proactive investors article

http://www.proactiveinvestors.com.au/companies/news/44199/quest-petroleum-finalises-acquisition-of-indonesian-oil-and-gas-well-site-44199.html


Quest Petroleum finalises acquisition of Indonesian oil and gas well site
Thursday, June 06, 2013 by Bevis Yeo


Quest Petroleum (ASX: QPN) is now poised to kick off drilling of its Prabu-1 exploration well in South Sumatra, Indonesia, after finalising the Land Purchase Agreement to acquire the property for the well site.

Notably, the outright purchase of the land enables the company to use the land for multiple purposes including seismic surveys, exploration wells, development wells and production infrastructure.

“We are pleased to have secured the ownership of the land and while it has taken some time to do so, we now hold strategic, multipurpose ground in this highly prospective location.” Quest Petroleum managing director Anthony Milewski said.

Separately, Quest advised that non-executive director Brett Mitchell has agreed to step down from the board following its appointment of experienced petroleum executive Jeffrey Mitchell as a non-executive director in March this year.

Land Purchase

The land purchase agreement was executed by Indonesian oil and gas regulator SKKMigas with the owner of land situated at Way Kanan, which is in the south east portion of the Ranau production sharing contract, about 140 kilometres northwest of Lampung.

This follows the completion of extensive legal due diligence to confirm tenure of the site. Title is held in the name of SKKMigas, as required under Indonesian law.

The proposed Prabu-1 drill site is located about 10km south of the town of Baradatu in the Way Kanan jurisdiction of Lampung Province, South Sumatra.

It is situated on well drained, elevated land adjacent to a paved asphalt road which allows good access for drilling and completion operations. The drill site is situated on the edge of an identified structural high proximate to three significant sub-basins with clear potential for hydrocarbon generation.

Prabu-1

The Prabu-1 Prospect targets up to 59 million barrels (MMbbl) of oil or 340 billion cubic feet (Bcf) of gas in the Baturaja Limestone and Talang Akar Sandstone Formations, which are the most prolific oil and gas reservoirs in the South Sumatra Basin.

Operators in the surrounding PSC’s have reported initial flow rates of up to 3,000 barrels per day of oil from the same formations as those hosting the Prabu-1 Prospect.

Based on the results of the Prabu-1 well, two further wells are planned in the initial drilling program.

Ranau Production Sharing Contract

Quest was granted the 2,191 square kilometres Ranau PSC, which has a 30 year term, in November 2011.

Prabu is one of 16 leads identified in the Ranau PSC with combined potential of up to 6 trillion cubic feet of gas and/or 300 million barrels of oil.

These leads are contained within four sub-basins in the highly prospective South Sumatra Basin.

With Sumatra being a well-established oil and gas province, any success by Quest will benefit from the extensive infrastructure and multiple hydrocarbon markets located within close proximity to the Ranau PSC.

This includes the nearby South Sumatra – West Java gas pipeline that supplies large markets in Sumatra, West Java and Singapore.

Discovered oil may be commercialised through facilities located within 50 kilometres of the Ranau PSC that process and transport oil from the large, Pertamina-operated, fields to the north of the Ranau PSC.

Analysis

With the acquisition of land for the Prabu-1 well, Quest Petroleum is now on the verge of unlocking the petroleum prospectivity of its Ranau Production Sharing Contract.

Importantly, the outright acquisition of the land rather than entering into a land access or use agreement, affords the company greater towards future operations on the site, be it further exploration or installing production facilities.