InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, is pleased to provide an update on its exploration activities. The Company is also separately releasing today its final results for the year ended 31 July 2012.
The past six months have seen significant progress in both its project areas.
Larne-Lough Neagh Basin, Northern Ireland (Operator, 46% net interest)
The PL1/10 licence was awarded to InfraStrata in March 2011 and covers an area of 663 square kilometres. A second seismic survey completed in June 2012, increased the total new 2D data acquired for the Company by Tesla Exploration International Limited to 400 kilometres. Processing of the data was completed by Fugro Seismic Imaging Limited in early October 2012. Interpretation of the data by Merlin Energy Resources Limited for the InfraStrata led joint venture has resulted in the mapping of more than twenty leads within this large licence area.
The licence covers the central part of the Larne-Lough Neagh Basin. There has been a limited amount of drilling in the Larne-Lough Neagh Basin over the past 40 years; largely for coal exploration and geothermal feasibility. These wells did however confirm the development of good sandstone reservoirs and seals within the thick Permo-Triassic sedimentary section, similar to those found in the prolific East Irish Sea Basin. Oil-prone source rocks have been identified on the margins of the Basin within the Carboniferous section, and gas-prone coals have also been mined to the west in the Coalisland area, and along the North Antrim coast. The basin is also along trend from the Midland Valley of Scotland where oil and gas prone rocks of Carboniferous age are well known. It is anticipated that in the more deeply buried areas of the Larne-Lough Neagh Basin the Carboniferous will have been buried sufficiently to generate oil and possibly also gas.
Only one petroleum exploration well has been drilled previously within the licence area, a well drilled by Shell and Marathon in 1971, prior to any seismic being acquired. The basin was largely ignored by the industry while other areas in the UK were extensively explored in the 1970s and 1980s. One of the reasons for this lack of attention was the presence of thick basalts extensively covering the surface of County Antrim. The properties of the basalts were a significant challenge to the acquisition and processing of seismic data. Recent technological advances are opening up sub-basalt plays around the world. The two seismic campaigns by InfraStrata, undertaken in 2011 and 2012, have proved successful in imaging structures below the basalt.
A trend of structures within the eastern half of the licence has been high-graded. An initial “most likely” estimate of the prospective resources, by the joint venture partners, for the first of these prospects that the partners would like to drill is approximately 13 million barrels of oil (“mmbo”) recoverable (net 6 mmbo to InfraStrata) within the primary Triassic Sherwood Sandstone target at a depth of approximately 650 metres below ground level. Additional reservoir targets will be evaluated in deeper Permian and Carboniferous sandstones. As with any new exploration province anywhere, the presence of a working petroleum basin remains the highest risk of the play and can only be resolved by drilling. Success with the first well would have the potential to open up a new play fairway within the licence with multiple reservoir targets in multiple prospects.
The joint venture proposes to drill its first exploration well during 2013. Work has now commenced on identifying a suitable surface site from which to drill, and engaging with local stakeholders. InfraStrata intends, if possible, to coordinate the drilling of this well with the appraisal well planned during 2013 for the Islandmagee project, a salt cavern gas storage venture in which the Company is also a partner.
Wessex Basin, Southern England (Operator, 78% net interest)
The P1918 licence, offshore adjacent to the Dorset coast, covering an area of 584 square kilometres, was awarded to the Company effective February 2012.
A total of seven wells have previously been drilled within the licence area, including the first UK offshore well in 1963 on Lulworth Banks. Six of these wells encountered oil or gas shows and three flowed oil or gas on test. Within and immediately adjacent to the licence area there are also a number of active oil and gas seeps.
The InfraStrata led joint venture has purchased approximately 3,500 kilometres of existing 2D seismic data, and three existing 3D surveys, within or adjacent to the licence. The advances in technology and higher petroleum prices mean that the licensees are hopeful of being able to develop one of the existing discoveries profitably as a base from which to appraise the full potential of the area.
Over the past two months this data has been interpreted by Geosolutions Limited on behalf of the group. The focus has been on the offshore extension of the Purbeck Prospect, an anticline in the east of the licence, up dip of the onshore well Southard Quarry-1, which encountered petroleum in Jurassic and Triassic reservoirs during 1989 but which was not tested. The new mapping of the Purbeck Prospect shows it covering an area of approximately 13 square kilometres at the primary target level, the majority within the P1918 licence.
An initial “most likely” estimate of the prospective resources, by the joint venture partners, for the primary reservoir objective, the Triassic Sherwood Sandstone, is approximately 100 billion cubic feet (“bcf”) of gas recoverable (net 78 bcf to InfraStrata). An appraisal well is now required to test the productivity of the reservoir at a depth of approximately 2,500 metres below ground level. The well will also be designed to evaluate two Jurassic reservoirs where oil was encountered in the Southard Quarry-1 well.
InfraStrata is now going to reprocess approximately 250 kilometres of 2D seismic data to further define the sub-surface target location for a new appraisal well. It is proposed to drill the well directionally from an onshore location to the offshore within Block 98/11 of licence P1918. The joint venture intends to submit a planning application in Q1 2013, and it is anticipated that the first appraisal well will commence drilling before the end of 2013, subject to consents and funding.
Further technical work will be undertaken to refine the prospect inventory in both exploration projects and the Company propose to commission a Competent Persons Report on completion of this work during the first half of 2013.
UK 27th Seaward Licensing Round
Two licence applications, covering seven whole or part blocks, were submitted with partners in 27th Seaward Licensing Round. All the blocks applied for are subject to Department of Energy and Climate Change (“DECC”) environmental assessments before any offer is made. The Company expects the award of these blocks to take place in a further tranche of licence awards by DECC during Q2 2013.
Commenting on the status of exploratory activities, Andrew Hindle, CEO of InfraStrata plc said:
“Good progress has been made in assessing and defining the prospectivity within the Company’s exploration acreage. The coming year will see an increasing focus of the Company’s activities towards its exploration portfolio. The upside potential of the licences for the Company is very significant. Characterisation of the primary prospects in each licence will continue as preparations are made for drilling and testing the plays, which is expected during the second half of 2013.
In Northern Ireland our success at imaging good sized structures below the basalt, where the presence of good Permian and Triassic reservoirs are known, is particularly exciting. In Dorset, the potential to drill an appraisal well on a structure where a well has already encountered oil and gas within the prospect closure offers a different and equally exciting risk profile.
The funding of InfraStrata's share of exploratory activity has traditionally been through the introduction of partners at the assets level. A portion of the first well in Northern Ireland is already funded under an existing farm-out agreement. We expect to see continued significant interest from industry partners in our acreage and will assess the options for securing the balance of the funding for the exploration and appraisal wells in due course.”