BPH poised to benefit from drilling of Baleen target

By Trevor Hoey. Published at Jan 28, 2020, in Energy

BPH Energy Limited’s (ASX:BPH) investee Advent Energy Ltd has submitted to the National Offshore Petroleum Titles Administrator (NOPTA) an application to enable the drilling of the Baleen drill target in the PEP11 permit offshore NSW.

Advent, through wholly owned subsidiary Asset Energy Pty Ltd, holds an 85% interest and is operator of the permit.

BPH Energy is the second largest shareholder in Advent Energy Ltd (Advent) with a direct interest of 22%.

Bounty Oil and Gas NL (ASX:BUY) holds the remaining 15%.

The PEP11 Joint Venture has reviewed the work program and now proposes to proceed with the drilling of a well at Baleen subject to approvals from NOPTA and other regulatory authorities and financing.

An application is being made to NOPTA to change the current permit conditions to proceed with the drilling.

Bounty and Asset Energy are now moving to a drill ready status for PEP11.

The current permit expiry date is in March 2021, but the application to NOPTA includes the extension of the permit title for up to two years to enable the drilling and includes an application for the removal of the requirement for a 500 square kilometre 3D seismic program.

The Joint Venture will further update the market on the timing of these approvals when details are available.

Targets believed to hold massive gas resources

The PEP11 project lies in the offshore Sydney Basin adjacent to the NSW coast, extending from Sydney to Newcastle and situated in Commonwealth waters.

The PEP11 project comprises significant structural targets believed to hold multi-trillion cubic feet natural gas resources.

PEP11 is supremely located to potentially supply gas into the east coast gas market.

The gas supply crisis on the east coast of Australia has created a significant market opportunity to raise the funding to drill with the objective of developing the PEP11 project, and management is now engaging with investors to fund this drilling.

As a means of assessing the industry outlook, the Australian Competition and Consumer Commission (ACCC Gas Enquiry 2017-2020 Interim Report April 2019) has confirmed that domestic wholesale gas prices have risen two to three times higher than historical prices, and the 2020 average of expected LNG netback gas price is around $9 per gigajoule.

BPH noted that this has put many trade-exposed Australian manufacturers under extreme pressure.

There is also continuing uncertainty about the longer-term supply outlook.

The Gas Statement of Opportunities (GSOO) released in March 2019, cited a warning from the Australian Energy Market Operator (AEMO) about potential supply shortages emerging on the east coast within five years, particularly in the southern states.

Advent with JV partner Bounty Oil completed a 200-line kilometre 2D seismic survey in PEP11 in the second quarter of 2018 at Baleen as a precursor to drilling of this target approximately 30 kilometres south east of Newcastle.

PEP 11 covers nearly 4600 square kilometres of the offshore Sydney Basin immediately adjacent to the largest gas market in Australia and is a high impact exploration project.

The permit area remains one of the most significant untested gas plays in Australia.

Importantly, the PEP JV has demonstrated considerable gas generation and migration in the offshore Sydney Basin, with the previously observed mapped prospects and leads being highly prospective for gas.

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