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MEO Australia And Eni Continue Heron South-1 Drilling

MEO Australia (ASX: MEO) and Eni Australia continue to drill their Heron South-1 well in the Timor Sea offshore Northern Territory towards total depth.

Operator Eni had drilled the well to its current depth of 3,828 metres and has run logs as well as installed and cemented the casing to 3,818 metres with no reportable incidents.

The Italian major is now planning to test blowout preventers prior to drilling Heron South-1 to its total depth of 4,265 metres or the gas water contact.

A full formation evaluation program will then be run including formation pressures and fluid sampling. If warranted, a production test will be run to determine reservoir productivity.

The joint venture had last week increased the mud weight for drilling to 14.3 pounds per galleon from 10.35ppg to manage the high levels of background gas seen in the well.

Heron South-1 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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