Last month’s huge oil discovery off the Pilbara coast, which could be the largest local find in 30 years, has already provided West Perth junior Carnarvon Petroleum with a significant boost to its share price.
While work continues to shore up the exact amount of oil that can be recovered, US operator Apache Energy and 20 per cent partner Carnarvon Petroleum are already celebrating the significant discovery at the Phoenix South-1 well, 180 kilometres off Port Hedland.
“Phoenix South may represent a new oil province for Australia,” Apache executive vice-president Thomas Voytovich said.
Fellow partner, privately held oil and gas explorer Finder Exploration, with 30 per cent equity in the permit where Phoenix South-1 well sits, has also greatly benefited.
Speaking at the Good Oil conference in Fremantle this month, Carnarvon chief operating officer Philip Huizenga said the discovery dated back to original drilling by BP in the 1980s.
“I can assure you, it was an overnight success many years in the making,” Mr Huizenga said.
“For 30 years the whole area was given a wide berth due to the two stigmas associated with this discovery, stranded gas and tight rocks, however not everyone in the industry had such a negative view of this area.”
He said former Carnarvon chief executive and current director, Ted Jacobson, had proved the naysayers wrong.
“Around six years ago in the middle of the GFC, when everyone else was battening down the hatches, Ted, along with Finder Exploration’s Jan Ostby, saw the great potential and picked up the four blocks that became known as the Phoenix blocks,” Mr Huizenga told Business News.
Carnarvon and Finder then partnered with operator Apache Energy and JX Nippon to drill the Phoenix South-1 well.
While the potential for the Phoenix acreage could be a standalone game changer for Carnarvon, it remains interested in progressing its range of other projects, including nearby acreage (Cerberus project) as well as a stake in a Thai oil project.
“Carnarvon is not resting on this most recent good news,” Mr Huizenga said.
“Joint ventures approved the Roc-1 well and that’s expected to be drilled in 2015, we’re initiating the farm-out process to look for partners in the Cerberus block, we continue to hunt down and secure new acreage, and we have a great foundation and cash position and a 20 per cent interest in our target producing assets.”
Typically oil explorers’ chance of success doesn’t nudge much higher than one in five.
Africa-focused oil explorer Pura Vida Energy’s managing director, Damon Neaves, said picking the right acreage and securing joint ventures with large partners to fund drilling programs was vital.
“If you accept we have a 20 per cent chance of success that means 80 per cent chance of failure, so we probabilistically expect to lose all of our money 80 per cent of the time,” Mr Neaves said.
“But when it works the payback is big enough to compensate for all those failures.”
Because staff at Perth-based Pura Vida had experience with African plays, the company is exploring large tenements off Morocco, Gabon and Madagascar.
While most explorers can point to potential projects that could ‘make’ the company, Woodside Petroleum’s recent entry into two nearby tenements has lifted Pura Vida’s confidence.
“It’s an interesting coincidence that Woodside is now in Morocco and Gabon. Two Australian companies that are very different in scale pursuing what is ostensibly the same strategy,” Mr Neaves said.
“In many ways you could view it as a good endorsement of our strategy.”
