stokes bay : update

Stokes Bay-1 Exploration Well Drilling Update
Pancontinental Oil and Gas NL (ASX: PCL) wishes to advise that Joint
Venture (JV) partner and operator of the EP 104 & R1 Onshore Canning
Basin project, Arc Energy (ASX: ARQ), has announced that the current
operation at the Stokes Bay-1 well is pulling out of the hole to run casing
after stabilising mud losses in preparation for testing the Nullara Formation.
Since last report on Thursday October 18th, Stokes Bay-1 has remained at a TD
of 2755mMD whilst tubing conveyed logging has been conducted, and plans are
now being implemented to case and test the well. Due the angle of the well and
hole condition, tubing conveyed logs rather than wireline logs have been run to
TD and are being interpreted, as follows:
a) Preliminary interpretation indicates modest oil potential in the Anderson
Sands that will probably need formation testing to verify commerciality.
Work on this continues, and a JV decision on whether to test the
Anderson is yet to be taken. Such a test would follow operations to
evaluate the Nullara Formation.
b) Whilst the top of the Nullara Fm is recognised on logs at 2722mMD,
below 2732m MD log quality is severely degraded by hole condition and
this is interpreted as being due to large scale vuggy porosity, such that
quantitative interpretation is not feasible.
In addition to the mud loss event reported last week, while conditioning the well
for logging and preparing to case the hole, there have been other several
instances where the mud column has been lost to the Nullara Formation at or
near TD. As yet, there have been no cuttings or mud returns from the Nullara at
this depth, and therefore as yet there is no indication of fluid type.
As described in last week’s announcement, all JV partners are participating in the
shallow part of Stokes Bay-1 (above 2589m MD). However, less than all parties
are participating in the well below 2589mMD such that equity levels in this part of
the Stokes Bay-1 well (below 2589mMD) are:
• ARC Energy Limited – 69.25% (Operator)
• Emerald Oil & Gas NL - 12.75%
• Pancontinental Oil & Gas NL - 10.0%
• First Australian Resources Limited - 8.0%
Under the Joint Venture Operating Agreement, the non-participating parties in the
deeper part of the well (Empire, Phoenix and Indigo) retain a future right to earn
back into the well by the payment of penalties.