Key Petroleum's (ASX: KEY) upcoming Waugh-1 exploration well has received support for its prospectivity with partner Empire Oil & Gas (ASX: EGO) farming out a 15% stake in EP 437 onshore Perth Basin to Caracal Exploration.
Caracal Exploration will earn its stake in the permit by contributing 30% of the costs of drilling Waugh-1.
Waugh-1 targets up to 3 million barrels of recoverable oil in the Bookara Sandstone and will also evaluate the unconventional potential of the carbonaceous shale section in the Cattamarra Coal Measures.
The joint venture will conduct three to four dedicated flow tests over the shales and carry out an open hole drill stem test to determine if the Bookara contains moveable oil.
Waugh-1 will be drilled to a total depth of 700 metres at a location up-dip from the Dunnart-1 well that was never tested despite encountering oil shows in the Bookara Sandstone as well as elevated methane and ethane gas reading while drilling through the Cattamarra Coal Measures.
The EP 437 Joint Venture will use DCA Rig 7 and will drill the well once all regulatory approvals are received.
Any unconventional gas discovery could be sold into the existing infrastructure located close by at the Dongara Gas Field or could be used to power oilfield facilities at Waugh-1 in the event of an oil discovery or any other oil discoveries in EP 437.
Key will continue to hold its 50% stake in the permit following the farm-out, while Empire's interest will be reduced to 35% from 15%.
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