Exploration and production company Armour Energy Limited (ASX: AJQ) has been formally awarded three exploration blocks (ATP2034, ATP2035, and ATP2041) from Queensland Department of Natural Resources, Mines and Energy (DNRME). These three exploration blocks which now form part of the company’s Roma Shelf Project, in the Surat Basin are considered to be highly prospective and are very close to the existing gas infrastructure associated with the Kincora Gas Plant.
Earlier the company had lodged the expression of interest to DNRME for ATP2041 and for the adjoining tenure to be publicly tendered, however, the company was unsuccessful in the award of both blocks. The fact that the adjoining block to ATP2041 was awarded to a Santos Shell Joint Venture validates the company’s belief that Roma Shelf still holds great potential, which may support the development of a significant new hydrocarbon project in the region. The company also believes that the region is having a multi-TCF potential to support a much larger project, and the Company will be working diligently to explore and prove-up the resource over the next four years.
The company has recently completed its second major plant shut down for maintenance and refurbishment activities on the Kincora Gas Plant. Further, the company has brought the plant back on-line into full operations with up to 10 terajoules per day of gas production through the plant from the existing petroleum wells across Armour’s production assets.
Currently, the company is planning to expand its production through the plant up to 15 terajoules per day over the coming weeks for supplying gas to the market at times of peak demand. To achieve increased rates, the company will have to produce gas from its existing wells which includes recently drilled wells and some gas drawn from the Newstead Storage Facility. By expanding its production, the company will be able to maximize its returns during the summer peak period. The company’s Board and Management Team are pleased with the way that the recommissioned Kincora Facility has performed in 2018 as it is a testament to the experience of the staff who have been operating the field and facility.
The company is currently in the third phase of its growth strategy, which involves the drilling of new wells together with investigations into the work over and stimulation of existing wells. This, along with any necessary further work on the Kincora Gas Plant is expected to increase the gas production up to 20 terajoules per day over the next 12 to 18 months. Currently, the company is reporting 170 barrels per day in liquids production of light oil or condensate and 14 tons per day of LPG from the restarted wells on the Kincora Project. Besides the gas sales, the sale of Light oil and LPG products are also significant contributors to the company’s growing positive cash flows.
In the last six months, the share price of the company increased by 9.11 percent as on 20 December 2018. AJQ’s shares traded at $0.090 with a market capitalization circa $45.7 million as on 21 December 2018 (AEST 4:00 PM).