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Norwest sale opens up Perth Basin exploration tilt

ASX-listed oil and gas developer, Norwest Energy, said this week that it is one step closer to disposing of its remaining interest in the Jingemia Production Licence L14, located 360km north of Perth after a 28-day “cooling off” period with the operator RCMA Australia expired.

Pending approval from the Foreign Review Investment Board and the WA Mines Department, RCMA will pick up Norwest’s remaining 6.278% interest in L14, via the payment of $700,000, with the parties anticipating that the agreement will be wrapped up by December this year.

RCMA Australia is a member of Singapore-based RCMA Group.

The transaction will enable Norwest to concentrate its time and financial resources on the company’s other core Perth Basin projects in which it has material participating interests.

These include two key exploration permits, northeast of the producing Waitsia and Dongara gas fields that are directly north of Strike Energy’s recent exciting Erregulla-2 discovery.

Norwest will also look to appraise its TP/15 Xanadu oil discovery near Dongara, WA, where it holds 25% of the project as the operator, with Triangle Energy retaining a 45% interest and the 3C Group controlling the remaining 30%.

Xanadu is a shallow offshore oil discovery that was drilled from an onshore location in September 2017 and located south of Triangle Energy’s producing Cliff Head offshore oil field.

Analysis of oil samples has indicated that Xanadu is analogous to the Cliff Head field.

Norwest was fully carried through the drilling of the original exploration well at Xanadu, with the JV partners now funding further activities on a pro-rata basis.

3D seismic was recently completed at the property and will potentially define both the up-dip and down-dip prospectivity of the discovery.

Results are expected in the December quarter this year, with an estimation of Contingent Resources and forward planning for further well appraisal likely to follow after that.

Norwest is a long-time operator in the Perth Basin and the recent discoveries centred around the highly prospective “Kingia-High Cliff” sandstones structure have once again seen pulses racing in the underexplored basin, with the company keen to cash in on that sentiment.

The renewed interest in the Perth Basin stemmed initially from AWE’s 2014 discovery of the Waitsia gas field that now boasts estimated proved and probable reserves of about 844 billion cubic feet of gas.

It is now described as Australia’s largest onshore conventional gas field.

Whilst the discovery of Waitsia opened up the Permian gas play in the basin, it is only in recent months that interest in the Perth Basin again peaked, after Strike Energy and Warrego Energy drilled the West Erregulla-2 gas well about 16km east of Waitsia that Strike itself has described as “staggering”.

The recent successes have dispelled most doubts about the prospectivity of the Kingia-High Cliff sandstones despite their depth at West Erregulla-2 and also somewhat de-risked the play in surrounding regions by proving that the Waitsia discovery was not a fluke.

Perhaps unsurprisingly, Norwest and its partner, Energy Resources, a subsidiary of ASX-listed hard rock mining heavyweight, Mineral Resources, are now running the ruler over their nearby Lockyer Deep and North Erregulla gas prospects too.

These prospects are situated on-trend with West Erregulla-2 and represent potential targets for their commitment well in the EP368 exploration permit in the first half of 2020.

Both areas are prospective for gas in the same Kingia and High Cliff sandstones as West Erregulla-2 and could benefit from the two formations being considerably shallower at the Lockyer Deep and North Erregulla locations.

Rounding out the company’s other petroleum plays is its Arrowsmith unconventional gas discovery within permit EP413, which also hosts the drill pad for the Xanadu-1 well.

The revitalisation of the Perth Basin comes at an excellent time for Norwest, given the substantial interest that the recent gas discovery at West Erregulla-2 continues to generate and with the pending settlement of its remaining stake in the L14 permit, Norwest will be chomping at the bit to address its other prospective holdings in the region.

The company’s considerable exposure to the Kingia-High Cliff gas play along with the Xanadu oil discovery both look to be potential company-makers in the event of exploration success.

 

Is your ASX listed company doing something interesting ? Contact : matt.birney@businessnews.com.au

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1 year TSR5 year TSR
77thNorwest Energy101%-18%
592ndAruma Resources-33%-30%
789thPeninsula Mines-67%-22%
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