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Mosaic Raises AS$14 Million To Fast-Track Waggamba Gas Project
Australian firm Mosaic Oil is gearing up for a six-month programme of growth and development. The company's July share placement and rights issue raised A$14 million to fund the A$9.3 million fast-track development of the Waggamba gas field in southeast Queensland, as well as further development of the Churchie gas field and general corporate purposes.

The company looks set for substantial growth over the next year, having signed a five-year gas supply contract in June with CS Energy, Queensland's largest gas-fired electricity generator, a deal which is expected to generate income of more than A$17 million from mid-2005.

"The CS Energy gas supply contract is a leap forward in the development of the company and it provides assured revenues over the next five and a half years," company chairman DW Stammer said in June. "These revenues will enable the company to fund, either by way of debt or the revenues themselves, additional exploration and drilling projects aimed at expanding our reserves of oil and gas."

To fulfill the terms of the deal, the company will install a 25 km pipeline connecting its 100 per cent-owned Waggamba field to existing pipeline infrastructure, complete a 75 sq km 3D seismic survey and drill two wells on the Waggamba field and one exploration well at Freneau, which is a larger structure to the northeast of Waggamba.

The company is also pressing ahead with its Churchie gas development, for which it has recently secured a new six-month gas supply contract with Santos.

Mosaic operates the field with a 49 per cent stake on behalf of Santos, which holds 51 per cent of the equity.

The Churchie-2 and Churchie-4 discoveries will be connected up to the main Churchie field facilities, where the 2P gas reserves were recently revised upwards by 65 per cent to 54.9 billion cubic feet, with the 3P reserve number standing at 129 bcf.

Earlier this month the company began its second half drilling programme to meet its existing sales commitments and secure supplies for future contracts. The Century 7 rig has been contracted for two firm and two optional wells while the ODE-5 rig will drill the Waggamba-3 well.

Mosaic is presently still drilling ahead on the first well in the programme, Mamaree-2 well, 4 km to the southeast of Waggamba-1 and -2 wells, which it hopes will add to the reserve base in the area. Mamaree-1 was drilled by Union Oil in the 1970s and there is considerable evidence the Permian gas target zones were damaged by drilling muds, the company said in a statement.

The second well in the series, Rockhampton High-1, will test formations east of the Tinker area. Waggamba-3 will spud in early October.