Perth-based oil & gas exploration and development company Prominence Energy NL (ASX: PRM) has achieved a major milestone for its key asset - Bowsprit oil project, inland shallow waters offshore Louisiana.
On 5 February 2020, the Company announced to have received a Reserves Report on the project from Netherland, Sewell & Associates, Inc. (NSAI), reclassifying the Bowsprit oil project from Contingent Resources to Reserves, thereby endorsing the fact that the field has reserves.
As per the report, the downside risk of drilling at the project is now considered low with potentially significant exploration upside tested by the well.
The de-risked & reserve upgrade follows extensive new work performed by the Company, permitting approval granted for the Bowsprit-1 well, and expected imminent funding and drilling of the well.
Reserves Attributed to Bowsprit-1 Well
The Bowsprit field consists of a proven Upper Miocene Reservoir (T1) at a depth of approximately 7,400ft TDSS overlying a secondary “Prospective” target Middle Miocene Reservoir (T2). Under the drilling program at the well, the Company will target three pay zones, namely T2 and T3 (Vertical Well) and the former producing T1 (Horizontal Well).
NSAI report findings suggest the following:
- T1 - 2P estimate of 330,000bbls by Netherland Sewell & Associates Inc, underpins well drilling cost, reserves are possibly conservative due to old data set and PRM carries larger volumes.
- T1 - initial rate estimated to be 50,000bo per month (~1,670 bopd).
- T1 - potential additional upside should a second T1 well be drilled. o T1 - 2P of 330,000 bbls worth US$6.4 million (NPV10).
- T2 & T3 - provide significant exploration upside with T2 reservoir prospective resources of 1.8MMbbls (mid case) tested by the first well.
Source: PRM Announcement
Farm-Out Discussions to Conclude in February
Prominence Energy is currently in advance discussions with numerous parties potentially interested in farming into the project.
The reserves certification and associated valuation puts PRM in a stronger negotiating position, as a result the Company is seeking to finalise the farm-out process in February 2020 and select optimum partner/funding option for the Bowsprit well. PRM Managing Director Alex Parks is due to attend NAPE Summit Week in Houston to finalise negotiations with potential Farm-in partners.
The Company expects to start the drilling program at the well in the second quarter of 2020.
The project has access to excellent infrastructure, as the oil can be quickly tied back to and processed by one of the two nearby production facilities and exported as required by barge directly to one of the 18 refineries on the coast of Louisiana.
The PRM stock was trading at A$ 0.002 on 5 February 2020 (AEDT 01:49 PM), with a market capitalisation of A$ 2.64 million.
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