Quarterly Reports 17 April 2001
The Announcements Officer QUARTERLY REPORT FOR THE PERIOD
FROM 1 MARCH 2001 TO 30 JUNE 2001
AUSTRALIA WA-254-P - OFFSHORE CARNARVON BASIN, Permit WA-254-P, comprising 4 graticular blocks was renewed on the 3 May 2001 for a further term of five years. A number of prospects have been mapped by the Operator using the Panaeus 3-D seismic survey that extends over the entire permit. These include Collier, Sage, Argos, Cerberus and Erebus which lie along the Rosemary Legendre Fault Trend. Woodside has now commissioned the 40 million barrel Legendre Oil field and have reported (P.25 Year 2000 Annual Report) that exploration success during the timeframe the Ocean Legend production facility is in place at Legendre will allow additional small discoveries to be optimally exploited. Production facilities at Legendre are likely to add significance to Argos, a potential step out candidate to the south of the existing field. EP 395 - OFFSHORE CARNARVON BASIN - 11.25% INTEREST FAR has agreed to a recommendation by the Operator to renew the entire permit (area 240 square km) for a further term of five years. The current term expires 13 December 2001. FAR recently acquired 64.2 square kilometres of additional 3D seismic within EP 395 and 6.5 square km outside the permit. This seismic will enable the prospectivity of the K1 (a new buttress style play), Boyd East, and a possible Jurassic pinchout/channel play., with a view to identifying the strongest candidate for drilling. EP 397 - OFFSHORE CARNARVON BASIN - 33.3% INTEREST During the quarter, the Operator, Tap Oil progressed plans for the drilling of the Banjo prospect. Banjo has been proposed as a 1,000 metre Triassic test to be drilled late 2001 early 2002. Banjo exhibits a robust closure with moderate risk and has significant upside to the east. Several wells have been drilled on the eastern margin Triassic trend to the north of EP 397, successfully encountering oil and gas. These successes have significantly upgraded the Jurassic/Triassic prospectivity of EP 397. FAR is likely to farm out the proposed well and has received strong interest from potential farm-in partners. EP 104 - CANNING BASIN - 8% INTEREST (10% POINT TORMENT) The Joint Venture has agreed to a farm in on EP 104 and the West Kora discovery. The agreement is currently being circulated for execution. Under the Agreement the farm in party is required to undertake a technical study involving further geological, geophysical and engineering work following which an option to drill a well will have been earned by the farminee. In the event that a well is drilled on EP 104 at the farminee's expense, FAR's interest shall then reduce to 3.2 percent or should a workover be conducted on West Kora, FAR's interest shall reduce to 4.8 percent. PAPUA NEW GUINEA PPL 213 - PAPUAN BASIN - 8.67% INTEREST A new application, APPL 228 covering 33 graticular sections and 2,673 square kilometres has been lodged with the PNG authority. Of these graticular sections, eight sections are part of PPL 213 and 16 sections are part of PPL 202, which have been conditionally surrendered as part of the new application. The Minister has offered to grant the new application which has been accepted by the participants and when formalised will result in FAR holding a 12.5 percent interest. Hydrocarbon shows in the Tarim and Menga wells have encouraged the applicants to pursue anticlinal structures further east in the foldbelt where reservoir quality may be better (Amdi, Gu River and Maipe). Remapping of the Champion structure also indicated some potential for commercial oil and this has also been included in the application area. Proposed early work includes the acquisition of up to 65 kilometres of seismic. UNITED STATES OF AMERICA Eagle Prospect, San Joaquin Basin, California Victoria Petroleum NL, as Operator for the Eagle Project Joint Venture, has advised the joint venture that the Eagle-1 well is currently at a measured depth of 13,730 feet (4,188 metres), and drilling ahead. Gatchell Sandstone sample fluorescence interpreted to be indicative of an oil bearing sand was observed to commence at 13,704 feet (4,178 metres) and is interpreted to be equivalent to the first Gatchell Sandstone oil zone drilled in the adjacent vertical Mary Bellocchi#1 well bore. At last report the well was drilling ahead at 6 feet per hour and still with oil shows. Although the first Gatchell Sandstone is not the primary target for the horizontal well, its presence and the successful predicted correlation with the adjacent original Mary Bellocchi#1 well bore, provide encouragement for the presence of the Second Gatchell Sandstone as a valid potentially oil bearing target for the horizontal well bore planned to be drilled in this zone. A horizontal well-bore of up to 1,000 feet is planned between 13,915 feet (4,241 metres) and total depth of 14,898 feet (4,541 metres). Reservoir targets are the Gatchell Formation sandstones that tested both oil and gas in the original 1986 discovery well. High gas prices enhance the commercial value for any gas produced in the Eagle Oil Pool Development Project. FAR was a participant in the 1986 Mary Bellocchi test that produced both oil and gas from the Gatchell Sands. Engineering studies support a case for horizontal drilling with the prospect of increasing potential flow rates to the range of 500-1000 barrels of oil and 1.5 to 3 million cubic feet of gas. Subject to successful completion and testing, the Eagle No. 1 will be the first well in the Eagle Oil Pool Development Project, a horizontal drilling project targeting potential recoverable reserves of up to 24 million barrels of oil and 62 billion cubic feet of gas. FAR has a 15 percent working interest in the Eagle project and 4,360 (approx) acres under lease. Other participants include the Operator, Victoria Petroleum NL, Lakes Oil NL, Sun Resources NL and North American interests. Langford 25 #3H-TXV Horizontal, Hardeman County, Texas The Langford 25 #3H-TXV Horizontal well is being drilled by re-entering an existing well bore and drilling a horizontal evaluation section to investigate a large Mississippian mound defined by an extensive geophysical review of 3D seismic shot by Ensearch in 1994. This data along with the existing well information has defined an appraisal target, supported by an edge well which is producing oil at around 50 to 60 BOPD. The proposed re-entry horizontal was designed to penetrate this productive zone 256 feet above the lowest known oil defined in the existing well control. The actual drilling data now to hand suggests that this prognosis is correct with the actual intersection being around 300 feet above the drill defined lowest known oil. This was evidenced while drilling in the directional hole at 8,295 feet when the well experienced a drilling break indicating a zone of porosity and permeability, which caused the mud system to lose circulation. The Operator has been conditioning the mud system and once stabilised, will run a production-casing string. This will enable the interval of permeability to be tested and subsequently completed. The closest analogue to this prospect with a similar structure and drainage area is an Ensearch well in the Apex Field that has produced 1.5 million barrels of oil from 185 feet of pay. According to an independent geological report an oil column with up to 256 feet of pay over the Loveless-Langford drainage area could recover a considerable amount of oil and the re-entry has the potential to become one of the biggest wells in Hardeman County. FAR has a 16.48 percent working interest in the well and 80 acre production unit. Other interests are held by North American entities. Clear Branch Field, Jackson Parish, North Louisiana The initial discovery well, the Terry Ewing No.1, was drilled during the third quarter of 2000 logging an aggregate 115 feet of net gas pay. Difficulties have been experienced completing the well due to a combination of well bore damage and a poor cement bond enabling water to enter the well and restrict gas flow. Studies are continuing with a likely completion attempt in the Blue and/or James Lime formation in the near future. The second well in the program, the Tolar No 1 well, is to be completed in the "Blue" Sand for gas production. The remaining sands were found to be water saturated. The "Blue" Sand recorded a bottom hole pressure of 709 psi suggesting a partially depleted reservoir. Well logs indicate this zone is water free. Mapping of the "Blue" Sand in the Tolar well shows this to be the same reservoir that has produced 8 billion cubic feet in two offsetting wells. Engineering advice is that the well should produce on compression at around 0.5 million cubic feet per day with ultimate recovery of up to 1.5 billion cubic feet being possible. A completion rig is currently being sourced. The two wells lie on trend with significant Hosston and Cotton Valley production which blankets a portion of North Louisiana. Hunt Oil discovered the field in 1976 and has produced in excess of 55 billion cubic feet of gas from multiple Hosston reservoirs. FAR has a 9.375% working interest in the Clear Branch project. Other interests are held by North American companies including the operator, Rio Bravo Exploration & Production Company. South Drew Field, Ouachita Parish, Louisiana A decision is still pending on the Police Jury No 1 well following an engineering study that suggests poor cement bonding has enabled salt water ingress into the objective Vaughn Cotton Valley. This sand was successfully drilled and calculates productive on well logs with 12 feet of net gas pay, however, pending advice from the Operator the well may be abandoned unless a cement squeeze is decided upon. FAR has a 15 percent working interest in the Police Jury No 1 well. Other participants are USA based entities including the operator, Goodrich Petroleum Corporation (NYSE). Lake Long Field, Lafourche Parish, South Louisiana The SL 328 No 7 well, a test of the NW Segment Prospect, commenced drilling on 15 April 2001 and reached a total measured depth of 12,300 feet (approximately 11,025 feet - true vertical depth). Production pipe has been run in the SL 328 No 7 well and the 5,780 Sand has been perforated and tested gas at an estimated rate of approximately 1.0 million cubic feet of gas per day on a 9/64 inch choke at a flowing tubing pressure of 1550 psi. This rate is an estimate as a test unit was not available. The well continued to clean up while testing. Application has been made with the Louisiana Department of Conservation to establish production units for the 5520 and 5780 Sands and for the well to be placed on production as soon as it is hooked up. The installation of a flow line is underway with estimated first production scheduled in July. The upper sand (5520 Sand) will remain behind pipe until the lower sand is fully depleted. The field is supported by existing infrastructure connected to Columbia Gas Pipeline System. FAR holds a 15 percent interest in the SL 328 No 7 well. Remaining interests are held by Kriti and other US based participants. New Barn Prospect, Cass County, Texas During the quarter the Neil Heirs # 1 well, a Cotton Valley test, was drilled to a total depth of 10,950 feet. Logging of gas shows in the Neil Heirs #1 well indicated that mud log show zones were water saturated and the well has been plugged and abandoned. FAR has an 11.5 percent working interest in the Neil Heirs #1 well and 1,050 acres (approx) under lease. Other participants are USA based entities including the operator, Goodrich Petroleum Corporation (NYSE). PRODUCTION Gas sales during the quarter totalled 62 million cubic feet for an average of 0.68 million cubic feet per day at an average price of US$5.35 per thousand cubic feet before production taxes. Oil sales during the quarter totalled 8,798 barrels for an average of 97 barrels of oil per day at an average price of US$26.60 per barrel before production taxes. Strong natural gas prices and a weak Australian dollar have enabled FAR to post another million dollar quarter achieving oil and gas sales revenues of A$1,115,503 before production taxes. As forecast in the previous quarterly report, the gas price cycle peaked around March at US$10 per thousand cubic feet, however gas prices continue to remain strong when compared to those in the Australian market. FAR's activities can be accessed via the Internet at www.farnl.com.au Yours faithfully, MICHAEL EVANS NOTE: In accordance with Chapter 5 of the Listing Rules, the geological information in this report has been reviewed by Terry Barr, a geologist with 20 years experience and a Fellow of AIMM. Mr Barr has given his consent to the information in the form and context in which it appears. |
