Quarterly Reports 17 April 2001
The Announcements Officer QUARTERLY REPORT FOR THE PERIOD
FROM 1 JAN 2001 TO 31 MAR 2001
AUSTRALIA WA-254-P - OFFSHORE CARNARVON BASIN, A renewal application remains outstanding for WA-254-P. 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. The 40 million barrel Legendre Oil field is due to be commissioned by Woodside around mid year and is 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
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 during the second half of 2001. 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 is currently reviewing a farm-in offer on this block. PAPUA NEW GUINEA PPL 213 - PAPUAN BASIN - 8.67% INTEREST A new application covering 33 graticular sections and 2,673 square kilometres has been lodged with the PNG authority. Of these, 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. 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 FAR has received independent economic evaluations of its oil and gas properties located in Louisiana and Texas from Coutret and Associates and Sproule Associates, petroleum reservoir engineers. The effective date of these appraisals is 1 January 2001. The proved net reserves of the properties are 2,203,218 MCF of gas and 233,768 barrels of oil with an expected net cash flow of US$20,623,672 and a before tax present worth at 10% discount of US$13,114,016. Prices used in the evaluation were those received in December 2000 as per SEC (Securities Exchange Commission) guidelines. The evaluation does not include probable reserves or reserves which might be attributable to the Clear Branch Field now under development. 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. In order to overcome these difficulties, the Operator conducted a study of six field wells in the Yellow and Orange Hosston Sands to determine how those wells performed based on similar pressure data (3,000 to 3,200 psi) measured in the Terry Ewing well. The average per well flow rate determined by the study was 3.1 million cubic feet per day suggesting better rates are possible within the Terry Ewing well once the water has been squeezed off. A completion rig is due on location today, 17 April 2001, to squeeze the water, and complete the Yellow, Orange and James Lime formations in the Terry Ewing well. 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 Production pipe has been run in the Police Jury No 1 well. The well, a follow up to the successful Silmon No 1, spudded on 16 February using the Reliance Story Rig No 2. The primary objective Vaughn Cotton Valley sand was successfully drilled and calculates productive on well logs with 12 feet of net gas pay. A further 7 foot net gas pay interval calculates productive in the Bodcaw section. A Pipeline Construction Contract has been awarded. A flow line will be built to the nearest existing pipeline (approximately one mile). The interval between 9,692 and 9,706 feet has been perforated and will now be fracture stimulated and, subject to testing, placed on line during May. The frac equipment is due on location on 5 May 2001. The South Drew field was discovered in the late 1970's and produces gas from a strandline Cotton Valley sand covering much of North Louisiana. Subject to performance of the Police Jury No 1 well a field development program with up to four 9,500-foot Cotton Valley test wells is possible. 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 A barge rig has finally arrived on location at Lake Long. The R&B Falcon Rig 28 has been released by Hunt Oil and is available to the participants at Lake Long for the duration taken to drill one well. Rig availability is extremely tight and FAR is fortunate to have secured this slot. The SL 328 No 7 well, a test of the NW Segment Prospect, commenced drilling on 15 April 2001. The planned deviated well will evaluate thirteen Miocene zones, eleven of which are productive in a major field fault block immediately south and adjacent to the NW Segment Fault Block. The southern block has produced 25 million barrels of oil equivalent. Plans call for the test well to be drilled to a true vertical depth of 12,000 feet. The prospect is supported by a modern grid of 3D seismic tied to sub-surface well control. Numerous bright spots are evident on seismic. A well drilled in 1949 intersected 15 feet of gas bearing sands at the 5,500-foot Sand interval. These sands were not produced at the time due to low gas prices, however, their existence considerably reduces the commercial risk. The field is supported by existing infrastructure connected to Columbia Gas Pipeline System. The level of FAR's participation in the SL 328 No 7 well is 20 percent reducing to a 15 percent working interest upon completion with the remaining interest held by the Kriti et al. New Barn Prospect, Cass County, Texas FAR is waiting on a land rig expected during May 2001. The New Barn Prospect is located in Cass County, Texas, approximately 16 miles northwest of the town of Jefferson. The Prospect is located on the north flank of the Lassater Field. The objective reservoir at the New Barn Field is the lower Cotton Valley gas sand. Existing well control suggests that potential exists for a reservoir running east-west for 5 miles, analogous to the nearby Kildare Field, which has produced 15 billion cubic feet of gas. Typically this reservoir requires fracture stimulation. The Neil Heirs #1 well is projected to penetrate improved reservoir within the Field. Planned total depth is 10,950 feet and anticipated drilling duration is 28 days. Gas pipelines and surface equipment exist within the New Barn Field and early connection to sales is possible. Subject to performance, a field development program involving up to 10 Cotton Valley wells may be possible. 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). Eagle Prospect, San Joaquin Basin, California During the quarter the pre-drilling preparation on the existing Mary-Bellocchi #1 well bore was completed, with the final bridge plug being set at 11,451 feet. The commencement of the Eagle-1 sidetrack exploration well is now awaiting arrival of the drilling rig, expected early May 2001. Plans call for the Eagle-1 sidetrack to commence at 11,500 feet and drill to a measured depth of 14,950 feet. A horizontal well bore of up to 1000 feet in length between 13,950 - 14,950 feet is programmed.
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. 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. 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. A leverage table of the participants published by the Operator and lodged with ASX shows that FAR shares have excellent leverage in the event of a successful outcome on the Eagle project. The newly announced July 2003 series option being offered at two cents will give existing shareholders a very low cost exposure to this play. PRODUCTION Gas sales during the quarter totalled 72 million cubic feet for an average of 0.8 million cubic feet per day at an average price of US$9.79 per thousand cubic feet before production taxes. Oil sales during the quarter totalled 5,737 barrels for an average of 64 barrels of oil per day at an average price of US$28.80 per barrel before production taxes. Surging natural gas prices and a weak Australian dollar have enabled FAR to post a record quarter achieving oil and gas sales revenues of A$1,772,016 before production taxes. A graph of quarterly receipts is attached showing five consecutive quarters of growth. The price cycle may have peaked during the current quarter with industry analysts expecting gas to trade at around US$5 per thousand cubic feet for the remainder of 2001. FAR's activities can be accessed via the Internet at www.farnl.com.au
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. |
