The Ranau PSC is located in South Sumatra, which 189 oil and gas fields with total reserves of about 12 billion barrels of oil equivalent.
Notable operators include ConocoPhillips, which operates the Corridor Block and South Jambi ‘B’ PSCs, and Santos(ASX: STO) with the Ogan Komering I and Ogan Komering II coal seam gas licences.
Data from a 225 kilometre gravity survey and 247 kilometres of 2D seismic have allowed Quest to identify four new and very lightly explored sub-Basins that contain up to 3 kilometres of sediment that are believed to be same oil and gas source rocks and reservoir rocks as those in the prolific South Sumatra Basin.
The 16 leads are located within these basins, with three in the Jaya sub-Basin prioritised for drilling.
In addition, exploration in the surrounding areas has already proven that a hydrocarbon system exists in the area, which is close to existing infrastructure.
Analysis
With approval from BPMIGAS imminent, Quest will soon be able to evaluate its first leads in the Ranau PSC, where the proximity to existing infrastructure allows for quick commercialisation of any discoveries.
Gas will find a ready market for both local and foreign power generation, the latter through exports to West Java and Singapore, while oil can be commercialised through facilities located within 50 kilometres of Ranau.
This is enhanced by Quest’s attractive 62 percent revenue split for both oil and gas in the Ranau PSC, which is more favourable than the fiscal terms Santos secured.
Quest’s appointment of Kenneth Bull to head its South Sumatran operations is also a positive as it places an experienced executive in charge of the key operations that are set to begin there.
The company presents a more leveraged way to gain exposure to the highly prospective South Sumatra Basin than Santos, sitting at a market valuation that is primed to move upon spudding of first well and any commercial discovery.
QPN Price at posting:
0.6¢ Sentiment: Buy Disclosure: Held
