Orion Petroleum (ASX: OIP) has announced the imminent resumption of conventional oil and gas exploration with the upcoming drilling of the Toenda prospect in PEL 6.
Lucas Rig 26 is currently mobilising to the Toenda-1 well site and the well is expected to commence drilling operations early next week.
Toenda-1 is an exploration wildcat well, located in the north-eastern part of PEL 6 and about 13 km from Willaroo-1, a non-commercial oil discovery drilled by Orion in May 2008.
The location is 14 km south-west of the town of Goondiwindi in Queensland. Toenda-1 will be drilled to a planned total depth of 1,850 metres with drilling operations scheduled to take an estimated 20 days to complete.
The well is targeting oil within the Upper Back Creek Formation within an 8.9 sq km fault-dependent closure.
It is located structurally updip of the Willaroo-1 well which recovered 3 barrels of light oil from an open hole drillstem test of sandstone reservoirs within the Upper Back Creek Formation.
The company said the Toenda prospect is interpreted to host a best case prospective resource of 31.4 million barrels oil-in-place of which an estimated 7.7 million barrels could be recoverable.
Interest holders in the well are: Orion Petroleum Limited 97.5%; private Interests 2.5%; and there is a Overriding Production Royalty of 3.75%.
The company has also advised that PEL 6 has been renewed for an additional two year term by the NSW Department of Industry & Investment.
Under the permit renewal terms the licence holders are committed to drill one exploration well in Year 1 of the renewal period (December 2009-December 2010).
Disclosure: The author holds no positions in the company