Aussie Junior Bounty Oil & Gas Really Lifts Its Sights And Goes For Some Possible Company Making Projects Starting With Tanzania Bounty Oil & Gas was one of a crop of small Australian start up companies that floated on the Stock Exchange there in the early 2000s, ostensibly to exploit new opportunities in Australia’s relatively unexploited mature hydrocarbon basins.
It raised A$5 million when it floated and has assembled acreage in the Perth Basin and North West Shelf in Western Australia and Sydney’s offshore basin. It has also achieved some production in Australia in that, in 2001 for the very modest price of A$3 million, it acquired from its then associate, Hardman Resources, a 25 per cent stake in the Woodada gas field in Western Australia along with the use of the Parmelia gas pipeline to supply customers in the Perth area, as well as processing and storage facilities. An old field at the time of the purchase, Woodada had produced 46.9 billion cubic feet of gas at rates of 20 million cubic feet of gas a day since it started production in 1982. Output has fallen off since then and new wells have had their ups and downs, but reserves are still in excess of 10 billion cubic feet of gas. This is capable of producing 4 to 5 million cubic feet of a gas a day meaning some small cash flow to Bounty.
Now, with a market capitalisation still under A$20 million, Bounty is lifting its sights and is involved in three possible company making projects any one of which, if successful, could mean at least US$100 million to Bounty.
The first is still in Australia and is a drilling prospect in offshore New South Wales (NSW). The second is some follow-up work on proven ground in the PEP38215 permit in the cold waters of New Zealand’s Great South Basin.
Of more immediate interest, however, is that Bounty has taken a leaf out of the book of its friends and associates at Hardman Resources, Ted Ellyard and Scott Spencer, and farmed into a high impact prospect in a frontier area. Hardman took courage in both hands, raised lots of money relative to its size, and has been vindicated insofar as it has come up with some monster discoveries offshore Mauritania, West Africa. Bounty has become involved in East Africa with a project offshore Tanzania. Bounty farmed into the Tanzania fields via a placement with the London listed Aminex of nine million shares at 15 cents for a ten per cent stake. The other partner in the venture is Romania’s National Oil Company Petrom.
The companies are involved in two exploration wells, Nyuni-1 and Okuza-1, in a vast block offshore the coast of Tanzania. The co-venturers are revisiting an area which is considered highly prospective, but on which there has been little drilling for some time. The Nyuni-1 well is designed to test a 375 sq km structural feature about 30 kilometres offshore the Tanzania coast within the so-called Nyuni block.
The primary target at Nyuni comprises Lower Cretaceous (neocomian) sands at about 2,400 metres. These sands form the main reservoir at the nearby Songo Songo gas field located 18 kilometres to the southwest. The Songo Songo gas discovery, containing at least 600 billion cubic feet, is due to deliver gas to Dar es Salaam, the Tanzanian capital, in 2004. Although offshore, the Nyuni prospect is below a small island, which has allowed the drilling to be undertaken with a conventional land-drilling rig for considerable cost savings. Drilling has been going on for some time. In fact, target depth should have been reached by now. However, logistical difficulties in getting the equipment to the site as opposed to drilling problems have meant delays. This has kept investors in Aminex in London on tenterhooks as each day they await developments. Success with Nyuni-1 would be a company maker not just for Bounty but also for Aminex. Aminex has the majority of the action. It is thought that the prospect could hold 260 million barrels of oil or, if gas is present, some 900 billion cubic feet.
Gas would be okay, since the Nyuni partners could use the Songo Songo pipeline currently close to completion, and quickly monetise the find. But let’s says it is oil. Then Bounty would be in for 26 million barrels. Tom Fontaine, the managing director of Bounty, reckons the oil in the ground is worth A$10 a barrel, thus its share would be worth A$260 million. If you prefer it in US dollars then the figures are: the oil is worth US$3.8 a barrel in the ground, multiply this by 26 million barrels and you get a value of US$98.8 million. After Nyuni the rig will move 10 kilometres north to start a test of the Okuza prospect.
In Australia, although NSW is the country’s most populous and energy hungry state, it has been little explored. However, Bounty has been assessing data over a large structure 20 kilometres off the coast of Newcastle. In one area the company estimates there is potential for 1.2 trillion cubic feet (tcf) of recoverable gas. If proven such a resource could meet Sydney’s gas consumption needs for the next decade. The PEP 11 licence on which the target has been identified covers 8,267 sq kms. The prospect contains potentially multi-tcf gas and condensate-charged Triassic and Permian reservoirs.
Bounty looks as if it will be the first company to drill a well offshore NSW. Bounty farmed out a 25 per cent interest of its 100 per cent stake in the PEP 11 licence to UK company Electro Silica. The A$2 million this is worth will fund 1,500 kilometres of 2D seismic. Bounty then plans to farm out a further 50 per cent interest to Electro Silica in return for the British company funding 100 per cent of the drilling of the Biggus-1 well at a cost of A$10 million. Drilling is expected in the third quarter of 2004, and success here could mean a sum not unadjacent to those possible from Tanzania net to Bounty.
Unlike the Sydney Basin, previous operators in New Zealand’s Great South Basin Permit 38215 have mapped more than 4 billion barrels of oil potential in the 13,614 sq kms permit. In addition, elsewhere on the permit, Bounty has lifted its recoverable gas reserves estimate for the Toroa structure to 1.4 tcf. The company also believes Toroa has additional possible recoverable reserves totalling 2.4 tcf. Bounty is targeting 2.2 tcf of gas. Seismic acquisition is taking place in the first quarter of 2004 and drilling is possible late in 2004 or early 2005. Bounty’s partners in the project are Electro Silica, Hardman Resources and Albatross Energy. Apart from these mega projects Bounty will also be involved in wells in the highly prospective north Perth Basin in Australia.
Hardman came to London and listed on London’s Alternative Investment Market (AIM) to facilitate the raising of money to develop its projects. On wonders when London can expect to see Bounty turn up.
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