Hunt for reserves backed by record profit

AFTER achieving a record profit after tax of $2.122 million in the last financial year and bolstered by an increase in oil production and sales, Perth-based Bounty Oil & Gas’s outlook for 2013 appears to be
particularly rosy.
Compared to the 2011 to 2012 financial year, the company’s oil revenue grew by almost $1 million, to $2.66 million, while its net assets rose by $2.56 million to more than $30 million with nil debt.
The company has projects across Australia and in East Africa (offshore Tanzania), and Bounty’s balance sheet was further strengthened by its $6.64 million worth of current assets: the company’s 2012 annual report released at the end of October, Bounty chairman Graham Reveleigh said that the company was entering an exciting growth path.
“In a very difficult year for junior resource companies, Bounty has performed well and continues to put in place the elements required to significantly increase the share price in coming years,” Mr Reveleigh said.
“We conserved our capital, with only $1.52 million spent on petroleum exploration projects during the year, but the acquisitions and enhancements flowing from those investments have achieved very
significant leverage to position Bounty to drill for a major oil resource, and to increase oil and gas production.”
Mr Reveleigh said the company had positioned its business activities to include a balance of low-risk onshore production areas with higher-risk and higher-impact offshore projects.
“Bounty management is focussed on adding accessible oil reserves to the portfolio within low-sovereign-risk operating areas”, he said.
“The results of these efforts will grow the company into a medium-size oil producer.”
He added that Bounty had a balance sheet, reserves and acreage that would support significant growth during the next two years.
In a major highlight for the 2011 to 2012 financial year, Bounty acquired a 100 per cent interest in AC/P 32 and became operator of the permit, offshore WA in the oil-producing Vulcan Graben region of the Timor Sea. According to the company, AC/P 32 could be the basis for a potentially major oil growth project.
In October, Bounty’s application to vary the work commitment conditions of the permit was approved by the National Offshore Petroleum Titles Authority.
As a result, the company stated that during permit years four (which started in June 2012) and five, it would be required to complete seismic reprocessing and geotechnical studies across 100 square kilometres, but would not be required to drill a well during the permit term. Mr Reveleigh said the company was in “the driver’s seat” to advance exploration of the permit by funding a drill test on large
oil prospects.
Bounty’s assessment of reprocessed seismic data identified two stratigraphic prospects with the potential to discover between 20 million barrels and 80mmbbls in the top Cretaceous age Puffin Sandstone
in the Wisteria area, and a lead with additional potential to discover between 10mmbls and 20 mmbbls in the mid Jurassic-age Plover Formation.
In southwest Queensland, the company has a 40 per cent interest in the Utopia Block, comprising PL 214 and ATP 560P in the Eromanga Basin.
New Hope Corporation recently completed its takeover of the Utopia Block’s operator Bridgeport Energy, and now holds the remaining 60 per cent interest in the block.
Bounty produces 20 barrels of oil per day from wells in the Murta Formation, 1000m below surface, which it sells to the Eromanga Refinery 50km away. The company also receives oil production of
49bopd from several Santos-operated oil fields and leases in the Naccowlah Block, also in southwest Queensland.
Bounty reported that a 3D seismic survey of Utopia indicated that the Murta Zone oil pool could extend across a significantly larger area to the east and contain as much as 10mmbbls of 2P reserves above the oil-water contact.
Development drilling at Utopia was suspended during 2012 to allow the joint venture partners to assess the best way of developing the large pools defined by 3D seismic analysis.
Bounty stated that the successful development of Utopia’s oil reserves was a priority.
Another achievement for the year was the renewal of PEP 11 for five years, in which Bounty has a 15 per cent interest. Covering 8250sqkm and operated by Advent Energy, PEP 11 overlaps 4576sqkm of the offshore Sydney Basin and is adjacent to Australia’s largest gas market. Bounty stated that PEP 11 kept the company on track to test for major gas resources in the region.
Regarded as a high-impact exploration area, PEP 11 contains leads and prospects with prospective resources of 4.7 trillion cubic feet of gas at the P50 confidence level (a 50 per cent probability that the reserves recovered will equal or exceed estimates).
With a 5 per cent interest, Bounty is a JV partner in the offshore Nyuni production sharing agreement (PSA) block of the Mandawa Basin in eastern Tanzania that, according to the company, was well placed in terms of exploration potential and infrastructure.
Aminex is operator, with a 70 per cent interest, and RAK Gas holds the remaining 25 per cent. Independent reserve assessments by ISIS Petroleum Consultants indicate the potential for 5.6tcf of gas (with a 280 billion cubic feet net share to Bounty).
In its annual report, Bounty stated that a forward plan for the PSA area involved carrying out a detailed 2D seismic survey of the deeper water eastern section of the block, where a strong lead could be
the up-dip end of a large gas-bearing stratigraphic trap. The area has seismic attributes that are similar to some of those found on major gas discoveries made in deeper water in eastern Tanzania.
The company reported that along with Mozambique, Tanzania had become one of the world’s premium hydrocarbon plays during the past few years, with about 100tcf of gas discovered in deep-water
turbidite sands related to the Rufiji and Ruvuma River deltas.
Increasing its natural gas portfolio, Bounty doubled its 5 per cent stake in the Nyuni PSA block’s Kiliwani North gas field during 2012, and now holds a 10 per cent interest in 45bcf of certified gas reserves.
Bounty purchased the stake from Key Petroleum for US$250,000. Kiliwani North was discovered in 2008 during the drilling of Kiliwani North-1: the most successful exploration well in Tanzania since the 1980s. In 2011, a 25-year development licence was awarded for the field, which is 3.5km from the existing Songo Songo Island gas plant.
Aminex is in discussions with the Tanzanian Government regarding a tie-in of Kiliwani North to a new gas processing facility, planned to be built on Songo Songo Island and a new north-running gas pipeline from Mtwara to Dar es Salaam, the country’s largest city.
The field will be connected to the main 36 inch-wide, 487km-long pipeline via a 24-inch, 24km spur line running from Songo Songo Island. The infrastructure is being funded by a Chinese loan and is expected to be commissioned in the first half of 2014.
Although Aminex has already completed the engineering design of a 6 inch pipeline to connect Kiliwani North to the existing gas plant, and the pipeline has been delivered to Tanzania, only minor adjustments will be required to connect it to the new gas processing facility.
The tie-in was designed to handle a production level of 20 million cubic feet of gas per day from Kiliwani North, boosting Bounty’s position in the gas commercialisation business.

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