Proactive Investor's  Instablog

Gippsland Basin focused 3D Oil (ASX: TDO) is confident of reaching a transaction that will allow it to progress development of its VIC/P57 permit offshore Victoria.

The permit holds the West Seahorse oil field, which can be developed economically even at its conservative 1C contingent resource estimate of 4.2 million barrels of oil.

It also contains a number of other prospects and leads of which Sea Lion and Felix are the top-ranked candidates that could be developed independently or jointly with West Seahorse in the event of a success.

3D Oil is currently at an advanced stage of negotiations to facilitate a potential transaction for VIC/P57. This includes the provision of detailed due diligence information, value negotiations and documentation.

The company is taking financial advice from Lion Capital Advisory and Baker & McKenzie is providing legal advice.

West Seahorse

3D Oil believes the West Seahorse field, which was discovered in 1981, can be developed as a subsea project with initial production of over 7000 barrels per day (bpd) of oil.

Oil and any associated will be transported to shore by a 14 kilometre pipeline before travelling along an additional 19 kilometre onshore pipeline to a new oil processing plant.

Besides the discovery well flowing 1800bpd of light 48 degrees API oil, West Seahorse has been proved up by two appraisal wells with the West Seahorse-2 providing controls on the extent of the reservoir while 3D Oil's West Seahorse-3 intersected an 8 metre oil column with excellent porosity.

The field is also close to producing oil and gas fields in the Gippsland Basin, one of Australia's most prolific petroleum provinces.

Notable examples include ExxonMobil's A$4.4 billion Kipper-Tuna-Turrum project where first oil is expected this year and gas production targeted for 2016.

Sea Lion and Felix

Further upside in VIC/P57 has been identified following the reprocessing of 500 square kilometres of 3D seismic data with Sea Lion and Felix ranked as the best prospects.

Sea Lion has prospective resources of 20.7 million barrels of oil in the same reservoir units as at West Seahorse and upside potential in excess of 32 million barrels.

Felix has potential in the Lower Latrobe Group, which has been confirmed as an exciting gas play in recent years with the Longtom and Grayling fields being discovered in recent years, as well as being located within an established oil production fairway between the Moonfish oil field and the Wirrah discovery and has the potential to contain over 100 million barrels of oil.

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