IPB Petroleum (ASX: IPB) is an Australian oil and gas exploration company with permits in the oil-prone southern margin of the Browse Basin, offshore north Western Australia.
IPB Petroleum closer to spudding Pryderi-1 oil exploration well Monday, March 17, 2014 by Proactive Investors
IPB Petroleum closer to spudding Pryderi-1 oil exploration well IPB Petroleum closer to spudding Pryderi-1 oil exploration well IPB Petroleum (ASX: IPB) continues to draw closer to spudding its highly anticipated Pryderi-1 oil exploration well in WA-424-P offshore northwestern Australia.
Negotiations for the drill rig are expected to conclude within the coming weeks and if successful, the company will then be in position to provide an estimated spud date.
The company and its partner CalEnergy , a fully-owned subsidiary of Berkshire Hathaway’s MidAmerican Energy Holdings Company, are targeting Best Estimate Prospective Resources of 32 million barrels of oil at Pryderi-1.
Notably, IPB’s share of costs of between $15 million and $20 million will be free carried by CalEnergy. IPB has a 75% interest in WA-424-P while CalEnergy holds 25%.
The company expects Pryderi-1 take around 12-15 days to drill.
CalEnergy, the operator, has also placed an order for a subsea wellhead that will be rented; secured third party liability insurance associated with the planned Pryderi-1 drilling activities; and completed the necessary pre-drill geophysical site survey over the proposed Pryderi-1 spud location.
IPB has also continued its geophysical and geological studies along with associated regional studies activities and has also continued reprocessing of 900 kilometres of 2D seismic.
The latter aims to achieve a better understanding and improved confidence in the interpreted continuation of the M.australis exploration plays identified in WA-424-P into WA-471-P, and WA-485-P.
These two projects combined with future results from the planned Pryderi-1 well are aimed at improving the confidence and predictability of a continuation of the M.australis oil exploration play in the company’s Browse Basin permits.
They are also aimed at assisting with the planned location of future 3D seismic activity and provide supporting information in any future potential farmout activities in the permits.
IPB’s permits are located in one of the most prospective oil and gas basins in Australia. The last couple of years have seen in excess of A$40 billion of gas condensate development projects reaching final investment decision approval in the Browse Basin.
Analysis
With no costs to IPB Petroleum, and a 45% chance of finding oil, investors are closely watching the lead up to the upcoming Pryderi-1 exploration well.
That a rig contract is expected to be finalised within weeks points to more news ahead for the company in the near-term.
The Pryderi prospect is around 5 kilometres away from proven oil producing Gwydion-1, which encountered a 14.5 metre gas column in poor quality glauconitic sand above a 10 metre oil column in good quality clean sand.
It is deemed to have a 75% chance of hydrocarbon discovery with 60% chance of this being oil, or an overall 45% chance of an oil discovery.
Success at Pryderi – assuming 40 MMbbls recoverable resource – has estimated NPV10 of $765m (100%) or unit NPV of an estimated A$18.30 / BBL.
Value to to IPB estimated (assuming residual 40% interest) is significant at $306m, + 11 other M.australis leads at the same level in WA-424-P alone + 13 in WA-485-P.
A success at Pryderi would catapult IPB's share price and market valuation. Pryderi will be one of the most anticipated well to be spudded in recent times.
Once a rig contract has been signed the Joint Venture will have a clearer view of the most likely spud date for Pryderi-1.
