PRESS RELEASE 18 May 2005Tipton West gas reserves certification...

PRESS RELEASE 18 May 2005
Tipton West gas reserves certification of 2 TCF to underpin 123 PJ gas sales
agreements
Coal seam gas producer Arrow Energy NL on Wednesday said it had secured reserve
certification on its second development field Tipton West, opening the way for 123 petajoules of
gas sales agreements to be completed by the end of September.
Chief Executive Officer Nick Davies said Arrow had so far outlined proven, probable and possible
(3P) reserves of 2,028 petajoules. The proven and probable (2P) reserves of 143 petajoules at
Tipton West allow the company to close gas sales agreements with ERM Wambo Power (60
petajoules); Ergon Energy (48 petajoules) and BP refinery (15 petajoules).
“We have memoranda of understanding in place to sell 123 petajoules to Wambo Power, Ergon
and BP with the final hurdle being the 2P reserve certification,” he said.
“We now anticipate finalising these gas sales deals by the end of the third quarter, if not sooner.”
Mr Davies said the reserve certification was carried out by US firm Netherland Sewell and
Associates, which also certified proven (1P) reserves of 61 petajoules and proven, probable and
possible (3P) reserves of 2,028 petajoules at Tipton West – almost double the previously reported
3P reserves of 1,086 petajoules.
“Certification is generally undertaken in areas immediately surrounding the production pilot wells
and monitoring wells, so we expect further reserves will be added during the development phase
as more production wells are drilled into the coal seams,” he said.
“Tipton West has enormous potential with 2 trillion cubic feet (TCF) of gas in the 3P category
confirmed by the reserve certifiers and we expect to move a large amount of 3P reserves to the
2P category as we develop the field, starting with one appraisal well north of the pilot area this
month.”
“Initial sales from the field will ramp up to 10.2 petajoules per annum and this cash flow will allow
Arrow to develop further stages of the Tipton West field, up to a peak rate of 25 PJ p.a.” he said.
“We have other potential gas sales agreements in place, including an opportunity to sell a further
225 petajoules to ERM Wambo power, which is not field specific.”
Mr Davies said by the end of 2006, Arrow’s numerous production projects would yield about 12
petajoules of gas a year to the company, with a goal of ramping up to 45 petajoules a year by
2010.
Mr Davies said obtaining the reserve number for Tipton West was also a precursor to finalising
financial arrangements for the company’s proposed gas processing plant and upstream facilities
at Tipton.
“In addition to Tipton, Arrow has the Kogan North field currently under development to produce
11 terrajoules of gas a day and first gas sales to Queensland government generator CS Energy
on track for October. This will amount to 4 petajoules a year for 15 years.”
“We also have the Daandine wellhead electricity generation project which is expected to use 5.5
terrajoules of gas a day with first electricity sales to Country Energy by March 2006.”
He said Arrow also had a pipeline of seven other projects in early to advances stages of
appraisal.
“These projects in the Surat Basin, Clarence Moreton Basin and Nagoorin Graben will be
developed , assuming continued successful exploration and appraisal programs, with a view to
achieving Arrow’s goal of 45 petajoules a year (approximately 120 TJ per day) of operated
production by 2010,” he said.
BACKGROUND
Arrow Energy is focused on coal seam gas - the natural gas produced from coal, with significant
potential resources in south east Queensland.
Since listing, the company has achieved various milestones as an emerging CSG producer,
including identifying resources, building of pilot production facilities, technical innovations and
more recently commencing development of its first commercial field.
At the same time Arrow has been proactive in establishing a diversified offtake market for its gas
with four memoranda of understanding (MOU) and one Gas Sales Agreement in place amounting
to 16.2 PJ per annum by 2007. Of this 12.2 PJ per annum will be to Arrow’s account.
The Tipton West field is 80 percent owned by Arrow Energy and 20 percent owned by fellow coal
seam gas explorer Comet Ridge.
In addition to Tipton West, Arrow is well advanced with its Kogan North development. The
company has an agreement in place with Queensland government owned electricity generator
CS Energy to fund $10.8 million of the Kogan North development and an offtake agreement for 4
petajoules a year for 15 years. The field development is well advanced and on track for the
delivery of first sales gas in October 2005.
Arrow Energy has strategic holdings over vast areas of several coal-rich basins in Queensland
and northern New South Wales including the Surat, Clarence-Moreton, Nagoorin and Styx
Basins. The basins have coal seams at an optimal depths for commercial coal seam methane
gas extraction.
For further information: For media enquiries:
Nick Davies Diana Taylor
Chief Executive Officer 07 3832 0095
0408 639 130
Stephen Bizzell
Executive Director
07 3303 0650
www.arrowenergy.com.au