Kea Petroleum PLC Operational Update (0189R)

TIDMKEA

RNS Number : 0189R

Kea Petroleum PLC

08 September 2014

 
 For Immediate Release      8 September 2014 
 

Kea Petroleum plc

("Kea" or "the Company")

Operational Update

Kea Petroleum plc (AIM: KEA), the oil and gas company focused on New Zealand, is pleased to announce an update on exploration of the Company's licences in Taranaki.

Directors are pleased to advise that exploration activities and analysis continues on the Puka field and both Kea and joint venture partner MEO Australia Ltd ("MEO") are working hard to incorporate the drill and logging results from Puka-3 into the geological models. MEO and Kea have agreed the basis of a program going forward and subject to the satisfactory conclusion of the above analytical work, are keen to see appraisal activity resume as soon as possible.

Post drilling Puka-3 analysis

Drilling of Puka-3 has been followed by a significant amount of analysis by both Kea and MEO of the logging information gained from the well. Whilst Directors were obviously disappointed with the result, the drilling of the well has validated the geological model for predicting the location of thicker sands.

Previous drilling on the Puka field had suggested a deeper oil water contact ("OWC"). The actual OWC level encountered by Puka-3 was some 30m higher than expected resulting in an uncommercial well.

Having established that we can predict the thicker sands, we must now develop a geological model so that we can confidently target the thicker reservoir sands which lie above the OWC. A number of potential Mount Messenger drill targets remain.

Tikorangi opportunity being assessed

Following completion of the Puka-1 and Puka-2 workovers and Puka-3 drilling, one component of the Phase 1 work specified under the farm in agreement with MEO remains - the evaluation of the suspended Douglas-1 well.

Douglas-1 intersected a 15m zone of oil shows in the upper Tikorangi formation, overlying a thicker section with only a trace of oil shows. Douglas-1 was tested and flowed significant amounts of water with no oil. The water is interpreted as coming from the heavily fractured, deeper section. The Tikorangi limestone intersected in Douglas-1 has been a prolific producer of oil at the Waihapa field, located some 2.5 kilometres to the west, where some 23.6 million barrels of oil ("MMbbl") has been produced to date.

Douglas-1 was drilled based on limited 2D seismic data and subsequently, Kea expended NZ$4.5M on a 3D seismic survey. Interpretation of the 3D data suggests that the targeted Tikorangi limestone could be up to 300m higher (updip) of the intersection in Douglas.

MEO and Kea have agreed to commence some initially limited sampling and pressure testing of the Douglas well, which was suspended in October 2012. Further evaluation of the Douglas well may provide information that would qualify the opportunity of drilling the updip prospect, which may now be accessible from the current Puka production site. Initial analysis of the prospectivity of the outlined Tikorangi structure suggests a recoverable resource potential of between 5- 20 MMbbl.

Mauku

A considerable amount of work has been carried out post the drilling of the Mauku prospect to incorporate the drilling and logging information that was obtained by the drilling of Mauku-1.

Mauku-1 reached a depth of 3,220m and intersected a gross 330m Mangahewa Formation interval with a net intersection of 161m of good quality sandstones, but which were water wet. Post well studies and evaluation suggest Mauku-1 was drilled outside and down dip of structural closure and that a large structural closure exists NE of the Mauku-1 top hole location.

The management view of recoverable resource potential for Mauku NE is in the 63-700 billion cubic feet ("BCF") range (P50 of 215BCF), with associated condensate resource potential of 19-120 MMbbl (P50 of 67MMbbl). In addition, post drill interpretation suggests a deeper mid-Cretaceous target, the Taniwha Formation is significantly updip of the Mauku-1 pre-drill assessment and this multi Trillion Cubic Feet target could be tested a by a well targeting the Mauku updip culmination.

Further seismic data is required to better define the structural configuration and location of any new well. The Company is currently assessing options for acquiring 2D seismic in the area.

Mercury

The Directors continue to have discussions with possible farm in partners for this prospect. However, with five unsuccessful offshore wells drilled in New Zealand in the past 10 months, including some with major cost overruns, the atmosphere for farming out offshore Taranaki is particularly difficult.

Production

Puka-1 and Puka-2 have continued to produce about 110 bopd. Present indications are that an increased stroke rate to increase production out of these wells is not recommended as this could risk prematurely coning water into the wells.

Ian Gowrie-Smith, Chairman of Kea, commented:

"With the disappointment of the Puka-3 result behind us it has been encouraging to receive the support of MEO for an on-going program, in particular to see if we can de-risk a Tikorangi updip prospect subject to further analysis and sampling of Douglas-1. Whilst the vastly larger potential rests in a successful Tikorangi prospect, the Directors of Kea remain optimistic about the prospect for further successful wells targeting Mount Messenger sands."

This release has been approved by non-executive director Peter Mikkelsen FGS, AAPG, who has consented to the inclusion of the technical information in this release in the form and context in which it appears.

For further information please contact:

 
 Kea Petroleum plc                 Tel: [phone] 
  David Lees, Executive Director 
 WH Ireland Limited (Nomad)        Tel: [phone] 
  James Joyce 
  Nick Field 
 Buchanan                          Tel: [phone] 
  Mark Court 
  Sophie Cowles 
 

Notes to Editors:

Kea Petroleum is an AIM listed oil and gas exploration company with interests in three petroleum exploration permits in the Taranaki Basin of New Zealand. Kea listed on the London AIM market in February 2010.

This information is provided by RNS

The company news service from the London Stock Exchange

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