SYDNEY, Australia – AWE Ltd. (ASX: AWE), as operator of Petroleum Mining Permit 38158 offshore Taranaki, New Zealand, advises that the semisubmersible drilling rig Kan Tan IV began drilling the Oi-1 exploration well on May 30. The Oi-1 exploration well is 12 km (7 mi) northeast of the Tui oil fields in 120 m (394 ft) of water.
Operations ran and cemented 30-in. casing to 229 m (751 ft) and was drilling ahead in a 17½-in. hole at a depth of 510 m (1,673 ft).
The Oi-1 exploration well will be drilled vertically to a planned TD of 3,881 m (12,734 ft). The objective is to evaluate the hydrocarbon potential of a four-way dip closed structure similar to the producing Tui, Amokura and Pateke fields, and it will target the same F10 reservoir sandstones.
The Oi prospect represents a best estimate prospective resource of 11 MMbbl recoverable oil (gross, unrisked P50 estimate). AWE is participating in the Oi-1 exploration well at a reduced equity of 31.25% and has the option to increase its equity participation in any future appraisal drilling and development to 57.5% by exercising existing buyback provisions.
Gross dry hole drilling costs are estimated at $27 million, and the well is expected to take 30 days to complete. In the event of a commercial discovery, subsequent development could tieback to the nearby Tui production facility, the FPSO Umuroa, where sufficient production capacity is available.
The Joint Venture partners in the Oi-1 exploration well are operator AWE Ltd. (via subsidiaries), 31.25%; New Zealand Oil & Gas (via subsidiaries), 18.75%; and Pan Pacific Petroleum (via subsidiaries), 50.00%.