the full article

CHIEF EXECUTIVE
officer Peter Munachen
describes Norwest Energys
activities in the last six
months as a rebuilding exercise.
During that time, Norwest has
rebadged itself and carried out an
airborne survey that has given the
company the confidence to identify its
prospects as firm drill targets.
It also marks a shift in Norwests
strategy to move from being a
participant in joint ventures to an
operator, with its 100%-held offshore
permit TP/15 its showcase project.
The work Norwest Energy has
carried out already is evidence of the
new focus and a clear commitment
to build shareholder value through
implementing this strategy in 2010.
TP/15 was the target of an airborne
full tensor gravity (FTG) gradiometry
imaging survey that was flown in
September last year, and is now the
subject of farm-out talks with both
local and international companies.
Norwest is well advanced with
negotiations and aims to finalise the
farm-out of half the permit, while
retaining operatorship, in March this
year.
FTG measures the gradient of the
Earths gravity field, records shifts
in the density of underlying rocks
and can clarify the local geological
picture when seismic surveys might
not be capable of getting a good
look. This relatively new technology
is cost-effective, non-intrusive and
copes well with complex geology and
changes in terrain.
Munachen believes FTG offers
a real edge for companies with the
expertise to use it effectively, and
singled it out as a good example of
the way in which Norwest intends
to go about its business in future
programs.
Norwest has identified Xanadu,
which has potential recoverable
reserves of 27-28 million barrels of
oil, and the Redhill South prospect,
which Munachen said was small but
sweet.
The law of exploration is you
drill your best target first, he said.
We are structuring the farm-in to
be a multiple-well commitment. We
dont want to drill just one well and
we want a partner that will share the
vision with us.
Munachen compared Xanadu
with Roc Oils offshore Cliff Head
oil field, noting that while estimates
on recoverable reserves there had
dropped from around 30MMbbl to
12MMbbl, it remained sizeable and
commercial.
Norwest is already making
progress in TP/15, holding discussions
with a well construction and drilling
engineering specialist group to
help source a suitable drilling rig.
The team will be involved with
well design as well as planning and
permitting.
We will continue well planning
as we need to drill it under the Mines
Departments requirements by the end
of the year, Munachen said. The
well planning people need to identify
a rig capable of directionally drilling
from onshore towards offshore
targets.
The feasibility of drilling both
Xanadu and Redhill South from
onshore sites will greatly reduce
exploration costs.
He noted that while Xanadu
would cost about $7 million to drill,
a discovery there would still require
three or four wells to optimise
recovery.
Importantly, Norwest is also
continuing to refine its data over other
prospects in TP/15, such as Capel and
Metricup, both of which Munachen
hopes will keep the company busy
even if both Xanadu and Redhill
South prove successful.
While the offshore TP/15 permit is
firmly at the top of its list, Norwest is
also active in the rest of the onshore
Perth Basin.
In late January the company
moved to buy out Origin Energys
stake in EP 413, which surrounds the
producing Jingemia field about 25km
south of the town of Dongara. This,
together with Roc Oils exit from the
permit, will give Norwest a 50.593%
stake in the acreage.
It also fulfils Munachens interest
in increasing Norwests exposure to
the northern Perth Basin, which he
considers to be under-explored and
offering many opportunities.
Our interest is focused on what
we have got, expanding our presence
in the basin and taking up any
opportunities that emerge, he said.
company profile
44
australia
norwest energy
Our interest is focused on what we have
got, expanding our presence in the basin and
taking up any opportunities that emerge.
peter munachen
norwest energy
rebuilding gives
explorer more energy
The impending conclusion of farm-out talks and acquisition of a larger stake in a permit surrounding
the Jingemia oil field has Norwest Energy well placed for petroleum exploration in the Perth Basin.
MARCH/APRIL 2010 RESOURCESTOCKS
45
Norwest is not alone in its
endeavours in the region. Besides the
Cliff Head and Jingemia fields, the
Perth Basin is also home to the
AWE-operated Hovea/Eremia oil
field, as well as the Beharra Springs,
Dongara and Woodada gas fields.
The basin has been the subject of
recent drilling, including Empire Oil
& Gass Gingin West-1 exploration
well, Origin Energy and AWEs
Redback South-1 gas discovery, and
the Jingemia-12 development well.
Gingin West-1 targeted 32.8 billion
cubic feet of gas and 400,000 barrels
of condensate in a simple anticline
to the south and updip from the
Bootine-1 gas discovery well.
Empire had suspended the well
for further evaluation and testing
after wireline logs identified two
hydrocarbon-bearing zones at about
3570m and 3325m.
Meanwhile, initial testing of
Origin and AWEs Redback South-1
produced gas flows at rates of up to
38.4 million cubic feet per day.
While Origin said the commercial
value of the find would not be known
until further analysis, it noted the
flow rates indicated the excellent
reservoir quality of the upper Wagina
sandstone.
Jingemia-12, in the Jingemia
oil field in which Norwest holds a
small interest, intersected a 15m
hydrocarbon column in the Dongara
sandstone and was cased and
completed by operator Origin in
August last year.
Munachen said that although
Jingemia-12 came onstream late
in 2009, it had not contributed
its maximum potential due to
engineering problems. When it
becomes fully operational it has the
potential to add up to 400 barrels
of oil per day to production at the
Jingemia field, which currently
produces 650bpd.
So even if we have a meagre
1.278 per cent, it is valuable.
Munachen also noted that
development options for any
discoveries would depend on the size
of the find, though he noted that there
was a ready market in Geraldton,
which is just to the north of the
permits.
He said that any major industrial
activity like the Okagee port and rail
project, which includes a steel mill,
would lead to the development of a
whole service industry and that all
these would need energy.
That is an opportunity to
capitalise on.
Norwest also has assets in the
Timor Sea and in southern England.
In Australian Timor Sea waters,
Norwest holds a 1.25% overriding
royalty interest in the Puffin oil field.
Munachen said the company was
confident of the value of this asset
and while production at the field was
currently stalled, the interest was
recently valued at about $15 million.
It costs Norwest nothing to hold
the interest and gives it exposure to
future production and upside, he
said.
In England, Norwest holds three
adjacent permits, PEDL 089, PEDL
238 and PEDL 239, in Dorset and the
Isle of Wight.
PEDL 238 and PEDL 089 are
just north of BPs giant Wytch Farm
oil field, which has produced more
than 400 million barrels of oil, while
preliminary work has indicated that
deep basement-involved geologic
structuring is highly prospective
beneath PEDL 239 in the Isle of
Wight.
While the north Perth Basin is a
company-maker, the Wessex Basin
can be a monumental companymaker,
Munachen said.
The Wessex Basin geology is
quite complex. But we do have a good
position there C we are the operator.
The work we have done to date is
extremely encouraging.
With the period of repositioning
now complete, the year ahead
promises to be a time of opportunity
for Norwest with a number of clearly
defined projects to drive shareholder
value. C Bevis Yeo
NORWEST ENERGY
AT A GLANCE
HEAD OFFICE
Ground Floor
288 Stirling Street
Perth WA 6000
Australia
Tel: +61 8 9227 3240
Fax: +61 8 9227 3211
Email: [email protected]
Web: www.norwestenergy.com.au
DIRECTORS
Michael J Fry, Henry David Kennedy,
Peter Lawson Munachen
Market Capitalisation
$A17 million (at press time)
MAJOR SHAREHOLDERS
Paticoa Nominees Pty Ltd
4.7%
Merrill Lynch (Australia) Nominees
Pty Limited 3.96%
Kirke Securities Ltd 3.06%
Comsec Nominees Pty Ltd 2.67%
The north
Perth Basin off
the Western
Australian coast
MARCH/APRIL 2010 RESOURCESTOCKS