Joint venture partners Metgasco (ASX: MEL), Vintage Energy (ASX: VEN) and private company RCMA Australia have entered a rig sharing contract with fellow oil and gas explorer Strike Energy (ASX: STX) with a view to drill the Cervantes-1 well next year.
Cervantes-1 is an onshore oil exploration well proposed to be drilled in Western Australia’s Perth Basin to target gross recoverable prospective resources (P50) of 15.3 million barrels of oil.
The Cervantes joint venture is operated by Metgasco with a 30% stake while Vintage holds another 30% and RCMA takes up the remaining 40% interest.
In an announcement today, Metgasco reported that RCMA signed a non-binding letter of intent with Strike Energy to set out a framework to negotiate a rig slot option for use of the Ensign 970 rig, which is currently contracted to Strike.
The proposed deal contemplates RCMA, on behalf of the Cervantes joint venture, entering into a standalone drilling rig contract with Ensign Australia, once agreement has been reached with Strike.
Environmental approval is anticipated for completed by the end of November and the access track and well pad civil construction work is scheduled to start around year end.
The proposed rig sharing contract is expected to align with the Cervantes joint venture’s plan to spud the oil well in the second quarter of the 2022 calendar year.
Metgasco said it will keep shareholders informed of material developments.
The Cervantes structure is a high-side fault trap with multiple Permian reservoir units including the prolific Dongara, Kingia and High Cliff sandstones. The prospect shares strong similarities with the offset Hovea, Jingemia and Cliff Head oilfields in terms of structure, potential reservoirs, and access to mature oil source rock.
Studies have shown the prospect to have a 28% chance of success and a high chance of development due to its close proximity to the producing Jingemia oil processing and export facility.
In addition to Cervantes, the joint venture has an option to drill a second well into a separate prospect.