ACOR spuds offshore Australia Garfish-1 well
  by: OilOnline
  Thursday, June 05, 2008

Australian-Canadian Oil Royalties Ltd. (ACOR) has been advised by Nexus Energy Limited, the operator of VIC/P54 including the production license VIC-L29 advises that the exploration well Garfish-1 (formally referred to as Longtom Upper) in the Gippsland Basin offshore Australia, has spudded using the West Triton jack-up drilling rig.

The Garfish-1 well will take around 14 days to reach the primary target, and will be followed by the two Longtom production wells in Longtom-4 and Longtom-5 on ACOR’s ORRI.

ACOR owns a 1/20^th of 1% ORRI under VIC/P54 (VIC/L29).

The Garfish-1 exploration well in Production License VIC/L29, in the Gippsland Basin, was setting 13 ¨ü inch casing after having reached a depth of 2,345 feet true vertical depth sub sea (“TVDSS”).

Over the course of the next week the anticipated operations will be to drill ahead in 8 ½ inch hole. The planned total depth of the Garfish-1 well is 8,146 feet TVDSS.

The primary target of the Garfish-1 well will be to test a seismic anomaly which directly overlies the Longtom gas field on ACOR’s ORRI. Similar seismic anomalies at Longtom have been shown to indicate the presence of gas bearing reservoir sands. Following the intersection of the primary target, the well will then be deepened to confirm that the main reservoir sands of the Longtom field extend to the western part of the VIC/L29 license area.

The Garfish-1 exploration target is calculated to have a possible resource potential of 180 Billion Cubic Feet of gas. The well is expected to take approximately two weeks to reach the primary exploration target.

The Garfish-1 exploration well is located in Production License VIC/L29, in the offshore Gippsland Basin, Australia on ACOR’s ORRI.

The Garfish-1 well will firstly examine an exploration target at around 6,561 feet which seismic picked up as an anomaly, the structure could possibly hold up to 180 Billion Cubic Feet of gas.

The well will then be deepened to around 8,202 feet to confirm whether the Longtom sands extend to the West South West of the known Longtom Gas Field.

The field development has been given the green light by the operator based on booked 2P reserves of 58,000,000 barrels of oil equivalent, with the Longtom-3 well alone being able to supply the full contracted amount of 11,000 barrels of oil equivalent per day, or a total of 350 Billion Cubic Feet of gas to Santos from Q1 2009 when first gas is due to flow.

The Longtom-3 well was a make or break well for the future of the field, drilled in Aug 2006, and sole risked in a bold move by the operator after regular permit partner Apache declined involvement. The well reached a total measured depth of 15,341 feet in late Aug 06, having intersected a total of 3,379 feet of gross gas sand in the Admiral formation which were deemed to be in connection with those at the Longtom-2 well based on pressure data.

The first production test over the upper sands (the “400 sands”) flowed at 23,000,000 cubic feet per day through a 1” choke in early September, but only a week later, that result had been blown out of the water. The lower sands of the Admiral Formation (“100, 200 & 300 sands”) flowed on test at an estimated rate of 77,000,000 cubic feet per day through a 1-¼” choke, with the maximum rate achieved using the separator being 59,000,000 cubic feet per day through a 60/64” choke, although rates were limited by equipment capacity.

The operator has booked 2P reserves of approximately 323 Billion Cubic Feet of gas and 4,000,000 barrels of condensate in Apr 2007 and considered the Longtom Gas Field as sufficient enough gas reserves to proceed with the development of the field, with a review undertaken since by Gaffney Cline & Associates indicating there is additional potential in the immediate area for 778 Billion Cubic Feet of gas and 12,900,000 barrels of condensate.

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