Permits
ONSHORE GIPPSLAND BASIN
PRL 2 – Onshore Victoria
(Lakes Oil Group, Operator: 100% interest)
Trifon Block (lakes Oil Group, Operator: 50% interst; Jarden Corporation Australia Pty Ltd 50% interest)
Drilling Operations
The Wombat 4 well was drilled to a total depth of 2,500 metres. This well was a tight gas discovery well. This well is also significant because it is the first time liquid hydrocarbons have been recovered from the Latrobe Group in the onshore Gippsland Basin. This well was drilled following 3D seismic which proved highly predictive. Four drill stem tests (DSTs) were conducted in the Strzelecki Group (primary target) and 3 DSTs in the overlying Latrobe Group (secondary target) and all zones flowed gas at indeterminate rates. Importantly, 27 prospective gas zones have been interpreted in the Strzelecki section with and estimated total potential production of 8.8 million cubic feet per day after fracturing. It is intended to re-enter this well later in 2010 to fracture stimulate several of the best tight gas zones.
Workover Program - Wombat 2
This well was seccessfully re-fractured in July 2009 procducing initial gas flows of up to 4.3 million cubic feet per day. However a chemical blockage was encountered which impeded the gas flow to the well bore following the re-fraccing. Upon receiving expert advice from USA tight gas experts, we conducted remedial work in August 2009 in an effort to remove the blockage. Flow rates and pressures build-up are slowly improving and monitoring continues.
Proposed Field Activities
Lakes Oil N.L. proposes to drill a new well, located southwest of Wombat 4, in the next quarter. This well will test a Tertiary Latrobe Group play located up-dip from the Wombat 4 location, where intra-Latrobe liquid hydrocarbons were encountered in drill stem tests in a similar interval. The expected total depth will be approximately 1,200 metres. We have commissioned a rig for this well, however the exact timing of commencement of drilling is dependent upon rig availability and the granting of all necessary approvals.
The Company is also planning work-over programs that will re-enter, test and evaluate gas and oil zones in other wells in PRL2. These will include the following wells and their objectives: Boundary Creek 2 - multiple Strzelecki gas zones, Trifon 1 - Tertiary gas zone and Wombat 3 - Strzelecki oil zone.
PRL 3 – Onshore, Victoria
(Lakes Oil Group, Operator: 100% interest of overall permit)
The Company is continuing to evaluate and consider the most effective method of oil development from the field near Lakes Entrance. During the period we constructed a composite model of the field using historical information, supplemented with recent oil company data. This will assist in future mapping and analysis of the area.
Discussions with landowners are continuing and no field activities took place during the period.
PEP 158 – Onshore, Victoria
(Lakes Oil Group, Operator: 100% interest)
No work was performed in this permit whilst we awaited Departmental consideration of our appeal on our Retention Lease Application.
PEP 166 – Onshore, Victoria
(Lakes Oil Group, Operator: 100% interest)
We completed regional mapping of basement structures using available seismic, gravity and magnetic data. This mapping enabled us to create a three dimensional basement model, extending across the Latrobe Valley into adjacent areas of the onshore Gippsland Basin.
Additionally we are planning a magneto-telluric survey across the Latrobe Valley region (See also PEP 163 below). This will enable us to image the base Strzelecki basement topography. We are seeking approval for this survey and, if approval is granted, expect to complete the fieldwork during 2010. The resultes of this survey will be shared with Greenearth Energy Limited.
ONSHORE OTWAY BASIN VICTORIA
PEP 163 – Onshore, Victoria
(Lakes Oil Group, Operator: 100% interest)
Evaluation of the potential Lower Cretaceous tight gas prospects in the permit is continuing. Several prospects have been identified and will be further evaluated. A magno-telluric (MT) survey is being prepared to complement the existing seismic data and provide better depth imaging in the area. Timing for this survey will be co-ordinated with proposed MT work to be done in PEP 166 in the Gippsland Basin, Victoria.
PEP 164 – Onshore, Victoria
(Lakes Oil Group, Operator: 100% interest)
Approval was granted for a Term 2 renewal of this permit; however 50% reduction in acreage was a condition of the new grant. Detailed seismic and geological mapping is continuing with the aim of providing several prospective tight gas targets in the Lower Cretaceous Eumeralla Group. This work will continue for the next few months. In 2011, the second year of the work program, we plan to drill a well.
PEP 169 – Onshore, Victoria
(Lakes Oil Group, Operator: 100% interest)
Detailed seismic mapping of conventional structure plays in Late Cretaceous reservoirs continued and at least 5 new structural prospects have now been identified in the south and southwest of the permit. Final selection for a drilling site will be decided shortly as a well is required for the work program in the near future.
This block contains significant potential for hydrocarbins, located as it is within and around the flanks of the Port Campbell Embayment and on the northern limit of the Shipwreck Trough, which have proven testing of the Late Cretaceous Waarre Formation.
In addition to the Waarre targets, several secondary targets that have been mapped and identified in the Tertiary Pebble Point Formation and Early Cretaceous Eumeralla Formation which occur at relatively shallow depths. These secondary targets are still being evaluated as there is less well control in this area. Discussions with potential joint venture partners are continuing.
EROMANGA BASIN - QUEENSLAND
ATP 560P – McIVOR BLOCK - Onshore, Queensland
(Lakes Oil Group: 90% interest; Operator: Victoria Petroleum N.L.)
Lakes Oil is reassessing its interest in the joint venture and discussions are taking place which may see an exit from the permit.
ATP 560P – UELEVEN BLOCK - Onshore, Queensland
(Lakes Oil Group: 25% interest; Operator: Icon Oil N.L.)
Lakes Oil is reassessing its interest in the joint venture and discussions are taking place which may see an exit from the permit.
ONSHORE USA - SAN JOAQUIN BASIN CALIFORNIA
Eagle Prospect - Onshore, California, USA
(Lakes Oil Group, 15% interest; Operator: Strata-X (formally Victoria Petroleum Inc.))
The joint venturers are participating in the acquisition of a 3D seismic survey which they believe will provide better resolution of structuring at depth. Recent oil discoveries in the area near this prospect have renewed interest in this project.