An expanded joint venture partnership over tenements near Alice Springs considered some of the “oiliest” in Central Australia, has been declared by Central Petroleum Limited.

The agreement could see Central free-carried for upwards of $6 million of seismic work on two oil permits to the west and southwest of Alice Springs as well as 20% of the initial cost of three wells on each of the permits.

Under the expanded JV, Melbourne-based private resources company, Trident Energy Limited, has entered a second farm-out with Central Petroleum, this time over Exploration Permit 111.

The permit is a 9,000 km2 permit application contiguous with the 12,000 km2 granted Exploration Permit EP 115 – in itself the subject of a current farm-in arrangement between Trident and Central Petroleum.

The expansion will now require Trident to fund 20% of the first three wells on each permit, plus $3 million of seismic work on each. Once that commitment is complete, Trident will be entitled to a 10% total interest in each of the tenements.

EPA 111 abuts the producing Mereenie Field to the north while EP 115 abuts it to the northwest. Both permits are in the area of the Amadeus Basin considered to be the most “oily” with source rock studies confirming that the main Ordovician source rock, the Horn Valley Siltstone, is richer and more oil prone in these areas than the remainder of the Amadeus Basin.

The EPA 111 acreage hosts a number of large untested structures available for high grading and subsequent evaluation by additional seismic and drilling. The Wallara lead for example, in EPA 111, is thought to host potential for petroleum at shallow depths of only 700 metres.

EP 115 includes the highly prospective Johnstone prospect with up to 320 million barrels (MMbbls) of Undiscovered Oil Initially In Place (UOIIP) as well as a large part of the Horn Valley Siltstone oil play.

In addition to today’s JV expansion, Trident has also paid Central Petroleum A$550,000 cash for previous JV work undertaken on EP 115 and will also carry out at no cost to the JV, a preliminary screening GoreTM geochemical survey over EP 111.

Trident has informed Central Petroleum it is considering an Initial Public Offer and ASX listing later this year in order to retain its participating interest. Negotiations with the Central Land Council have already commenced over the granting of EPA 111 using the exploration deed over EP 115 as a template.

The Joint Venture over EP 115 and EPA 111, subject to grant, now comprises Petroleum Exploration Australia Limited (20%), Central Petroleum (70% through its wholly-owned subsidiary, Frontier Oil and Gas); and Trident (10%).

“The Trident farm-in brings with it not only assistance on the cash front but also considerable technical expertise that can be brought to bear on highly prospective acreage where a large number of prospects have already been outlined,” Central Petroleum’s Managing Director, Mr John Heugh, said today.

“Senior Trident personnel have long experience with one of the most sophisticated geochemical prospecting technologies available in the world today, the GoreTM Survey method,” Mr Heugh said.

“The application already of this method over the Johnstone prospect - described as potentially having more than 300 million barrels of UOIIP - has shown very positive results. A more intense employment of the technology across the tenement is expected to enhance the development of EP 115’s oil and gas potential, paralleled by Trident’s many years of experience in basin modelling” he said.

“EP 115 and EPA 111 have considerable oil promise as they feature an increasingly oil rich and oil mature source rock sequence, the Horn Valley Siltstone, widespread over the acreage”

“The siltstone has potential to host oil-in-fracture systems similar to the Bakken Shale Formation in North America, although this concept has not been tested to date in the Amadeus Basin.”

Mr Heugh said in-house assessments by Central Petroleum put a figure of potentially up to 10 billion barrels UOIIP in its Amadeus Basin permits, inclusive of EP 115 and EPA 111, in naturally occurring or artificially induced fracture systems within the Horn Valley Siltstone.

“The Horn Valley Siltstone has already been drilled at a number of locations and almost invariably shows evidence of gas and or oil saturation which has never been tested,” he said.

Tags: Central Petroleum Limited