FOR years the Perth Basin was written off as a gas province of minor significance, one where, compared with other parts of WA, quantities were insufficient for long-term commercial development.
Local domestic and industrial gas demand had historically been insignificant for the bigger explorers and, particularly in the southern part of the basin, the reservoirs had been found to be difficult.
But all that has changed over the past 15 months on three significant discoveries.
The stakes were first raised in October 2001 when Arc Energy and Origin Energy found oil onshore, in the Hovea field, not far from Perth.
Another find came soon after, this one close to shore on the Cliff Head trend, followed two months ago when a new onshore field, Jingemia, was proclaimed by Origin.
Hovea operator Arc is now production testing the fourth Hovea well, and Jingemia is undergoing production testing, with an initial reported clean-up flow of 2,000 barrels per day.
Hovea-5 will follow soon, in the field expected to produce for up to 10 years, with a daily 5,000 barrels for at least the first three years.
Hence, a bevy of small to medium players has now jockeyed into position, keen for a slice of the action from this summer’s appraisal and exploration program.
Keen disappointment in October, with a dry exploration well in the Morangie prospect on trend to the north of Cliff Head in WA 226P, has not dampened enthusiasm for the basin.
Apache Energy has just bought in to two offshore permits awarded in July this year, to the immediate north of the summer action, and approaches to other players for territory were still reported as late as last week.
The market likes these types of finds, as do the companies.
Such onshore or close to shore oil discoveries – with good reservoirs not requiring exotic techniques, and close to markets – are considered comparatively easy and simple to execute.
Origin and Mitsui are the two major companies in the region, but players and onlookers are talking of new company-maker finds, significant cash flows and the inevitable takeover plays should even some of this summer’s planned wells on and near the Cliff Head trend come in.
Arc – with 50 per cent of the Hovea field, in on Cliff Head and an adjoining permit, and keen to explore prospects on its territory adjacent to the Jingemia find – is considered attractive.
So is Voyager Energy, which had success with Cliff Head and Jingemia following its September 2001 float.
The attraction of this pair was underscored recently when Delta Oilfield Developments – a 50/50 venture by Westgold Resources and Carpenter Pacific Resources – made its first two investments in Arc and Voyager, becoming a substantial shareholder of each.
Hogan & Partners resource analyst Adam Conigliaro rates Australian Worldwide Exploration as another attractive entry into the Perth Basin.
The three Perth Basin players from Sydney – Australian Worldwide Exploration, Origin and Roc Oil –hold significant acreage, and are often mentioned as leaders in any subsequent corporate activity.
Speculation also surrounds the corporate intent of Apache and Mitsui, and another player not as yet in the Perth Basin, South Australia’s Santos.
Santos is Voyager’s complementary 59.1 per cent partner in the oil-producing Nockatunga project in Queensland.
Mr Conigliaro expects the consolidation that would be inevitable over time in the region will be accelerated if even just one or two wells of the potential eight to be drilled this season come in.
Origin currently has no equity in Cliff Head. And Roc Oil, which led the second oil find on the Cliff Head trend last Christmas-New Year, has plenty of its own links within WA.
It chose ‘friendly, like-minded parties’ Voyager Energy and Bounty Oil & Gas – regarded as undervalued and ripe for takeover – to bid successfully earlier this year for two new offshore permits north of the current finds.
Six companies have joined with Roc in TP/15 to drill the Cliff Head trend between last year’s find and the shore near Dongara. Hardman Resources, also in the Perth Basin, is a Roc partner off Mauritania.
Hardman listed earlier this year on the London Stock Exchange’s Alternative Investment Market.
In the UK, Roc has interests in close to 20 onshore and offshore oil and gas permits.
Publicly, Origin is not talking much, and the consensus is that not too many know what company management has in mind.
However, over the past two years, the company has significantly increased its WA exploration, production and electricity generation interests.
Australian Worldwide Energy is in both Cliff Head and Jingemia, in addition to the already-producing Beharra Springs gas field.
Many of the smaller companies are partnering the bigger players in this summer’s activity.
Some of these companies, such as Norwest Energy, are carrying the greatest comparative risk and could suffer significant market loss if the season turns out to be a dry one.
However, they also stand to benefit from substantial leverage.
Those benefiting from Jingemia are Origin (operator, 49.2 per cent), Hardman (22.4 per cent), Australian Worldwide (15.2 per cent), Victoria Petroleum and Voyager (5.8 per cent each), and Pancontinental Oil & Gas (1.3 per cent).