Sun Resources’ Bowsprit Oil Project and its Redevelopment Potential

  • Nov 20, 2019 AEDT
  • Team Kalkine
Sun Resources’ Bowsprit Oil Project and its Redevelopment Potential

Based in Perth, Western Australia, Sun Resources NL (ASX: SUR) is an oil & gas exploration and development company, with key exploration and production assets in the US state of Louisiana. In August 2017, the company had acquired the Bowsprit lease, with prime focus on developing the Bowsprit oil project with modern horizontal wells and establishing production.

Bowsprit Leases

Early in the second half of 2019, the company boosted its working interest in the Bowsprit Petroleum Leases (21754 & 21787) from 50 per cent to 100 per cent, which are situated ~ seventy kilometres southeast of New Orleans in nearly three metres of water. The company is also the operator of the two leases.

  • During 1952 – 1982, sixteen historical wells were drilled within the leases with extensive existing 2D and 3D seismic;
  • The leases are near the boundary of St Bernard and Plaquemines Parishes, which have produced a combined 1.2 billion barrels of oil and 5.2 trillion standard cubic foot of gas;
  • Contains an undeveloped conventional Upper Miocene aged oil sand at a depth of ~ 7.4k feet;
  • The oil sand is located above a deeper, 9.5k feet gas field, where Shell produced ~46 billion of standard cubic feet of gas after developing the field in 1960s;
  • As a result, the Bowsprit field contains 14 vertical well penetrations and has demonstrated producible oil.
  • The Bowsprit lease holds production potential in the near term via the planned redevelopment of the field.

Bowsprit Redevelopment Potential

  • Low drilling costs using readily available Barge Drilling Rigs;
  • Low cost production facilities: in less than three metres of water, extensive existing infrastructure, ready offtake arrangements and low unmanned operating costs;
  • Horizontal Drilling – Miocene Sands are thin for vertical offshore wells; however, horizontal wells should increase IP’s and EUR’s to commercial volumes;
  • Horizontal well in the nearby analogous field was production tested at 1,500 barrels per day of oil;
  • RISC modelled a 1.2k feet horizontal crestal well in Bowsprit capable of IP of 2k barrels per day of oil and EUR of 670k barrels;
  • One horizontal well to be drilled into proven main sand at 7.4k feet;
  • A maximum of four horizontal wells to be drilled into prospective target sand at 7.4k feet, constrained to an average IP of ~1k barrels per day of oil;
  • Secondary exploration potential in other sands and possibly a redevelopment of Shell gas field

According to SUR, the Bowsprit structure can be developed with one firm and a maximum of four contingent horizontal wells. Moreover, the company has determined that it could start the production using a simple unmanned production platform.

Sun Resources intends to drill the initial appraisal well to have a horizontal section of 1,500 feet in length and flow test the well, targeting the end of the first quarter of 2020. The objective of drilling the appraisal well is to prove the commerciality of the contingent resources in the 7,400’ sand, in addition to discovering and appraising the resource in the 7,400’ deep sand.

The company has secured two of the three permits required to kickstart the drilling program. More on the company’s progress with respect to securing state and federal permits can be read here.

The company is currently seeking a new partner for the project to execute a farm-out deal, targeted towards securing funding support for the drilling program. Sun Resources is using its contacts, in addition to appointing agents, to help it find a farm-in partner for the project. Discussions are underway with interested parties.

Sun Resources is focused on appraising and developing the Bowsprit project to production as rapidly as practical, with the aim of delivering return to its shareholders for their continued support as well as directing the cash flow towards funding further project acquisition in the area.

Bowsprit is a low capital expenditure, high margin, oil appraisal/development project, first oil from which is expected in 2020.

Stock Information

The stock of Sun Resources last traded on 15 November 2019 at AUD 0.002. The market capitalisation of the company stands at AUD 2.64 million, while the number of outstanding shares is 1.32 billion.


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