Carnarvon Petroleum (ASX:CVN) has encountered a further two minor hydrocarbon bearing sands at its Phoenix South-1 oil well in the North West Shelf, one of the Australia's biggest oil discoveries in three decades.
Highlighting the significance of the discovery to Carnarvon, its shares have soared 202.5% in just the past three days.
The two 10 metre sands were encountered during the additional 55 metres of drilling undertaken after wireline logs by operator Apache Corporation (NYSE:APA) confirmed the find may represent a new oil province for Australia.
Oil samples and permeability measurements have indicated a productive oil reservoir with preliminary estimates of as much as 300 million barrels of in-place oil.
Drilling at Phoenix South-1 has been completed at a depth of 4,595 metres after encountering the Locker Shale.
The rig is currently undertaking activities to leave the well in a safe condition, and it is anticipated that the rig will leave location by the end of this month.
Costs to completion, including additional drilling, are within previous guidance of approximately $6 million net to Carnarvon.
The company is well funded to meet these costs with cash holdings of $50 million as of 30 June 2014.
Evaluation of the formation penetrated in the Phoenix South-1 is underway.
Analysis
Phoenix South-1 represents the most significant new oil play in the North West Shelf since the Enfield discovery opened up the Exmouth Basin almost 20 years ago and the additional 10 metre sands, while minor, add further potential.
That operator Apache had committed to drilling the follow-up Roc-1 well as well as exercise its option to acquire interests in Carnarvon Petroleum's WA-436-P and WA-438-P just emphasises the value of this find.
Investors have clearly been thrilled
Share price catalysts ahead for Carnarvon include:
- Results from analysis of core samples;
- Estimating recoverable oil at Phoenix South-1;
- Commercial assessment of Phoenix South-1; and
- Drilling of Roc-1 in 2015.
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