Norwest Energy NL is retaining its equity at 20% in the adjoining exploration permits EP368 and EP426, the joint boundaries over which the North Erregulla prospect straddles.

Empire Oil and Gas NL has reported that Origin Energy Limited has conditionally agreed to fund a 3D seismic survey over the North Erregulla prospect. Origin will earn 40% of the permit by paying 80% of the survey costs. Both permits are operated by Empire Oil & Gas NL.

Norwest has a strong focus on the North Perth Basin and considers that the exploration permits are under explored, accordingly elected not to dilute its interest in the permits by farming out any of its equity to Origin and will maintain its equity at 20% by contributing to the costs of the survey, proposed for Q1/2012.

Apart from the conventional targets at North Erregulla Norwest also considers that the permits are prospective for shale gas, especially with the background of its regional knowledge acquired though its other activities in the Basin. In addition to that knowledge, Norwest also engaged Denver based Hoyer Group to conduct an independent petrophysical analysis of North Erregulla data, the results of which suggested that there is significant shale gas potential at the lower Kockatea level. The Kockatea is one of the key shale sequences present throughout the North Perth Basin, which also include the Carynginia and the Irwin River Coal Measures, all of which are currently being evaluated by Norwest at Arrowsmith. These shale sequences are also present in EP368/426.

EP368 and EP426 are considered by Norwest to have excellent conventional prospectivity:

The North Erregulla#1 well encountered 3m of oil at the Wagina level. A significant up dip has been mapped. The potential volumes have been estimated at 60MMbbls recoverable. In addition, mapping suggests the North Erregulla#1 up dip potential at the High Cliff level is 300BSCF recoverable and at the Aranoo level 10MMbbls recoverable

Both permits have additional leads that warrant further exploration activity

Tags: Norwest Energy NL