Central Petroleum (ASX:CTP) has secured funds needed to appraise the potentially company-making Surprise-1 oil discovery in the Amadeus Basin, Northern Territory, with its successful A$9.9 million share purchase plan.
The placement of 50 million new shares priced at A$0.055 each to existing institutional, sophisticated and professional shareholders was managed by Patersons Securities and will allow Central to carry out an extended production test, 3D seismic and additional drilling.
Central plans to carry out the production test in April and will finalise details of the 3D seismic and further drilling soon.
The company is also evaluating its options for the lifting, transportation and sale of the oil produced during the test, which could last for up to six months or more pending flow stabilisation and a possible application for a production licence.
Work is underway to obtain the necessary permits and regulatory approvals with Central expecting to finalise and announce a sales contract for the oil produced during the test in the coming weeks.
Central had ended the quarter ending 31 December 2011 with A$7.69 million in cash and cash equivalents.
The Surprise-1 horizontal well flowed light sweet crude at a maximum sustained rate of 380 barrels per day with low water cut, marking the first major onshore oil flow in the Northern Territory in nearly 50 years.
Its success serves to validate Central's long-standing belief in the petroleum prospectivity of central Australia, expanding the commercial oil potential of its Western Amadeus Basin acreage.
Further appraisal of the discovery would allow Central to delineate its extant and determine its productivity and resources present.
An engineering report by RPS Energy had indicated Surprise-1 could access initial in-place oil of 0.5 and 2 million barrels.
A successful development will also give the company a source of cashflow to target further prospects in its portfolio.
To top it off, Central could tap into further upside if its investigation into the unconventional shale oil and gas potential of the Horn Valley Siltstone in the well bears fruit.
With the Hunt Rig 3, which was originally commissioned to drill up to 3 wells, stacked on site, any appraisal wells the company decides on can be drilled without having to wait for a rig.