WHL Energy (ASX: WHN) has received a number of farm-in and joint venture offers for its La Bella gas field in the Otway Basin off Victoria but believes that upcoming seismic will allow for more attractive offers.
"While WHL Energy has received non‐binding farm‐in and Joint Venture offers from some individual organisations active in the area it has elected not to pursue these offers at this time as the company believes there is significant upside in the VIC/P67 asset pending the outcome of the planned seismic activities in the permit," managing director Steve Noske said.
He added the WHL board had ascertained the offers didn't provide the company with sufficient value given the independent advice received regarding a proven gas field like La Bella as its potential to be quickly tied into gas grids in Eastern Australia.
"However, the Company continues to hold discussions with a number of interested parties and will continue to do so as and work hard to obtain the best return for our shareholders on this highly valuable asset."
Domestic gas market demand
La Bella's potential to be quickly developed is especially interesting in light of recent reports that Australia's east coast is potentially facing a major domestic gas shortage.
Major industrial users have reportedly being unable to source firm domestic gas supplies beyond 2015.
Noske noted that these concerns and reports that gas prices were set to increase had been raised in recent discussions with potential partners.
"This 'gas crisis' has certainly opened up fantastic opportunities for companies like WHL Energy that have proven gas assets. This certainly has being reflected in the increasing interest we have received from potential farminees and joint venture partners."
Initial modelling using conservative estimates for future commodity pricing has provided estimated life of project revenues in excess of A$1 billion for the development of a 150 billion cubic feet of gas recoverable resource.
WHL Energy is currently undertaking further independent preliminary engineering studies that will provide a valuation on the estimated gas and condensate reserves associated with the La Bella field.
It has also submitted documentation related to the Environment Protection and Biodiversity Conservation Act 1999 as part of its application to shoot 3D seismic over VIC/P67 in April 2013.
The 811 square kilometres of 3D seismic forms part of its work commitment for the permit and will firm up resource assessment and field development plans for the La Bella field along with the nearby prospects and leads with potential to host 500Bcf of gas that the company has already identified.
WHL had brought forward the 3D seismic by almost 12 months from its original commitment, reflecting a decision to fast track its development due to industry interest.
La Bella holds Estimate (2C) Contingent Resources of 158 petajoules (about 150Bcf) of gas in 95 metres of water and about 55 kilometres off the southern Victoria coast.
Upside is present at the relatively low risk Highlander and West La Bella prospects that offer additional tie-back opportunities to a potential La Bella development.
New company secretary
Meanwhile, WHL has appointed current finance director David Rowbottam as its company secretary with effect from the end of January 2013.
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