Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Central Petroleum tastes sweet success at Surprise oil well

Central Petroleum (ASX: CTP) has achieved significant oil flows to surface during initial flow testing at the Surprise-1 Re-entry H well, in the Amadeus Basin, the first significant onshore oil flow in the Northern Territory in nearly 50 years.

The company achieved a maximum sustained flow rate over a four hour testing period of 300 barrels per day with a low water cut.

Oil flowed to date has been a light sweet crude, with an API averaging 40 degrees and no evidence of hydrogen sulphide.

Further evaluation of the data collected over the Surprise prospect will be collected before determining the next course of action, which could involve additional drilling and seismic surveys in the area.

In addition to evaluating the results from this testing program, Central will assess the unconventional shale oil and gas potential of drilling samples taken from the Horn Valley Siltstone, where hydrocarbons and elevated organic materials has been previously noted.

Surprise-1 will be suspended once the first phase of the well test clean up has been completed, while Central fast tracks additional storage to allow for an EPT to begin.

This will be subject to government approvals.

The success at Surprise has materially enhanced the prospectivity of Central’s extensive acreage in the area and expanded the commercial oil potential of the company’s Western Amadeus Basin holdings.

Horizontal drilling

Significantly, Surprise-1 will be central Australia’s first ever horizontal well completion to produce oil.

Although Central originally planned to drill a sidetrack section in preparation for possible vertical completion and production, the company announced horizontal drilling plans in November 2011.

Share purchase plan

A share purchase plan, underwritten up to A$5.5 million by Patersons Securities, is due to close on January 25.

Eligible shareholders can purchase shares at a value of A$2,500, A$5,000, A$7,500, A$10,000 or A$15,000.

The shares are available at A$0.055, an 18% discount from the average closing price of the company’s shares in the five days prior to the announcement of the share purchase plan on September  15.

Success at Surprise

- Maximum sustained flow rate of 300 barrels of oil per day
- API Gravity averaging 40 degrees; light sweet crude
- Low gas oil ratios
- First ever horizontal well completion producing oil in central Australia
- First significant oil flow onshore Northern Territory in almost 50 years
- Materially enhances prospectivity of Central’s extensive Amadeus Basin acreage