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MEO Australia And Eni Encounter High Levels Of Background Gas At Heron South 1

MEO Australia (ASX: MEO) and Eni Australia have increased the mud weight at their Heron South 1 well in the Timor Sea offshore Northern Territory to manage high levels of background gas.

The mud weight increase to 14.3 pounds per galleon from 10.35ppg at a depth of 3,433 metres also serves to stabilise the wellbore.

Heron South-1 is currently at a depth of 3,740 metres and is drilling ahead to the planned casing point at about 3,847 metres. It will then be drilled to its total depth of 4,265 metres or the gas water contact.

The well is being drilled to determine the extent and productivity of the Elang-Plover reservoir and the gas composition.

Eni is earning an initial 50% interest in the Heron area by funding two wells on the structure. It also has an option to earn a 50% interest in the Blackwood area by acquiring a minimum 500 square kilometre 3D seismic survey and drilling a well in the area.

The Italian major has a further option to acquire an additional 25% interest in both areas of the permit by funding MEO's share of the work program, including additional appraisal wells, required to reach a Final Investment Decision (FID) for either Heron and/or Blackwood.

MEO has estimated the Greater Heron structure could hold mean prospective recoverable raw gas of 5 trillion cubic feet, potentially sufficient to underpin a liquefied natural gas development.

MEO will receive a one off bonus payment of US$75 million for the first discovery to reach FID.

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