Sun Resources Secures First State Permit to Perform Drilling at Bowsprit Oil Project

Western Australia-based oil & gas exploration and development company, Sun Resources NL (ASX: SUR) is completely focused on developing assets that are expected to be commercially viable in the current environment of low oil prices. The company’s key oil project is Bowsprit, located in inland waters Louisiana in the United States, ~ 70 kilometres southeast of New Orleans. SUR holds petroleum leases that cover an area of more than 1,150 acres in the Breton Sound Area in Louisiana.

First State Permit to Drill Bowsprit 1

On 22 October 2019, the company shared an update with respect to its Louisiana project. Sun Resources secured the first state permit for carrying out drilling operations at the project. The approval was awarded to the company’s US subsidiary Sun Louisiana LLC by the Department of Natural Resources Office of Coastal Management.

The grant (Office of Coastal Management) follows final well site surveys performed by FensterMaker and Brammer Engineering, the SUR consultants based in Louisiana, and the submission of drilling permitting applications in September 2019.

Within the next 30-45 days (in/by December 2019), Sun Resources is expecting to secure the remaining two permits - approval from St. Bernard Parish permit and Port Authority and approval from Corps of Engineers - to start drilling an appraisal well, Bowsprit 1, into the Bowsprit field. Once all the permits are secured, they will remain valid for performing drilling activities at the project location for one year.

The company plans to drill the well in the first quarter of 2020; however, it is subject to securing funding through a combination of capital raising and farm out, for which SUR is already in talks with several interested parties.

A Sneak Peek into Bowsprit Oil Project

SUR secured the project in partnership with Singapore-based Pinnacle Exploration Pte Ltd in August 2017 in an equal joint venture. The company was the operator of the leases, holding a 50 per cent stake in the project. However, in July 2019, Sun Resources increased its stake in the project to 100 per cent after acquiring the 50 per cent stake held in the project by Pinnacle.

Quick Bowsprit Oil Project Facts:

• Within the leases, 14 historical wells were drilled during 1952-1982;
• In 1955, Shell discovered a gas field, a re-development project with proven, conventional, good quality reservoir, light-sweet oil;
• The project leases overlie the first field developed by Shell in the 1960s;
• The field comprises 14 vertical well penetrations;
• Minimum economic field size is less than 0.5 million barrels;
• The leases are located near the boundary of St Bernard and Plaquemines Parishes, which have produced 5.2 trillion standard cubic feet of gas and 1.2 billion barrels of oil, as per publicly available records;
• 7,400 Upper (Proven) and 7,400 Deep Sand (Prospective), with proven moveable oil of only 76,000 barrels produced at the 7,400’ sand package. 7,400’ Deep Sand is a Prospective Resource target.

Near Future Plans

Bowsprit Oil Project is a low CAPEX, high margin, oil appraisal development project. Sun Resources is currently is working on executing a farm out deal for the project, aimed towards raising funds to finance a portion of drilling activities and offering a near term, low cost, low risk, horizontal development well, in to proven, produced oil sand, with exploration upside.

Sun Resources plans to progress Bowsprit Oil Project to production as soon as possible, targeting to deliver value to its shareholders. The company is expecting first oil production potentially in the third quarter of 2020, with well cost estimated at USD 3.6 million and breakeven oil price of ~USD 25-30 per barrel.

Stock Performance

Listed on the ASX in January 1992, the conventional oil focused Sun Resources has a market cap of AUD 2.64 million. The number of outstanding shares of the company stands at 1.32 billion. On 22 October 2019 (AEST 03:03 PM), the SUR stock was trading at AUD 0.002 per share. In the last six months, the stock has delivered a positive return of 25 per cent.

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