Bow Energy yesterday confirmed press speculation regarding a potential transaction with Liquefied Natural Gas with respect to a project in Gladstone. 03/08/2010 10:33AM AEST
Bow Energy Ltd (ASX:BOW) yesterday confirmed press speculation regarding a potential transaction with Liquefied Natural Gas Ltd (ASX:LNG) with respect to LNG's Fisherman's Landing LNG project in Gladstone.
Bow said that discussions with LNG relating to a number of commercial arrangements are ongoing that may or may not lead to a binding agreement.
In its June quarter report, Bow Energy increased its end-of-2010 3P gas reserve target by 50 per cent from 2,750 PJ to 4,130 PJ and set end-of-2011 gas reserve targets of 6,200 PJ for 3P and 1,250 PJ for 2P.
A further 435 PJ of 2C resource was certified in the Rangal and Burngrove Coal Measures.
Drilling success at Norwich Park indicates a large gas field potential.
The first four core holes have been drilled and completed within the Vermont and Norwich prospects of ATP1031P.
Each core hole intersected an average of 63 metres of gassy coals and preliminary gas desorption rates suggest Norwich Park block contains considerably more gas per square kilometre than Comet block.
Dewatering of the first three of twelve planned pilot production wells for gas supply to the Blackwater power project resulted in early gas breakout on all three wells.
Testing of several well completion methods are underway aimed at achieving commercial gas flow rates.
The next 2P appraisal testing program on up to seven additional wells is scheduled to commence in August/September.
Bow has progressed critical path items including ordering of long lead time equipment, approval requirements and electrical connection of the Blackwater 30MW power project with construction planned to commence this month.
The first well on the Cuisinier oil field produced 440 BOPD.
Oil production commenced at the end of May from the Cuisinier-1 well, producing at an initial rate of approximately 440 barrels of oil per day.
Regular truck loads of oil are being delivered to the Jackson petroleum facility.
Since start of production, about 9,000 gross barrels of oil have been produced (Bow 20 per cent).
SHARE PRICE MOVEMENTS
*********************
Shares of Bow Energy yesterday gained 7c to $1.36. Rolling high for the year is $1.655 and low 90.5c. The company has 289.6 million shares on issue with a market cap of $381.6 million.
Since the end of the June quarter, the first core-hole within the Norwich prospect of ATP1031P, NW-1, reached total depth of 960 metres and intersected over 63 metres of gassy coals within the Rangal, Fort Cooper and Moranbah Coal Measures.
This well confirms the southerly extension of the thick coals interested in the VM-1, VM-2 and VM-3 wells in the Vermont prospect.
The average gassy coal thickness from the first four wells of a seven-well initial exploration drilling program on the Norwich Park Block is 63 metres.
Early desorption results show high gas contents of over 96 per cent methane, indicating that the block has large gas field potential.
Due to the initial excellent technical results, and in anticipation of certifying substantial gas reserves, Bow has scheduled permeability testing on at least two Vermont wells next quarter and initial pilot production wells are planned for later this year.
Furthermore, the initial seven-well 3P exploration drilling program has been increased to nine wells with two wells added to the Dysart prospect exploration program.
Bow Energy has defined its exploration, appraisal and production coal seam gas activities in the Surat and Bowen Basins that have been or are scheduled to be actively explored and appraised during 2010 and 2011.
The Comet and Norwich Park blocks have a combined area of over 1,600 sq kms and are located in the heart of one of Australia's highest-rated CSG provinces 250 kms west of Gladstone where several world-class export LNG projects are planned by other unrelated parties.
A study conducted by MBA Petroleum Consultants Pty Ltd of Bow's Bowen Basin tenements at the Norwich Park block, Gunyah block and Bandanna block estimates a total of 8.7 Tcf of GIP potential.
The substantial GIP estimates and recent positive drilling results, combined with the currently certified reserves in Bow's more advanced CSG fields, has justified a significant increase in gas reserves targets for 2010 and 2011 to more than 6,200 PJ of 3P and 1,250 PJ of 2P now being targeted by the end of 2011.
The initial 2P reserves certification of 59 PJ over the Blackwater CSG field exceeds gas reserve requirements to underpin Bow's Blackwater power project.
Drilling has now commenced to target further 2P reserve upgrades within both the Comet and Blackwater CSG fields.
As announced last week, 286 PJ of 3P and 7 PJ of 2P gas reserves included in the Comet Block certified reserves is over land subject to native title extinguishment.
Bow submitted 16 Petroleum Lease Applications (PLA) over the gas reserve areas covering the Blackwater and Comet CSG fields during the June quarter.
BACKGROUND
**********
Bow Energy Ltd joined the Australian Stock Exchange list on May 20, 2005.
The company is an exploration firm focused on the discovery of commercial oil and gas fields with projects in several of Australia's producing basins.
According to one broker review, Bow's upside value is expected to be driven by increasing 3P and 2P certified gas reserves currently in progress.
John De Stefani, CEO Commercial, said that over the next six to eight months Bow Energy's primary focus will be on upgrading certified reserves in its coal seam gas projects, particularly its Bowen Basin blocks.
The increase in its gas reserves targets has come on the back of strength from the company's Comet and Norwich Park blocks, located in the Bowen Basin, which have multiple coal measure targets.
Bow was awarded and granted these two high-potential permits in the March quarter, and a third block, Gunyah, is subject to Native Title.
Further highlighting the value of Bow, the company has a proven business development management team and is in a strong cash position to deliver on its planned reserve target.
The group has a clean asset base with 100 per cent ownership interest in key tenements, operator positions and significant uncontracted gas potential in regards to resources located at Gladstone.
Rapid industrialisation and economic growth, particularly in China, India and Eastern Europe, has created an unprecedented global demand for coal and other mineral commodities.
This demand occurs against a background of falling mine production and depleting reserves and reduced expenditure on exploration.
This combination of booming demand and inadequate supply has resulted in record prices for coking and thermal coal.
Bow has acquired 2,400 sq kms of prime exploration ground in the heart of the Bowen Basin, Queensland's major coal producing region, close to major coal mines operated by BHP Billiton, Rio Tinto, Xstrata and Anglocoal.
The Queensland Government has now committed to spend $7.2 billion on new infrastructure projects that will support the Bowen Basin coal industry.
A further $3.1 billion is planned on upgrade and expansion as well as additional rolling stock.
In addition to its coal exploration assets, Bow is developing a portfolio of mineral exploration projects and has signed joint venture agreements with major customers, both in Australia and throughout the Asia-Pacific region, to further enhance shareholder value and maximise the opportunities to profit from its exploration and commercial expertise.
Back Issues
BOW Price at posting:
$1.42 Sentiment: LT Buy Disclosure: Held
