Oilex Signs Drilling Contract With Songa Offshore

Published: 25-Sep-2009

Oilex Ltd. (Oilex) has signed a contract with Songa Offshore Drilling Limited (Songa Offshore) to secure the services of the semi-submersible drilling rig, Songa Mercur. The rig will drill two wells (with the option of one additional well) in the contract area JPDA 06-103 in the joint petroleum development area (JPDA) of the Timor Sea.

The drilling contract is the latest in a sequence of recent events that will culminate in the drilling of two attractive offshore oil prospects in JPDA 06-103 including:

Oilex farming out part of its interest in this block to Japan Energy E&P JPDA Pty Ltd, a subsidiary of Japan Energy Corporation – resulting in Oilex being carried for its 10% share of all costs associated with the first two commitment wells (up to an agreed cap) and repayment of some of Oilex past expenditures;

The term of the production sharing contract (PSC) being extended to January 15, 2011; and

The selection of the Loré and Lolotoe prospects - with combined prospective oil resources of 285 million barrels of oil - as the locations for the first two wells.

Prospects

The portfolio of prospects in JPDA 06-103 comprises over 20 structural closures.

Drilling locations have been selected for the first two wells on prospects with recoverable mean prospective resources (on 100% basis) of 195 million barrels of oil (Loré) and 90 million barrels of oil (Lolotoe).

The prospect portfolio was prioritised on the basis of potential resource volume and technical risk. While oil is the anticipated hydrocarbon phase based on nearest offset discoveries, the possibility also exists for significant gas condensate finds in the block. ConocoPhillips’ Bayu Undan gas condensate field is located about 40 kilometers to the south of JPDA 06-103.

JPDA 06-103 lies close to significant recent discoveries and prolific producing fields further to the west along geological trend. ENI’s 2008 discovery at Kitan, located in the adjacent PSC to the west of JPDA 06-103, is now under development and wells and fields to the south and west of JPDA 06-103 have demonstrated exceptionally high productivity on testing oil. The Kitan-1 discovery well is reported to have flowed oil at a rate of 6,300 bopd from a drill stem test in the Elang/Plover Formation. The discovery was followed by an appraisal well, Kitan-2, that confirmed its commercial viability.

The Maura 3D seismic survey (2,140 square kilometers), in combination with existing 3D seismic data in the block, provides 3D seismic coverage over about 90% of the contract area. The seismic data quality is excellent and the definition of events at the level of the top primary objective - the Elang and Plover Formation reservoirs – allows for interpretation with a higher level of confidence than previously achievable using older seismic data.

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