New Guinea Energy (ASX:NGE) has zeroed in significant oil targets at its petroleum licence in Papua New Guinea, that has the potential to contain more than 50 million barrels of petroleum in place.
The areas were identified following an internal technical review of leads in PPL 267.
Imaging by six seismic lines suggest there is a closure of more than 11 square kilometres a the Alene and Toro horizons. These potential reservoirs intervals were assessed to contain more than 65 metres of reservoir quality sands that averaged over 22% porosity in
the nearby Panakawa-1 well.
The structure requires a further two seismic lines to constrain the up-dip closre to the northwest and a seismic program will be completed most likely in the third quarter of 2013.
PPL 267
The PPL 267 licence covers approximately 7,695 square kilometres or about 1.9 million acres.
The company last year acquired the extension of the tenement for a further 5 years.
It drilled the Panakawa-1 exploration well in June-July 2010 to a total depth of 2424 metres and the well encountered well-developed reservoir sands in the Alene Member (Ieru Formation) in excess of 57 metres net reservoir averaging 22% porosity.
Reservoir quality sandstones were also present in the Toro Formation within a gross interval totaling 67 metres.
Residual gas was also noted in the Toro Sandstone suggesting a combined Alene-Toro historical gas column of up to 150 metres.
Analysis
The identification of potential oil targets paves the way for possible drilling which could unlock the 50 million barrels of petroleum in place.
The area has the logistical advantage of being near the southern coastline of Papua New Guinea and is accessible by barge.
New Guinea Energy is cashed up for its drilling activities with a total of $13.35 million in cash at the end of last quarter following the sale of PPL 277 to Esso PNG Exploration and Oil Search for US$15 million.
At a market capitalisation of $30.60 million, New Guinea Energy has a cash backing of 1.5 cents per share. With its shares trading at 3.4 cents, the current market valuation is under-valuing the company and the value of its petroleum asset portfolio.
It also listed its shares on the OTC-QX platform late last year, which could swell investor interest from North America.
With 5 onshore petroleum prospecting licences covering more than 29,000 square kilometres and royalty rights over another 8,000 square kilometres, New Guinea has one of the largest independent acreage positions in South East Asia.
Its prospectivity is also highlighted as more than 1 billion barrels of oil and 15 trillion cubic feet of gas have been discovered in adjacent licences.
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