Looks like Hartleys and WHN are talking up palta-1 big time....

Looks like Hartleys and WHN are talking up palta-1 big time. Good thing for us is that this only 1 of our 3 big cards to play.


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ASX RELEASE 9th October 2012

WHL ENERGY ANTICIPATING PALTA WELL SPUD

WHL Energy holds 1/3rd interest in highly prospective offshore permit - WA-460-P

Palta-1 exploration well expected to spud this week in adjacent permit

An estimated 2.5 tcf of the Palta prospect is mapped to lie in WA-460-P.

In response to numerous shareholder and market enquiries and continued speculation, WHL Energy Ltd

(ASX: WHN) (WHL Energy or the Company) is providing an update on activities related to the WA-460-P
exploration permit in which the Company holds a 33.3 per cent interest.

Industry reports and field monitoring anticipate that the Palta-1 exploration well, located in adjacent
Exmouth sub-Basin permit WA-384-P, will spud within the next seven to eight days.

Mobile Offshore Drilling Unit, “Noble Clyde Boudreaux” - which has been contracted by Shell to drill a test of
the large Palta prospect - is currently under tow and heading to the Palta-1 site with two contracted support
vessels.

Palta-1, which is expected to take approximately 60 days to drill in a water depth of 1350 m, is targeting the
very large Palta prospect, estimated to contain upwards of 13.5 trillion cubic feet (tcf) of gas if hydrocarbons
are in place.

An estimated 2.5 tcf of the Palta gas is mapped by WHL Energy to be located within the WA-460-P permit,
which was awarded to a consortium of WHL Energy, Strike Energy Limited and Cottesloe Oil & Gas Pty Ltd in
November 2011.

“There is growing interest from the industry and investors in the start-up of drilling at Palta - recently
reported to be potentially one of the most expensive wells drilled in Australian waters to date,” WHL Energy
Managing Director, Steve Noske said.
Mr Noske added: “Thankfully for our shareholders, we are being taken along for this exciting ride at no cost.”
Ends.


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WHL ENERGY LTD

Everybody Needs Good Neighbours

WHL Energy Limited (“WHL”, “WHN”, “Company”) is anticipating the imminent drilling of the Palta-1 well in Shell’s WA-384-P permit which is contiguous to WHL’s WA-460-P (33%) permit.

Palta-1 drilling imminent

The drill rig contracted to drill the Palta-1 well in Shell’s WA-384-P permit is currently listed as “enroute” to the well location. Octanex NL had announced that the well was due to spud in Q3 so we assume that the spud date must be imminent.

Shell’s WA-384-P permit lies south of WHL’s WA-460-P permit and the Palta prospect straddles both permits. WHL estimates that the Palta prospect could contain 13.5Tcf, with 2.5Tcf in WHL’s permit.

This is only the second well to be drilled in the region, and the first since 2005, when Woodside drilled the Falcone-1 well and found a 35m gas column in the Mungaroo formation. The Falcone-1 well was located approximately 50km North of Palta-1.

Shell is drilling the Palta-1 well to earn a 75% interest in the permit (Mitsubishi has farmed in for the other 25%). Given the likely high cost (potentially $60m - $80m) to drill Palta-1 (1,350m of water and 60-75 days to drill), it could be assumed that Shell has high expectations for the well.

Possibility of 2.5 Tcf in WA-460-P

WHL estimates that 2.5 Tcf of the Palta target could lie in the WA-460-P permit. If we apply a rule of thumb exploration value of $1 per mcf and a probability of success (POS) of 10% then this implies a value of 4.8cps for WHL’s share of the permit. In a success case, WHL’s interest could be worth 48cps.

Speculative Buy – near term catalyst without the expense
Being located near to a discovery can sometimes provide a catalyst for share price appreciation, however, holding a permit that potentially contains part of a discovery is reason to be excited. The Palta-1 well is likely to spud soon and we could know the results in 60-75 days, post drilling.

WHL’s shares could trade up to the 4.8cps risked value noted above while the well is being drilled. However, given the target is not actually being drilled in WHL’s permit and the distance of Palta-1 to WHL’s permits could be as much as 10km, we would not expect the full unrisked value to be reflected in WHL’s shares. There is also a risk that Shell does not disclose the results of the well, which could cause some confusion post drilling.

If Shell does have success and WHL’s estimate of the 13.5Tcf is supported, then this would have a flow on affect to the POS of WA-460-P. A 30% POS results in a value of 14.4cps.