See the Australian oil and Gas Review this month. Promoted from the homepage.
Full page article on page 21-22
http://www.miningoilgas.com.au/aogr/latest.html
Two pics in the article - a good pics of action man JH next to a plane as well as a camel (in that order thankfully). The caption are "Central Petroleum managing director John Heugh" and "Camels are a major road hazard at night, with more than five million in the Northern Territory" - i'm hoping they didn't mix up the captions.
Article below.
OPERATING the largest holding of prospective onshore acreage in Australia, junior explorer and producer Central Petroleum?s mining and petroleum permits cover about 270,000 square kilometres. The holdings are mainly within the Pedirka and Amadeus Basins in the Northern Territory, and cross the borders into Queensland, South Australia and WA. ?It possibly represents one of the biggest exploration acreage holdings in the world under the one 100 per cent ownership in contiguous permits,? Central Petroleum managing director John Heugh said. With the successful Mereenie and Palm Valley oil and gas fields having been discovered in the region in the late 1960s, Central Petroleum considered the acreage holdings to be highly prospective for both conventional and unconventional oil and gas, helium and condensate. Mr Heugh said Mereenie and Palm Valley were the biggest fields in Australia when discovered, and had been put into production by the Northern Territory Government to provide gas to power the Port Darwin area. He stated that while Palm Valley was almost depleted of resources, gas was still being produced at the Mereenie field, which had about 300 million barrels of oil in place when discovered. Due to geological challenges, however, only 25mmbbls had been extracted so far. In addition, Mr Heugh said that Central Petroleum had an exploration target of 500 billion tonnes of coal above 1000 metres in the Pedirka Basin, which was ?probably the biggest tonnage of coal in the world, under 100 per cent ownership in contiguous permits?. Despite the company?s optimism, Mr Heugh said Australians didn?t seem to comprehend the potential of its coal exploration target. ?There are companies with big coal holdings around the world, but this total resource is a major milestone in the company?s history and people out there just don?t get it,? Mr Heugh said. ?The coal is relatively low to average grade steaming coal, and it is isolated and a long way from market. So people have just simply ruled it off and said you can?t do anything with it. ?There are things you can do with the coal. You can mine it, wash it to remove some of the ash, beneficiate it, dry it, pelletise it and export it in massive quantities to places like China and India,? Mr Heugh suggested. ?We also have a lot of people interested in mining the coal and running it through a coal to liquids plant like they?ve been doing in South Africa for many years very successfully.? Mr Heugh said the third way to monetise the coal was through an underground coal gasification (UCG) to gas to liquids (GTL) plant to produce liquid transport fuels. Another concept the company had been having difficulty selling to the Australian market was unconventional oil and gas exploration, which until recently hadn?t been considered in the region. ?We were the first people in Australia to promote the idea that unconventional ? that is, shale gas and shale oil ? in Central Australia could be a viable exploration ?fairly conservative? total at P50 (50 per cent probability) middle case estimates of about 40 trillion cubic feet of gas and 5 billion barrels of oil recoverable. Acknowledging that the Canadian market has more confidence in unconventional exploration, Central Petroleum has planned to list on the Toronto Stock Exchange (TSX) Venture Exchange in late September or early October. ?The TSX resources ? that is, the mining/ oil/gas energy sector ? is about five times bigger than the same sector in the ASX,? Mr Heugh said. ?The other reason we are attracted to Canada and Canadians is that these people seem to have a much clearer ?big picture? understanding of frontier basins than most other nationalities in the world, particularly the Australians. ?Our price is markedly undervalued and we have put out some independent reports that say that, but nobody?s taking any notice in Australia. If we list on the TSX we know already from promotional work we?ve done over there that these people do get it and I?ve been so impressed with that that I?ve brought out two Canadians to work with us in key management roles,? Mr Heugh added. He said that there were very few people in Australia who had any unconventional drilling experience as there were no producing unconventional wells in Australia as yet, and therefore it was vital for the company to ?beef up? its team?s unconventional drilling expertise. History and milestones The company was formed by Mr Heugh and fellow director Richard Faull in 1997 to focus on areas of Central Australia that were underexplored but had obvious geological potential. ?We saw an opportunity with low oil prices at US$10 to 12 a barrel to secure large acreage holdings in areas that didn?t have much attention being paid to them,? Mr Heugh said. Central Petroleum?s first major milestone had been listing on the ASX in 2006. Following this, a major seismic survey had been completed that outlined new structures and prospects. Mr Heugh said the seismic acquisition and mapping had been a major continuing development that was now approaching a total of 200 prospects and leads. To date, five conventional wells had been drilled in Central Petroleum?s permits, with four finding good oil shows. ?In the fourth of those four wells we have what we believe is a discovery on our hands ? at the Surprise-1 well in the western Amadeus [Basin],? Mr Heugh said. With independent assessments, subject to logging and flow testing, suggesting the zone had the capability to produce at about 500 to 1000 barrels of oil per day, Mr Heugh believed this represented another major milestone for the company. The next six months Central Petroleum?s plans for the second half of 2011 include a three-well drilling program comprising further drilling of: the Surprise oil well; Madigan, a very large 4bbls of Undiscovered Oil Initially In Place (UOIIP) oil prospect; and Mt Kitty, a gas, condensate and helium prospect. Mr Heugh said the company planned to start drilling by of completing the three wells before the end of the year to avoid drilling during the wet season. ?We are fairly well advanced with the drilling program. We have casing secured, most of our hardware and equipment has been secured, [and] we are upgrading roads into the first site as we speak,? Mr Heugh said.He added that the upgrade of the roads should be completed, and a Letter of Intent sent to a rig operator, in early August. To date, all that remained to be done was the rig and service company selection. In a prospects update released in early July, Central Petroleum stated that dependent on the results of final analysis and interpretation, the Simpson East prospect in the Exploration Permit (EP) 97 Simpson farm-in block (in which the company has an 80 per cent interest) could be an additional well, or an alternative to Madigan. Meanwhile, the company recently announced the signing of a commercial partnership with Allied Resource Partners covering some of Central Petroleum?s coal deposits in the Pedirka Basin. Mr Heugh said Allied was now tasked with managing coal exploration, and the design and funding of a major UCG to GTL plant, as part of the $7.5 billion Pedirka Basin Clean Fuel Production Project. The project will also enable carbon capture and permanent underground storage of carbon dioxide. In a statement announcing the joint-venture partnership, Allied joint managing director David Shearwood said, ?The proposed project is world-class in size, expected profitability and environmentally because it is a giant leap towards lower emission fuel. It has the potential to be expanded many fold with enormous benefits to government, regional economies, indigenous communities and Australia?s long-term oil self-sufficiency.? Allied is currently searching within major global and Australian sources for $300 million in funding and technology partners for a Bankable Feasibility Study (BFS) including drilling to resource status. Mr Heugh said that after this had been achieved, Central Petroleum would join the project as a joint-venture partner and contribute its share of project finance. The 12-month outlook ?Within 12 months, it?s my firm hope that we have made successful discoveries and we can be gearing up to get into production,? Mr Heugh said. ?For example, if Surprise is a successful producer, we should be able to get into production and sales within 6 to 12 months.? Mr Heugh outlined the program for next year: ?Subject to the success of Surprise we aim to do a 3D seismic survey over the Johnstone and Surprise areas, and drill three, maybe four, horizontal wells there that will have multi-stage fractures to increase any potential oil flow from that area?. ?We would also aim to drill three or four horizontal wells with multi-stage fractures in the southern Georgina [Basin] permits because we have three of those that we?re anticipating will be granted in the next few months,? he added. In addition, Mr Heugh said the company had one well in EP 105 and one in EP 107 to drill as part of a commitment program: ?We have a number of targets there but we haven?t selected which target yet or made a well design because we have until the year after next to drill them?. He said this drilling would not start until mid-2012. ?The second aim in the next 12 months is we are in discussions with quite a number of Indian and Chinese companies, particularly over our coal and gas resources, and a number of very big North American companies interested in our oil and gas acreage,? Mr Heugh said. ?We hope to seal the deal with one of the more substantial companies in farm-ins or joint ventures over acreage,? he said. ?Certainly in the next 12 months from now, we should see a few of these joint ventures get off the starting blocks.? Future plans for expansion Mr Heugh asserted that with all of its gas produced from Central Australia, the company had ?no plans whatsoever? to sell its resources on the domestic gas
CTP Price at posting:
33.0¢ Sentiment: Hold Disclosure: Held