MEO Australia Provides Heron South-1 Progress Update

  • Business & Finance

MEO Australia Limited advises that at 06:00 Darwin time on Monday 24th September, Eni Australia Ltd (Eni) as operator of the NT/P68 exploration permit had drilled the 311mm (12 ¼”) hole to 3,740mMDRT (metres Measured Depth below Rotary Table).

High background gas necessitated mud weight increase at 3,433mMDRT. Mud weight increased from 10.35 ppg (1.24 SG) to 14.3 ppg (1.71 SG) to manage background gas and stabilise the wellbore. The well is currently drilling ahead to the planned 9 5/8” casing point.

There have been no reportable incidents.

The well was spudded on August 24th 2012 and will be drilled to at least 4,265mMDRT or the gas water contact. The key objectives of the well are to determine the productivity of the Elang-Plover reservoir and the gas composition. The drilling program is expected to take around 60 days.

An overview of the NT/P68 permit including location map and simplified Heron structural cross section are attached for reference.

Heron South-1 Drilling Underway

Eni farmed in to the NT/P68 Exploration permit in 2011 (refer ASX release dated 18th May 2011) and is earning an initial 50% interest in the Heron area by funding two wells on the Heron structure. The first of these wells – Heron South-1 – spudded on 24th of August 2012 using the ENSCO-109 jack-up drilling rig and is expected to take up to 60 days to complete. Eni has 60 days following the conclusion of Heron South-1 drilling to elect whether to fund a second Heron well to fully earn its 50% interest in the Heron area of the permit or withdraw from the Heron area in which case the participating interest reverts to MEO.

Heron South-1 will target the Heron South fault block to determine the extent of the gas column, the productivity of the Elang and Plover reservoirs and analyse the gas composition. MEO estimates the Greater Heron structure could contain mean prospective recoverable raw gas (ie inclusive of CO2) resources 5 of Tcf, potentially sufficient to underpin an LNG development.

Blackwood Area

Eni also has an option to earn a 50% interest in the Blackwood area by acquiring a minimum 500 km2 3D seismic survey in the Blackwood area and drilling a well on the Blackwood structure.

Eni completed acquiring the 766 km2 Bathurst 3D seismic survey over Blackwood East on the 5th of January 2012. Eni has 365 days from the completion of the survey to elect whether to drill Blackwood-2 to fully earn its 50% interest in the Blackwood area of the permit or withdraw in which case the participating interest reverts to MEO.

Eni is a major participant in the region and in November 2011 acquired a 40% interest in the adjacent Evans Shoal Field for US$250m cash and a deferred consideration of US$100m.

Development Plans

Under a provision of the Farmin agreement, Eni has a further option to acquire an additional 25% interest in both areas of the permit by funding MEO’s share of the work programme (including additional appraisal wells) required to reach a Final Investment Decision (FID) for either a Heron and/or a Blackwood development. MEO will receive a one off bonus payment of US$75 million for the first discovery to reach FID.

Following appraisal of the Heron and/or Blackwood gas discoveries the Joint Venture will evaluate all potential development options including consideration of incorporating a gas processing hub at Tassie Shoal, approximately 75 km from the Heron South-1 location.

Press Release, September 25, 2012

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