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Carnarvon Petroleum Updates Phoenix South-1 Well

Carnarvon Petroleum (ASX:CVN) has reported that the Phoenix South-1 well has successfully set the 9 5/8" casing in the side-track well and is drilling ahead.

Carnarvon said that as at 12:00 hours today the well was drilling ahead at around 3,750 meters MD in the final hole section.

The Phoenix South-1 well is planned to drill to a depth of around 4,500 meters to explore for gas on trend with that discovered in the Phoenix-1 well some 13 kilometres away. The Phoenix South-1 well may be extended to approximately 5,000 meters if gas is being detected below 4,500 meters.

The primary targets for the Phoenix South-1 well are the interbedded sandstones, siltstones and claystones of the Middle Triassic Lower Karaudren Formation and Early to Middle Triassic Locker Shale.

These sands are expected to be intersected while drilling this final hole section.

The well is expected to take approximately three weeks to complete drilling.

Next steps

Following the completion of drilling, extensive wireline logging and both pressure and fluid sampling are planned. These operations will continue for a further week.

Equity interests

The equity interest holders in the Phoenix South-1 well (upon satisfaction of the farm in agreement terms) are:Carnarvon Petroleum 20%, Apache Energy (Operator) 40%, JX Nippon 20% and Finder Exploration 20%.

The Phoenix South-1 plan

The well will be funded to US$70 million (gross cost of well) by Apache and JX Nippon with this being the success case estimate for the Phoenix South-1 well, excluding side-track operations. Carnarvon is liable for 20% of any costs over this amount.

The side-track operations are expected to cost Carnarvon around $6 million if the US$70 million limit is exceeded.

Success in the Phoenix South-1 well is likely to lead the Joint Venture to drill the Roc well in the adjoining WA-437-P permit.

This is a similarly large structure identified on modern 3D seismic data and is the next structure up from Phoenix South. Funding for this well has been secured through an agreement with Apache and JX Nippon.

Well-funded

Carnarvon is well-funded, and at the end of June 2014 had cash of $50.5 million, a US$32 million receivable from oil receipts and zero debt.

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