365m gas bearing sands, page-25

I get the impression that the implications of condensate at Heron are being completely overlooked. Lets put it into a context more easily understood, oil.

Many explorers have targeted oil targets in the Timor Sea with recoverable reserves in the 25 - 50mmboe range.

We know condensate is more valuable than heavier oil.

Lets put this into context with Heron.

Ignoring any upside, mean recoverable reserves at Heron (pre-drill) were 4,960 bcf. Depending on the CGR (bbl/mmscfd), the recoverable condensate would equate to the following million barrels (mmboe):

CGR 20, would result in recoverable condensate of 79.2 mmboe

CGR 50, would result in recoverable condensate of 248 mmboe

CGR 70, would result in recoverable condensate of 347.2 mmboe

CGR 90, would result in recoverable condensate of 446.4 mmboe

MEO's interest is somewhere between 25 - 50%, realistically 25% as eni will take up its options.

In this case, even at relatively conservative CGR estimates, MEO's share of condensate alone is an absolute company maker.

When MEO first announced H2 as a formal discovery on 11 March 2008, they said:

"Given the encouraging mud log indications while drilling the Plover formation of possible wet gas (gas with associated LPG and condensate), a significant gross column (164m) of Plover gas saturated sands and positive electric log interpretation, the joint venture is currently planning a re-drill of the Heron North structure to production test the Plover sandstone unit."

http://www.meoaustralia.com.au/icms_docs/50484_Heron-2_Well_Update.pdf

The main kitchen for condensate in the area is the Malita Graben, i.e. the kitchen which feeds Heron. Top RHS of link.

http://www.meoaustralia.com.au/icms_docs/50484_Heron-2_Well_Update.pdf


Condensate fields in the region, i.e. Bayu-Undan are highly valuable as this field (smaller structure than Heron) contained 350 - 400 mmboe condensate, eni is also a minor (11%) equity holder here.