spoke to company, page-32

25 October 2007
ASX Limited
Company Announcements Office
Level 4
20 Bridge Street
SYDNEY NSW 2000
Dear Sirs
RE: EP 104/R1 CANNING BASIN, WESTERN AUSTRALIA – THE STOKES BAY-1 WELL
The EP 104/R1 Joint Venture has elected to run 7” (178mm) casing in the well bore to enable testing
of the oil and gas shows observed in the Stokes Bay-1 well. Testing will commence from the bottom
zones upwards as is standard oilfield practice.
Empire is carried through this programme of casing and testing as part of its EP 104/R1 Farmin
Agreement where it is carried through the costs of any completion of the Stokes Bay-1 well.
It is proposed to test the deeper Nullara Formation carbonate section first. The interval of interest is
that interval where drilling fluids were lost in the well bore upon deepening the well to the Nullara
Formation. This interval is called a lost circulation zone and is indicative of a very porous and
permeable reservoir. Testing of the Nullara Formation lost circulation zone is designed to determine
whether it is hydrocarbon bearing as it is in the Blina Oilfield, located along the Pinnacle Fault trend
100 kms south east.
Empire, upon electing to go Non-Consent, has minimised risk expenditure of the deeper drilling
operations whilst retaining the right to “back in” to any deeper objectives paying the “back in” penalty
out of any future oil and gas production, if hydrocarbons are present and they are completed for
commercial production.
Testing of the Lower Anderson Formation sands, where several zones are interpreted to have oil
saturations, are on the test programme agenda.
It is anticipated that, upon the 7” casing being successfully landed and cemented, the first operation
conducted by the Operator will be to test the Nullara Formation lost circulation zone. Further testing
through casing of the Lower Anderson Formation will follow upon the EP 104/R1 Joint Venture being
provided with that test programme for consideration.
For personal use only
I look forward to providing further details of this exciting test programme in the Stokes Bay-1 well.
Regards
J L CRAIG MARSHALL
BSc (Hons), F. Aus. IMM, CPGeo
Managing Director
Empire Oil & Gas NL
Suite 7, 154 Hampden Road, Nedlands WA 6009
Telephone: 61 8 6389 2687
Facsimile: 61 8 9386 6812
Email: [email protected]
For personal use only
STOKES BAY-1 DRILLING REPORT
CANNING BASIN, WESTERN AUSTRALIA
Date: 25th October 2007
Permit: R1
Well Location:
Lat : 17o 08’ 23.46”S
Long : 123o 42’ 32.40”E
Directional offset to target: 1024 metres
Elevation:
Ground Level is 12.4mAMSL
Rotary Table is 18.1mAMSL
Proposed Total Depth
(measured KB): 2800 metres
Prognosed drilling time: 15 days
Spud Date: 0930 hrs, WST 3 October 2007
Present Depth at 0600 hrs: 2755m MD
Time of Reporting: 0600 hrs, WST 25th October 2007
Operations Since Last
Report:
Since last report on Thursday October 11th, drill pipe conveyed
logging has been conducted. Drillpipe conveyed logs rather than
wireline logs have been run to TD due the angle of the well and
hole condition.
Preliminary interpretation of these logs indicates:
a) The Anderson Sands have some zones with potential oil
saturations. The commercial significance of those zones
will require formation testing to evaluate. Testing of the
Anderson zones would follow operations to evaluate the
deeper Nullara Formation. A joint venture decision on
testing of the Anderson awaits availability of the test
program and any relevant information to be derived from
testing the Nullara Fm.
b) The top of Nullara Formation has been interpreted at
2722m MD. Below 2732m MD, the log quality is severely
degraded by interpreted large scale vugular porosity such
that quantitative interpretation is not possible.
In addition to earlier reported drilling fluid (mud) losses into the
Nullara section there have been continued losses while
conditioning the well for logging and preparing to case the hole.
Because of the losses and subsequent lack of mud and cuttings
returns, there is no indication of fluid content in the Nullara
porous section. As of 0600 today the wellbore is now properly
stabilised and the forward plan is to run 178mm (7”) casing prior
For personal use only
to testing the Nullara Formation.
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 2589m MD such that equity levels in this part of the Stokes
Bay-1 well (below 2589m MD) 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 nonparticipating
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 out of future production.
Current Operations: POOH to run Casing
Hydrocarbon indications: Mud gas and oil shows as noted in the Anderson Formation. No
returns or shows from the Nullara Fm. due to mud losses.
Comment: While the loss of mud to the Nullara Fm has created operational
difficulties that have now been overcome, we are encouraged by
the presence of both porosity and significant permeability in the
Nullara reef section. Development of vugular porosity in this
section is a well recognised play, having previously been the
target of exploration in the Basin, and we note that it is host to oil
production at Blina some 100km to the SE.
The planned test of the Nullara Formation will determine fluid
type and flow characteristics of the reservoir. The Stokes Bay
intersection of the Nullara Fm is 80m up dip of the Pt Torment 1
intersection which did not have the vugular porosity developed,
but nevertheless tested gas at low rates.
Participants in the Permit
(post earning):
Empire Oil and Gas NL - 14.8%
ARC Energy Limited - 38.95% (Operator)
Emerald Oil & Gas NL - 12.75%
Pancontinental Oil & Gas NL - 10.0%
Phoenix Resources PLC - 10.0%
First Australian Resources Limited - 8.0%
Indigo Oil Pty Ltd - 5.5%
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