A rig is on its way to drill Vintage Energy’s (ASX: VEN) 30%-owned Cervantes-1 oil well in Western Australia’s onshore Perth Basin.
The Ensign 970 drill rig has been mobilised to the permit L14, where the well will be drilled under a joint venture comprising Vintage (30%), Metgasco (ASX: MEL, 30%), and RCMA Australia (40% and operator).
Vintage is funding 50% of the drilling costs, which will secure its 30% stake in any Cervantes discovery.
The company noted it was fully funded to meet its financing costs for the well after its recent $8.5 million placement and oversubscribed $3.44 million share purchase plan.
It is anticipated the rig will arrive onsite within seven days with well spudding to begin “shortly thereafter”.
Cervantes oil well
Preparatory site works began for drilling Cervantes-1 last month, which has been assessed to contain gross recoverable prospective resources (P50) of 15.3 million barrels of oil (4.6MMbl net to Vintage).
The well has been given a 28% chance of success estimate, with any oil production to benefit from its proximity to the Jingemia oil field and processing facility.
As well as proximity to Jingemia, Cervantes is on trend with Cliff Head and Hovea oil fields in the region.
Vali gas field
While advancing Cervantes, Vintage is fully funded through to first production and cash flow at its Vali gas field in Queensland’s Cooper Basin.
The Vali field contains 2P reserves of 101 petajoules of gas, with 50.5PJ net to Vintage.
In December, Vintage inked a binding term sheet for a $10 million debt facility with the PURE Resources Fund, which will supplement a gas sales heads of agreement with AGL Wholesale Gas.
Combined, Vintage will have access to $17.5 million in funding to cover its share of costs required to bring the field into first production and initial cash flow.
“With strengthening gas prices in the domestic and international markets, the timing couldn’t be better to commercialise the sizeable Vali field for Vintage and its shareholders,” Vintage managing director Neil Gibbons said.
Vintage also has a stake in the nearby Odin gas field and Kinta oil and gas prospect.