Carnarvon Petroleum (ASX:CVN) and operating partner Quadrant Energy have established recently recovered gas from the Roc-1 well oil offshore Western Australia as being at the top end of its condensate-to-gas ratio estimate.
The Roc-1 well is located in WA-437-P, 20 kilometres south-east of the 2014 Phoenix South-1 oil discovery. Carnarvon Petroleum holds a 20% equity interest in the well while operator Quadrant Energy owns 40%.
The condensate-to-gas ratio gas has been confirmed as at the top end of a range of 20 to 40 barrels per million cubic feet of gas.
This update has coincided with completion of the project's wireline logging program and removal of the rig from the Roc-1 location, about 20 kilometres southeast of last year's Phoenix South-1 oil discovery and around 150 kilometres north of Port Hedland.
This program had previously confirmed reservoir quality sands with net hydrocarbon interval of 10 metres from the gross 40 metre sand column over the interval from 4,380 metres to 4,420 metres.
Pressure testing has confirmed at least three discrete hydrocarbon columns in the section from 4,380 metres to 4,420 metres.
The cost for the well has been on budget, inclusive of success case logging, sampling and coring costs.
Under previous farm-out agreements, in exchange for equity in the permits, Carnarvon bore no cost for this well.
Under the farm-out agreements, there remains a carry contribution towards any further drilling or testing in the WA-437-P permit (which hosts Roc-1) of about A$30 million to A$40 million (gross).
Carnarvon estimates it will be in a position to advise the market on the expected range of recoverable volumes of gas and condensate within the next six weeks.
Appreciating the Roc-1 well has just completed and data from the well needs to be properly assessed, a decision on the timing and location of the Roc-2 well has not yet been considered by the joint venture.
This will be done in due course and will be subject to joint venture and government approvals and rig availability.
The initial well results at Roc-1 are increasingly encouraging, with the latest update importantly demonstrating the strong condensate-to-gas ratio of the recovered material.
This reinforces the project's existing potential as a simple, low-cost development close to infrastructure.
Price catalysis for the company in this context may be realised as the significant work expected to be undertaken in the coming months unfolds, including the completion of an estimate of the recoverable volumes involved.
This process is currently underway and expected to produce results within six weeks.
Research by Carnarvon's privately owned joint venture partner Finder Exploration has delivered some strong preliminary information on the well results, including an Original Gas in Place (OGIP) estimate of up to 1.2 TCF and reservoir sands with permeability and strong water drive.
Finder Exploration's initial assessment established a liquids-rich gas presence 40-60 bbls/mmcf with low CO2 & no H2S.
Upside is inherent in about 60 further prospects and leads currently identified and covering more than 10 square kilometres.
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