Perth Basin

WA-481-P

INTERESTS

Key Petroleum Ltd 40%
Pilot Energy Ltd (Operator) 60%
LOCATION

WA-481-P is situated in the proven hydrocarbon province of the offshore North Perth Basin. The permit covers an area of 17,457 km2 in water depths mostly within 5 – 200 m.

EXPLORATION POTENTIAL
  • It contains the single largest Australian offshore exploration area within water depths less than 200 m with the size of the permit itself regarded as being larger than the most prospective area in the onshore Perth Basin.
  • A highlight of the area is that it includes the Dunsborough oil and gas discovery, and gas discoveries at Frankland and Perseverance.
  • It is also directly adjacent to the producing Cliff Head oil field with 9 mm bbls produced to 31 December 2009 (Department of Mines and Petroleum, 2010), all of which provide strong evidence of a working petroleum system.
  • The recovery of oil at Xanadu-1 is significant as it appears to validate the interpreted oil migration pathways from the known oil sources of the Kockatea Shale and the IRCM in the Abrolhos Sub-Basin in the central portion of the Permit.
  • Oil from the source kitchen is interpreted to have migrated up-dip through the southern portion of WA-481-P into the Cliff Head and Xanadu structures located in the adjacent permit to the east.
  • Markets for oil exist at the Kwinana Refinery, 5 hours by truck south of the Arrowsmith processing facility that handles the Cliff Head produced crude.
  • Markets for gas are in the form of long term supply contracts to meet Western Australia's growing energy needs that can be tied back into the Dampier Bunbury Pipeline Gas Pipeline to meet a number of customers
  • Key believes the permit contains proven play fairways with numerous untested leads and prospects as well as appraisal opportunities of known discoveries.
  • A Geoscience Australia study over the area several years ago highlighted the regionally extensive source rocks, which have good to excellent potential for generating oil.
  • While the majority of hydrocarbon resources in the Perth Basin have been found in the Late Permian clastic sequences, recent Early Permian discoveries onshore are shaping up to be some of the largest gas resources discovered in the last 50 years.
PROSPECTIVE RESOURCES

The Operator, Pilot Energy Limited ("Pilot") undertook this study on behalf of the Joint Venture and has a 60% working interest in the permit. The permit is located in shallow waters to the west of the onshore Dongara/Beharra Springs/Waitsia gasfields, and the Jingemia/Hovea/Cliff Head oilfields. Key operated permit EP437 lies approximately 10km to the east. The permit is very large (17,475 km2) and covers a major portion of the offshore extension of the North Perth Basin. The primary petroleum plays are for oil and/or gas within the Dongara Sandstone and the Irwin River Coal Measures, both of which produce oil at Cliff Head.

Both oil and gas are proven within the permit, with the Frankland gas and the Dunsborough oil discoveries offering 2C contingent resources of 42 Bcf gas and 6 MMBbls oil respectively. These discoveries could likely be developed in the event of exploration success in adjacent prospects, or further improvement in oil and gas prices.

The Cliff Head South play incorporates four structural prospects to the south and west of the Cliff Head oil field. Two of these structures are larger than Cliff Head and are ideally situated, directly between Cliff Head and the hydrocarbon source kitchen to the west. The oil within Cliff Head would have migrated directly through this area, resulting in a high probability for oil charge in to the prospects. While three of the prospects are sufficiently large to warrant standalone development, even a small discovery could likely be developed by tying back to the Cliff Head offshore facility, approximately 10km to the northeast.

The Leander Reef area offers potential for large accumulations of oil, within large structures to the west of Cliff Head. While the Leander Reef-1 well was drilled between two of the structures and encountered both oil and gas shows, the prospects remain untested due to the fact that the well intersected a fault at a location where the Dongara reservoir target has been "faulted out" -  i.e. reservoir was absent due to movement on the fault.

The total prospective resources for the four primary trends in the permit, are as follows:

Trend

No. of Prospects

Gross (100%) MMBOE

Low

Best

High

Cliff Head South Oil

4

59.1

106.8

186.4

Dunsborough Oil

4

18.6

35.3

69.8

Frankland Gas

2

4.8

7.6

11.7

Leander Reef Oil

3

55.9

98.1

168.0

Total

13

138.4

247.8

435.9

Refer Pilot Energy Ltd (ASX: PGY) Major Prospective Resources Confirmed WA-481-P Announcement released to the ASX on 30 January 2017.

Prospective Resources for both oil and gas prospects, arithmetically summed for each trend, are reported above in MMBOE. Assumed conversion factor for Frankland trend gas prospects is 6 Bcf per MMBOE. The prospective resources for each of the two reservoir targets have been arithmetically summed to provide total prospective resources for each prospect.

WA-481-P Discoveries and Prospects Map.

FORWARD WORK PROGRAM

The Joint Venture has commenced the process of seismic reprocessing (pre-stack depth migration, or PSDM) of the existing seismic data to improve the chance of success of future drilling activities. The reprocessing work is likely to take 6 months to complete and the Joint Venture participants are working cooperatively to ensure a quality reprocessing product and subsequent interpretation are undertaken to support additional participation in the permit and drilling activities as soon as is practicable.

Notes:

Prospective Resources are the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) related to undiscovered accumulations. These estimates have both an associated risk of discovery and a chance of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

Contingent Resources are the estimated quantities of petroleum that may be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies

The estimates of Prospective Resources and Contingent Resources included in this announcement have been prepared in accordance with the definitions and guidelines set forth in the 2007 Petroleum Resources Management System (PRMS) approved by the Society of Petroleum Engineers (SPE). 

The Contingent Resources were estimated by mapping the extent of the prospect using seismic data and applying ranges of volumetric parameters based on regional data, including recovery efficiencies. The Contingent Resources were calculated probabilistically and the two reservoir targets were arithmetically summed in order to provide estimates for the prospect as a whole. Gross Contingent Resources are 100% of the on-block volumes estimated to be recoverable from the field.

The Prospective Resources were estimated by mapping the extent of the prospects using the seismic data and applying ranges of volumetric parameters based on regional data. Recovery efficiencies were estimated using generalized recovery factors and parameters were then combined probabilistically for each reservoir target. The total prospective resources for each prospect were then determined by the arithmetic total of prospective resources for each of the two reservoir targets.

Gross Prospective Resources are 100% of the on-block volumes estimated to be recoverable from the prospects in the event that a discovery is made and subsequently developed.

The prospective resources volumes reported are "Unrisked" in the sense that the Geological Chance of Success (GCoS) factor has not been applied to the designated volumes. Pilot Energy has estimated the GCoS for each reservoir target in each prospect, as per the tables provided in the Appendix to this announcement.