ferret's stock to watch: great artesian oil & gas

Ferret's Stock to Watch: GREAT ARTESIAN OIL AND GAS LIMITED
07:42, Thursday, 23 September 2004



MINI OIL EXPLORER BATTLING ITS WAY TO THE BIG TIME


Sydney - Thursday - September 23: (RWE)
***************************************

Feverish activity in the Cooper- Euromanga Basins of southern
Queensland and into South Australia, his lifted market interest in a
number of explorers.

Among them is newcomer Great Artesian Oil and Gas Limited which
is at present in the speculative counter category.

Great is just a few cents above its 20c listing price despite
discovering a gas field that will be in production next year.

The well has the unlikely name of Smegsy,reminding old timers of
a newspaper cartoon called Ginger Meggs.

The Smegsy discovery could well indicate another oil-gas field
(Paranta-1) while action appears imminent on the most exciting front -
its Otway offshore South Australia territory.

Great Artesian popped into the spotlight last week after making a
successful capital raising of $4 million.

This will enable the oil and gas explorer to progress its Smegsy
gas field in South Australia's Cooper Basin to early production and to
increase other exploration activity.

Managing Director, Dr Ray Shaw, said the coming quarter would be
an active one with:

* Testing of the Smegsy gas field to enable planning and
development for production next year;

* Planning for drilling of one the exciting large structures in
its offshore Otway Basin area near the South Australian-Victorian border;

* Drilling of the Nulla Nulla-1 prospect in southwest Queensland;

* Further seismic work around theParanta gas and condensate
discovery to determine the site of a Paranta-2development well;

* And three further seismic surveys toprove up additional targets
in its most prospective portion of its Cooper Basin acreage.

SHARE PRICE MOVEMENTS
*********************

Great Artesian shares sold yesterday 0.5c lower at 23.5c
Rolling year high has been 42.5c and the low 16.5c.

The company placed 20 million shares at 20c a share through Bell
Potter Securities on September 16 to underwrite an accelerated
exploration program through 2005 in its PELs 91, 106 and 107, in the
heart of the Cooper Basin, South Australia.

Great Artesian is initiating activity on an area that holds the
largest potential petroleum structures in its acreage portfolio, the
offshore Otway Basin EPP 27 area.

"Our most recent development is the agreement reached last week
with Oilex NL by which it will fully fund an exploration well to earn a
60% participating interest in an area that contains by far the largest
structures in our portfolio, EPP 27 in the Otway Basin.

"The Offshore Otway Basin is possibly Australia's most
prospective new petroleum region, with the Woodside-Origin Energy-led
consortium recently announcing the go-ahead of development of its Otway
Thylacine and Geographe gas fields, and a forthcoming new round of
exploration drilling including Santos' Amrit prospect.

"An initial drilling target on one of the 15 identified
structures in our EPP 27 Otway Basin permit will be selected following
processing of seismic data.

The most likely target will be a prospect in an area where
hydrocarbon seepage occurs on the sea floor, either the Breaksea, Galatea
or Havana structures.

"EPP 27 contains a number of large prospects, the largest capable
of containing over a trillion cubic feet of gas.

"Oilex is keen to drill as soon as possible, and subject to rig
availability we hope to be in a position to see drilling commence in the
first half of 2005,” Dr Shaw said.

The Cooper Basin has four wells scheduled in coming six months.

"Great Artesian will accelerate the drilling of up to four wells
in two of our key South Australian Cooper Basin permits PELs 106 and 107
in addition to the drilling of Nulla Nulla-1 in the South west
Queensland Cooper Basin.

"The well is due to start around the end of this month” Dr Shaw
said.

Nulla Nulla-1 is being drilled on Great Artesian's ATP 549 Block,
is an oil target where potential reserves could be as high as 23 million
barrels.

Great Artesian will maintain a 25 per cent participating interest
with Enterprise paying half of Great Artesian's costs and operating the
drilling.

In development of the Smegsy gas field, production testing is
scheduled to commence at the end of next month.

Initial wire line logs and pressure data have been run from 24
metres of net gas-bearing sands with gas-in-place estimates of
approximately 20 billion cubic feet, located just 3.5 km from the nearest
gas pipeline.

"These cased-hole tests will give us firm data to plan and
finalise future development planning, production and sales," Dr Shaw
said.

"In the Paranta gas-condensate discovery follow up we are now in
a position to carry out 3-D seismic surveys of the Paranta discovery to
determine the best position for a second, development, well.

"While the initial well flowed gas (at 1.8 cubic feet a day) and
condensate (at 75 barrels a day) from one interval, with evidence of a
second gas zone in the overlying level, the well was close to a fault
which inhibited sustained flow.

"From our review of the seismic and engineering data we are
confident of locating a second well in a far more optimal location once
3D seismic coverage has been acquired and interpreted," Mr Shaw declared.

Other impending activity in the coming quarter involves:

* Seismic surveys around the Smegsydiscovery will identify
locations for follow up drilling;

* Beach Petroleum is evaluating seismicdata it carried out on the
southwestern part of Great Artesian’s PEL 106(the Farmin Block) and has
until December to decide whether to drill awell in that block before the
end of the second permit year - April 2005;

* Negotiations are progressing withpotential farminees to take
part in a Rossco-1 exploration well on aprospect approximately 6 km
northeast of Smegsy-1, 4km north of the JackLake gas field and 8 km south
of Paranta-1.


BACKGROUND
**********

Great Artesian Oil and Gas Limited listed on the Australian Stock
Exchange on August 5 2003, after raising $6 million through an IPO.

It has been involved in an active exploration program primarily
centred on its South Australian Cooper Basin acreage.

Both the first two wells Great Artesian operated in its PEL 106
permit were discoveries.

Nutmeg-1 and Paranta-1 were both cased and suspended as potential
future hydrocarbon producers with Great Artesian retaining a 100 per cent
interest in each well.

The Nutmeg-1 and Paranta-1 discoveries have highlighted that
portion of PEL 106 as an area of core interest to Great Artesian's future
exploration program.

Seismic data, recorded by Great Artesian in February 2004,
confirmed the presence of at least 3 additional, follow-up, drillable
prospects in this area.

A positive outcome from the extended production testing of either
Nutmeg-1 or Paranta-1, and the early delination of a commercial
hydrocarbon accumulation, will significantly enhance the planning of
future production strategies not only for this portion of the PEL 106
permit, but for the Company as a whole.

Great Artesian has a strategic spread of petroleum exploration
acreage in Australia's most prolific onshore oil and gas province, the
Cooper-Eromanga Basin.

The Company holds significant interests in this Basin in South
Australia (three permits - PELs 91, 106 and 107) and Queensland (three
permits – ATPs 539, 549 - West and Cypress Blocks and 552) as well as one
offshore Permit, EPP 27 in the Otway Basin.

Its exploration focus is in "brownfields" areas where geological
risk is reduced and access to existing infra-structure ensures that
following any discoveries, production can be fast-tracked.

Already it has made two new gas field discoveries in PEL 106 with the
drilling of Paranta-1 and Smegsy-1.

ENDS

Copyright © 2004 RWE Australian Business News. All rights reserved.

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Fig Jam