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Central plan meets with approval

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Wednesday, 12 June 2013


DJ Carmichael analysts have given the thumbs up to Central Petroleum’s development plan for the Surprise discovery, but has left its price target unchanged at 32c and labelled it a “speculative buy”.

Central told the market last week that it was formally in the market for a farm-out partner to help develop the Surprise project as two separate developments, on either side of a fault line.

The first stage of the western development will involve the installation of a production facility to increase capacity to 5000 barrels of oil storage, with 2000bbls of water separation. A re-entry of Surprise-1 and pump installation is on the cards.

DJ Carmichael said it was likely that development of the western project would take a mere three months and have capital paid back within nine months of operation.

It said that it now forecast the project to provide Central with $600,000 per month at peak production.

Central said it would proceed with the development of Surprise East depending on the outcome of farm-out discussions.

It would drill Surprise East-1 to appraise the extension of the Lower Stairway sandstone, and test the underlying Horn Valley Siltstone, and Pancoota Sandstone.

The HVS will then be cored to evaluate the oil shows seen at Surprise-1 ST1 and Johnstone West-1 to try and gain an understanding of the unconventional potential of the Surprise area.

DJ Carmichael said an ideal farm-out scenario would be for Central to receive back costs and be fully funded through the drilling of Surprise East, and also be carried on any follow-up development in a success case.



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