Quarterly Reports 18 October 2001 The Announcements Officer QUARTERLY REPORT FOR THE PERIOD
AUSTRALIA WA-254-P - OFFSHORE CARNARVON BASIN, During the quarter FAR commenced licencing all Panaeus data covering Part 4 of the Permit. WA-254-P was renewed on the 3 May 2001 for a further term of five years and comprises 4 graticular blocks (321 square kilometres). 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 has 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 Following a recommendation by the Operator, a renewal application was lodged on 12 September 2001 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 continued efforts to source a rig for the drilling of the Banjo prospect. Banjo has been proposed as a 1,000 metre Triassic test and subject to rig availability is likely to be drilled in the first half of 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 Early Jurassic-Triassic trend to the north of EP 397, successfully encountering oil and gas (Gypsy, Rose and Lee discoveries). These successes have significantly upgraded the Jurassic/Triassic prospectivity of EP 397. During September, the Apache operated Errol-1 well intersected a gross 26 metre hydrocarbon column in the Upper Barrow Group approximately 4 kilometres from the western boundary of EP 397. FAR is likely to farm out the proposed well and has received strong interest from potential farm-in partners. Following a recommendation by the Operator, a renewal application was lodged during September 2001 to renew the entire permit (area 159 square km) for a further term of five years. The current term expires 13 December 2001. 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. Under the Farm-in Agreement, the farm-in party is required to undertake a technical study involving further geological, geophysical and engineering work for an option to drill a well to earn a 60% interest in EP-104. In the event that a well is drilled on EP 104 at the farminee's expense, FAR's interest in EP-104 shall then reduce to 3.2 percent or should a workover be conducted on West Kora, FAR's interest in the West Kora Application shall reduce to 4.8 percent. PAPUA NEW GUINEA PPL 228 - PAPUAN BASIN - 12.5% INTEREST PPL 228 covering 33 graticular sections and 2,673 square kilometres was granted by the PNG authority on 26 July 2001. Of these graticular sections, eight sections were part of PPL 213 and 16 sections were part of PPL 202, which have been surrendered. During September, geological mapping by the Operator defined a new source rock model that suggests Amdi may be well placed to receive a local oil charge similar to Menga and Tarim. 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 scheduled for the second quarter of 2002. UNITED STATES OF AMERICA Langford 25 #3H-TXV Horizontal, Hardeman County, Texas The Langford re-entry horizontal drilled during July 2001 penetrated a seismically defined Mississippian mound of excellent porosity and permeability some 305 feet above the lowest known oil based on existing well control. Subsequent production testing of the Langford 25 #3H-TXV well confirmed an oil discovery. After swabbing, the well commenced flowing back fluid (90 percent oil) on a half hour test at the rate of 216 barrels per day on a 5/16 inch choke at a flowing tubing pressure of 1200 psi. The crude is of high quality (50° gravity or above). Following testing, the well was placed on line and produced at the rate of 108 barrels of oil and 110 thousand cubic feet of gas per day on a 12/64 inch choke at a flowing tubing pressure of 1250 psi. The Operator plans to adjust production upward to its allowable rate after 30 days. The crude is of high quality (50° gravity). A tank battery comprising four (4) 300 barrel tanks has been installed on the Langford lease to handle oil production from the Langford 25 #3H-TXV discovery well. Following installation, the well was shut-in for pressure testing and measured 3,409 psi shut-in bottom hole pressure after a build up period of only five minutes indicating excellent permeability. 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 and is still producing flat line. According to an independent geological report an oil column of this magnitude (305 feet of potential pay) over the Loveless-Langford drainage area could recover a considerable amount of oil and the Langford well 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 A compressor has been installed on the Terry Ewing well to enable gas sales into the Louisiana State Gas Pipeline from the Early Cretaceous Blue (Hosston) Sand. Initial rates up to 500 thousand cubic feet per day have been reported. The well is being monitored for production and if warranted a completion will be made in the James Lime formation (6,930 to 6,944) which remains behind pipe for future production. The Terry Ewing well was the initial discovery well at Clear Branch (drilled third quarter 2000) and logged 115 feet of net gas pay. Difficulties had been experienced completing zones below the Blue Sand due to formation damage. The Operator's prognosis is that the Terry Ewing and Tolar wells have established the Hosston Yellow, Orange and Blue Sands are all productive, with a remaining reserve of over 30 BCF of gas while the deeper Cotton Valley has an estimated reserve of 20 BCF and 200,000 barrels of condensate. A number of wells may be required to recover this potential. The two wells (Ewing and Tolar) lie on trend with significant Hosston and Cotton Valley production which blankets a portion of North Louisiana. Hunt Oil discovered the Clear Branch Field in 1976 and the field has produced in excess of 55 BCF of gas from multiple Hosston reservoirs. FAR has a 9.375% working interest at Clear Branch. Other interests are held by North American companies including the operator, Rio Bravo Exploration & Production Company Lake Long Field, Lafourche Parish, South Louisiana The SL 328 No 7 well drilled during the second quarter was placed on line late July 2001 at the rate of 680 thousand cubic feet of gas and 5 barrels of condensate on a 7/64 inch choke and a flowing tubing pressure of 1,890 psi from the 5780 Sand of Miocene age. Application has been made with the Louisiana Department of Conservation to establish production units for the 5520 and 5780 Sands. 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 the operator, Kriti and other US based participants. Eagle Prospect, San Joaquin Basin, California The Eagle No 1 well has been drilled to a total measured depth of 4,330 metres (true vertical depth (4150 metres). Following unsuccessful efforts to free a stuck drill head, a 4½ inch liner has been run in the well-bore to enable future completion and production testing of the Gatchell reservoirs. Proposed completion, to be conducted at a date to be determined, will involve the running of coiled tubing through the 4½ inch liner, the stuck drill head and target formation already drilled (prior to well sticking). Operators interpretation of the drill rates, MWD logging and chromatographic gas analysis results during earlier drilling indicate a gross pay of 131 metres, and a net pay of 91 metres in the upper and lower Gatchell Sands in the near horizontal and horizontal well bore over the interval 4,177 metres to TD of 4,330 metres measured depth. During operations minor amounts of oil were seen on the surface of the mud pits. 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. Rainosek-Halletsville Project, Lavaca County,Texas FAR has entered into negotiations to participate in a development project offering low risk but high potential located in Lavaca County Texas. The leasehold area comprises approximately 632 acres located on and to the southeast of the Word field area covered by 3D seismic and includes two producing wells and associated production equipment including tanks and pipelines. Subject to agreement and final documentation, FAR will acquire up to a 20 percent working interest. Target reserves are in the range of 3 million barrels of oil and 16 billion cubic feet of gas. The project involves the re-entry and stimulation of an existing producer planned for November to be followed by the drilling of an 8,750 foot test of nine potential Eocene Wilcox pay zones, supported by subsurface well control and 3D seismic. PRODUCTION Gas sales during the quarter totalled 54 million cubic feet for an average of 0.59 million cubic feet per day at an average price of US$3.11 per thousand cubic feet before production taxes. Oil sales during the quarter totalled 10,263 barrels for an average of 112 barrels of oil per day at an average price of US$25.68 per barrel before production taxes. Lower natural gas prices saw quarterly revenues (at $889,900) dip back below the million dollar mark. Cumulative sales for the year to date are $3,777,000. 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 Bevan Warris, a geologist with 35 years experience and AAPG Certified Petroleum Geologist No 4723. Dr Warris has given his consent to the information in the form and context in which it appears. |
