Oil and gas explorer Real Energy Corporation (ASX: RLE) expects to mobilise a rig at its Tamarama 2 well site next week, with drilling set to begin soon afterwards.
The Cooper Basin, Queensland-focused company said today it had finished preparing the well site and was ready for drilling operations.
Tamarama 2 is one of two well sites covering 682,000 acres in the basin the Sydney company is planning to drill in the coming months.
The company’s gas processing partner, oil and gas leader and A$13.5 billion Harbour Energy takeover target Santos (ASX: STO), also operates in the basin which extends from Queensland to near-east South Australia.
Real Energy told the market its drill casings had been delivered and all contracts were in place for the drilling campaigns.
The company reported an Ensign rig 964 is due to be mobilised next week at the site, with drilling tipped to start “shortly thereafter”.
Ensign on board
Last month Real Energy reported it was fully funded for the drilling of the two pilot development wells to be completed with signed up contractor Ensign International.
Ensign will drill Tamarama 2 and 3 on behalf of the company.
Real Energy managing director Scott Brown said on March 16 the company was in a strong financial position, “As one of the few independent oil & gas companies with a substantial and 100%-owned acreage holding in the Cooper Basin, we are ideally placed to take advantage of the significant unlocked value that prospects in the Basin hold…Real Energy has a strong financial position and is fully funded for the drilling of these wells.”
If the wells are successful, the company plans to connect flow lines and set up pilot production on-site, then supply the Australian east coast market.
Real Energy already has a memorandum of understanding in place with Santos for gas processing.
The company has also signed a gas sale deal with Weston Energy to sell gas from the company’s Windorah gas project in the Cooper Basin, Queensland.
The Weston deal represented at $6 million cash injection, as the partner agreed to pre-purchase gas and snap up 3PJ of gas a year for a five-year term.
In an investor presentation published last month, Real Energy revealed it had about $8.4 million in cash, with the company’s market capitalisation sat at $28.08 million this morning.
Last month the Australian Energy Market Operator published its Victorian Gas Planning Report Update, tipped further declines in gas supply and production in the coming years, as the east coast and South Australia feel the effects of offshore gas field depletions.
AEMO revealed Victorian gas supplies to New South Wales and South Australian were likely to decline, particularly in winter due to gas storage limitation experienced in the colder months.
Shortfalls in offshore reserves could create opportunities for companies with on-shore resources.
Real Energy believes east coast gas supplies will be in short supply for the next five years, with gas prices forecast to stay between $8 and $12 a gigajoule.
Real Energy last month affirmed it held 100 per cent of its 2761 square kilometres of permits near infrastructure in the Cooper Basin.
The company’s independently verified estimated total mean gas in place sits at 13.76 trillion cubic feet in ATP 927P.
Its maiden 3C gas resource of 672 billion cubic feet is from two discoveries Tamarama 1 and Queenscliff 1, near Mount Howitt in south-west Queensland near South Australia.
Real Energy has said Tamarama 1’s well performance is improving progressively, achieving variable rates of up to 2 million cubic feet a day during flow periods.
The company is focusing initially on the Toolachee and Patchawarra formations at its acreage.
“Seismic interpretation in conjunction with existing petroleum well data has determined that the Toolachee and Patchawarra formations are significant across much of our acreage,” the company said today.
Real Energy securities slipped 4.55% down to 10.5c by late morning on the Australian Securities Exchange after reaching an 11c high.