Company insight interveiw John Heugh Date of Lodgement: 23/1/12
But back to your question, although we’ve been investigating oil in Central Australia since 1997, we did not drill our first conventional well until 2008. We subsequently drilled a number of targets, the most significant one of which was Johnstone West, which, together with our seismic work on the Johnstone trough structure, indicated a very nice rollover or dip closure. Then, after some follow-up seismic work, we identified close to a large oil kitchen, the Johnstone Trough, a 4-way dip closure, the target of the Surprise-1 well. This was drilled in November/December 2010 and showed the existence of oil beyond any doubt with an unrisked target of about 10 million barrels of oil in place at P50 level and good permeability, at least in part, in a 9m core th at was retrieved from the well. Unfortunately, a rig incident meant further drilling a nd flow testing had to be deferred and we had to terminate the drilling contract. Then with the difficu lty of securing drill rigs in Australia we were unable to start to redrill Surpri se until November 2011. But by the n, we’d hired Dalton Hallgren, a horizontal drilling specialist from the US, who reviewed our data on the first well and convinced us that the best approach to deliver early production and cash flow was to drill a horizontal section into the zone we’d already core d, and to flow-test it. As I said, the result of this has been the mo st significant event in the Company’s history. Flow testing achieved a sustained flow rate of 380 barrels of oil per day via a 32/64” choke over a 230 metre horizontal section and a Gross Vertical Thickness with continuous oil shows of approximately 28 metres.
There are additional oil shows above this giving a potential maximum thickness of oil shows in the Stairway Sandstone of some 68m;
We are not sure at this stage whether this is a continuous oil column or not but this is a very positive result. Further, the product is a light sweet crude with API Gravity averaging 40 degrees - a quality that attracts TAPIS benchmark prices (that are currently around $120 a barrel). This is an eminently saleable product.
Dalton Hallgren Companyinsight Date of Lodgement: 9/5/12
I came into the Surprise operation just as they were starting to drill, and after reviewing the core and looking at the thickness of the permeability streak, I realised that Surprise resembled another sand- play I’d completed in the US called the Tyler/Heath sand. My team and I convinced Central’s Board into adjusting the plan and drilling a horizontal well – which we could do for about the same cost of the originally planned sidetrack. So we drilled down to the maximum depth that our particular rig could handle, leaving our lower horizon targets for a later date. We then pulled back up and did our horizontal sidetrack. We utilised what we call geosteering using vertical offset logs and a gamma tool - we steered the horizontal through the different lithologies in the rock – targeting the streak we wanted to drill. Doing this, we drilled the small horizontal at Surprise to within a metre or thereabouts of our target. We’ll be continuing to employ these and other techniques I’ve brought across as we pursue our targets and develop our properties
Surprise-1 REH is approximately 160 kilometres west of the Mereenie oil field and the work done in both areas indicates that there is the combination of oil generation,migration and oil trapping present across the Amadeus Basin area.
Surprise – along with the Johnstone West #1 well – has given us a lot of valuable knowledge, and we think we can utilise some newer techniques and the lessons we’ve learned from similar environments overseas to sharpen our thinking and reduce Central’s ongoing exploration risk.
Overall, the Surprise discovery has meant the potential of our acreage in central Australia is starting to be recognised. Moreover, with our large onshore acreages, we’re well placed to capitalise on the opportunities in the current market. But I’m pretty focused and so is our team.
Surprise was the biggest event in this Company’s history, and we’re working hard to engage our skills and take this discovery to the next stage.
CTP Price at posting:
43.5¢ Sentiment: ST Buy Disclosure: Held
