TIDMMSMN
RNS Number : 4848P
Mosman Oil and Gas Limited
17 November 2016
17 November 2016
Mosman Oil and Gas Limited
("Mosman" or the "Company")
Exploration Update
Mosman Oil and Gas Limited (AIM: MSMN) the Australian, New
Zealand and USA focused oil exploration and production company,
announces an update in respect to its current exploration
operations.
As advised previously activities have been fiscally restrained
in 2016 due to the need to maximize the value received for every
dollar spent, whilst continuing to make progress especially on the
EP 145, EP 156 and Murchison permits.
Australia
Amadeus Basin Permits
Mosman owns and operates two granted permits (EP 145 & 156)
and one application (EPA 155) which total 5,458 sq. km.
In March 2016 SRK Consulting (Australia) ("SRK") reported on the
prospective resource contained in permit EP 145 which is on trend
with the existing producing Mereenie oil and gas field owned by
Central Petroleum Limited (CTP: ASX).
SRK calculated the unrisked Prospective Resources as documented
below:
Resource Type P50
Conventional Recoverable Gas (Bcf) 12.44 (Bcf)
------------
Unconventional Recoverable Gas 1456 (Bcf)
(Bcf)
------------
Source: SRK
In the region, work has begun on procurement for the Northern
Gas Pipeline to connect the Northern Territory pipelines to the
East Coast gas markets. It is also noted that Central Petroleum
Limited, which is the largest onshore gas producer in the Northern
Territory, has received an unsolicited, indicative and non-binding
proposal from Macquarie Group Ltd.
Fieldwork has recently recommenced in permit EP145, to further
assess hydrocarbon prospectivity. Dr Ian Dyson, an expert in the
geology of the Amadeus basin, is currently conducting the field
work in the permit area with a report due in the first quarter of
2016. The Pacoota Sandstone beds that form the reservoir at nearby
Mereenie oil and gas field and the Stairway Sandstone that is the
reservoir at the Palm Valley gas field are visible at surface in
the eastern part of EP145, along with the Horn Valley formation
that is recognised as an excellent source rock. These formations
can be mapped at surface and potential traps identified from data
including existing seismic and wells drilled in the permit.
Dr Julie Daws, (Mosman's Senior Geoscientist), and Andy Carroll
(Technical Director) recently spent time with Dr. Dyson on site to
further explore the geology and conduct a review.
Following on from the permit application for EPA 155, meetings
were also held with the Central Land Council ("CLC") in Alice
Springs, part of the normal negotiation process prior to grant of
an exploration licence. The team also visited the Department of
Mines office and inspected core samples from relevant wells in and
around EP145, at the core store.
In EP 156, the planned airborne survey contract will take place
once the aircraft is in the area in order to enable mobilisation
and demobilisation costs to be shared.
New Zealand
In April 2015 SRK calculated the Prospective Resources on the
following projects as documented below:
Estimated Tight Gas and Oil Prospective Resources for the mapped
northern part of Murchison PEP 57068 block
Murchison Tight Gas and Oil P90 P50 MEAN P10
-------------------------------------------------------- ----- ------ ------ ------
Recoverable Gas
(Bcf) 9,543 13,271 13,695 18,546
Prospective Resources
Recoverable Oil
148 159 164 196
(MMbbl)
Source: SRK
SRK has also estimated the conventional oil prospective
resources at the Te Wiriki Prospect:
Estimated Prospective Oil Resources for the Te Wiriki
Anticline
Te Wiriki Prospect P90 MODE P50 MEAN P10
========================== ---- ---- ---- ---- ----
Prospective Oil Resources
0.06 0.03 0.40 1.13 2.92
(MMbbl Recoverable)
============================ ---- ---- ---- ---- ----
Source: SRK
In early 2016 Mosman received approval from NZPAM to carry out a
LiDAR survey. The NZPAM approval was for a Change of Condition
whereby LiDAR replaced a licence condition to acquire magnetic and
gravity data.
The LiDAR survey is designed to assist in firming up the
structural geology interpretation on the Permit, and thus further
assist with specific well locations for future drilling on the
permit.
The initial LiDAR was completed in July 2016 and the processing
and analysis of the results produced generally confirmed the
structural geological model and demonstrated the usefulness of the
data. As a result a second contract was signed with consultants GNS
Science, in which the analysis has been extended to cover
additional areas of prospectivity.
As a result of the LiDAR analysis completed to date, Mosman's
technical team are now working on finalising preferred drill
locations and a timing schedule for Board review and approval.
Initial discussions have also commenced with drilling contractors
to determine availability and to review costings.
A site visit to the Petroleum Creek area confirmed there has
been no apparent adverse effect following the recent
earthquake.
Competent Person's Statement
The information contained in this announcement has been reviewed
and approved by Andy Carroll, Technical Director for Mosman, who
has over 35 years of relevant experience in the oil industry. Mr.
Carroll is a member of the Society of Petroleum Engineers.*
Enquiries
Mosman Oil & Gas Limited NOMAD and Broker
John W Barr, Executive Chairman SP Angel Corporate Finance LLP
Andy Carroll, Technical Director Stuart Gledhill / Richard Hail
jwbarr@mosmanoilandgas.com +44 (0) 20 3470 0470
acarroll@mosmanoilandgas.com
Gable Communications Limited
Justine James / John Bick
+44 (0) 20 7193 7463
mosman@gablecommunications.com
Updates on the Company's activities are regularly posted on its
website
www.mosmanoilandgas.com
About Mosman
Mosman (AIM: MSMN) is an oil exploration and production company
with projects in Australia New Zealand and the USA, Current
projects include the following permits which are 100% owned.
Petroleum Creek Permit, New Zealand
The permit is a 143 sq. km project located near Greymouth on the
South Island in the southern extension of the proven Taranaki oil
system.
Taramakau Permit, New Zealand
The permit (990 sq. km onshore) surrounds the Petroleum Creek
Permit and shares similar geological characteristics and shares
similar prospective play types.
Murchison Permit, New Zealand
The permit (517 sq. km onshore) located approximately 100
kilometres north of Petroleum Creek has a 13 TCF Prospective
Resource identified.
Amadeus Basin Projects, Australia
Mosman owns two granted permits and one application in Central
Australia which total of 5,458 sq. km. The Amadeus Basin is
considered one of the most prospective onshore areas in the
Northern Territory of Australia for both conventional and
unconventional oil and gas, and hosts the producing Mereenie, Palm
Valley and Surprise fields.
Pine Mills (80% acquisition underway)Pine Mills is an onshore
conventional oil field, in Wood County, 160 km east of Dallas,
Texas, USA that Mosman has contracted to acquire. The Pine Mills
oil field taps the prolific Woodbine trend, in the Mid-continent
oil producing area that includes the East Texas oil field, 150km to
the east of Pine Mills, which has produced more than 5.4 billion
barrels of oil since its discovery in 1930.
APPIX 1
Glossary of Oil and Gas Terms*
% per cent
bbl barrel
Bcf or BCF billion standard cubic feet of gas
km kilometre
m metre
Md or md millidarcy
MMbbl million barrels of oil
MMboe million barrels of oil equivalent
MMscf million standard cubic feet of gas
MMscfd million standard cubic feet of gas per day
NZP&M New Zealand Petroleum & Minerals, the New
Zealand Government body charged with
managing New Zealand's oil, gas, mineral and
coal resources
Permeability measure of the ease with which a fluid flows
through a rock. The units are millidarcies or
darcies
OGIP Gas initially in place
OIIP Oil initially in place
Porosity measure of how much of a rock is open
space. This space can be between grains or
within cracks or cavities of the rock.
Measured in %.
RKB RKB - Rotary Kelly Bushing (a datum for
measuring depth in an oil well)
Tcf trillion standard cubic feet of gas
Tight Gas Formation a reservoir that cannot be produced at
economic flow rates nor recover economic
volumes of natural gas unless the well is
stimulated by a large hydraulic fracture
treatment or produced by use of a horizontal
wellbore or multilateral wellbores
* The above Competent Person's statement in respect of the
review and approval by Andy Carroll and glossary also apply to the
Company's original announcement of 14 March 2016 made in relation
to the prospective resources at the Amadeus Basin project where
such wording had been omitted.
APPIX 2
Category Definitions of Petroleum Reserves and Resources
For further details on the definitions and guidelines, please
see the original document (Society of Petroleum Engineers (SPE),
2007).
The following figure (from the World Petroleum Council) presents
1P 2P and 3P category definitions. Furthermore, it provides
guidelines designed to promote consistency in resource assessments.
The following summarizes the definitions for each Reserves category
in terms of both the deterministic incremental approach and
scenario approach and also provides the probability criteria if
probabilistic methods are applied. Reference:
www.spe.org/industry/docs/PRMS_Guidelines_Nov2011.pdf
Resources Classification Framework
Proved Reserves are those quantities of petroleum, which, by
analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be commercially recoverable, from a given
date forward, from known reservoirs and under defined economic
conditions, operating methods, and government regulations. If
deterministic methods are used, the term reasonable certainty is
intended to express a high degree of confidence that the quantities
will be recovered. If probabilistic methods are used, there should
be at least a 90% probability that the quantities actually
recovered will equal or exceed the estimate.
Probable Reserves are those additional Reserves which analysis
of geoscience and engineering data indicate are less likely to be
recovered than Proved Reserves but more certain to be recovered
than Possible Reserves. It is equally likely that actual remaining
quantities recovered will be greater than or less than the sum of
the estimated Proved plus Probable Reserves (2P). In this context,
when probabilistic methods are used, there should be at least a 50%
probability that the actual quantities recovered will equal or
exceed the 2P estimate.
Possible Reserves are those additional reserves which analysis
of geoscience and engineering data suggest are less likely to be
recoverable than Probable Reserves. The total quantities ultimately
recovered from the project have a low probability to exceed the sum
of Proved plus Probable plus Possible (3P) Reserves, which is
equivalent to the high estimate scenario. In this context, when
probabilistic methods are used, there should be at least a 10%
probability that the actual quantities recovered will equal or
exceed the 3P estimate.
The "Range of Uncertainty" reflects a range of estimated
quantities potentially recoverable from an accumulation by a
project, while the vertical axis represents the "Chance of
Commerciality", that is, the chance that the project that will be
developed and reach commercial producing status.
The following definitions apply to the major subdivisions within
the resources classification:
TOTAL PETROLEUM INITIALLY-IN-PLACE is that quantity of petroleum
that is estimated to exist originally in naturally occurring
accumulations. It includes that quantity of petroleum that is
estimated, as of a given date, to be contained in known
accumulations prior to production plus those estimated quantities
in accumulations yet to be discovered (equivalent to "total
resources").
DISCOVERED PETROLEUM INITIALLY-IN-PLACE is that quantity of
petroleum that is estimated, as of a given date, to be contained in
known accumulations prior to production.
PRODUCTION is the cumulative quantity of petroleum that has been
recovered at a given date. While all recoverable resources are
estimated and production is measured in terms of the sales product
specifications, raw production (sales plus non-sales) quantities
are also measured and required to support engineering analyses
based on reservoir voidage.
Multiple development projects may be applied to each known
accumulation, and each project will recover an estimated portion of
the initially-in-place quantities. The projects shall be subdivided
into Commercial and Sub-Commercial, with the estimated recoverable
quantities being classified as Reserves and Contingent Resources
respectively, as defined below.
RESERVES are those quantities of petroleum anticipated to be
commercially recoverable by application of development projects to
known accumulations from a given date forward under defined
conditions.
Reserves must further satisfy four criteria's: they must be
discovered, recoverable, commercial, and remaining (as of the
evaluation date) based on the development project(s) applied.
Reserves are further categorized in accordance with the level of
certainty associated with the estimates and may be sub-classified
based on project maturity and/or characterized by development and
production status.
CONTINGENT RESOURCES are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations, but the applied project(s) are not yet
considered mature enough for commercial development due to one or
more contingencies. Contingent Resources may include, for example,
projects for which there are currently no viable markets, or where
commercial recovery is dependent on technology under development,
or where evaluation of the accumulation is insufficient to clearly
assess commerciality. Contingent Resources are further categorized
in accordance with the level of certainty associated with the
estimates and may be subclassified based on project maturity and/or
characterized by their economic status.
UNDISCOVERED PETROLEUM INITIALLY-IN-PLACE is that quantity of
petroleum estimated, as of a given date, to be contained within
accumulations yet to be discovered.
PROSPECTIVE RESOURCES are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective Resources have both an associated chance of
discovery and a chance of development. Prospective Resources are
further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery and
development and may be sub-classified based on project
maturity.
UNRECOVERABLE is that portion of Discovered or Undiscovered
Petroleum Initially-in-Place quantities which is estimated, as of a
given date, not to be recoverable by future development projects. A
portion of these quantities may become recoverable in the future as
commercial circumstances change or technological developments
occur, the remaining portion may never be recovered due to
physical/chemical constraints represented by subsurface interaction
of fluids and reservoir rocks.
ESTIMATED ULTIMATE RECOVERY (EUR) is not a resources category,
but a term that may be applied to any accumulation or group of
accumulations (discovered or undiscovered) to define those
quantities of petroleum estimated, as of a given date, to be
potentially recoverable under defined technical and commercial
conditions plus those quantities already produced (total of
recoverable resources).
In specialized areas, such as basin potential studies, where
alternative terminology has been used, the total resources may be
referred to as Total Resource Base or Hydrocarbon Endowment. Total
recoverable or EUR may be termed Basin Potential. The sum of
Reserves, Contingent Resources and Prospective
Resources may be referred to as "remaining recoverable
resources". When such terms are used, it is important that each
classification component of the summation also be provided.
Moreover, these quantities should not be aggregated without due
consideration of the varying degrees of technical and commercial
risk involved with their classification
Under the SPE (2011) guideline a Tight Gas Formation (TGF) is "a
reservoir that cannot be produced at economic flow rates nor
recover economic volumes of natural gas unless the well is
stimulated by a large hydraulic fracture treatment or produced by
use of a horizontal wellbore or multilateral wellbores"
(Holditch 2006).
Project-Based Resources Evaluations
The resources evaluation process consists of identifying a
recovery project, or projects, associated with a petroleum
accumulation(s), estimating the quantities of Petroleum
Initially-in-Place, estimating that portion of those in-place
quantities that can be recovered by each project, and classifying
the project(s) based on its maturity status or chance of
commerciality.
This concept of a project-based classification system is further
clarified by examining the primary data sources contributing to an
evaluation of net recoverable resources.
Resources Classification
The basic classification requires establishment of criteria for
a petroleum discovery and thereafter the distinction between
commercial and sub-commercial projects in known accumulations (and
hence between Reserves and Contingent Resources).
Determination of Discovery Status
A discovery is one petroleum accumulation, or several petroleum
accumulations collectively, for which one or several exploratory
wells have established through testing, sampling, and/or logging
the existence of a significant quantity of potentially moveable
hydrocarbons.
In this context, "significant" implies that there is evidence of
a sufficient quantity of petroleum to justify estimating the
in-place volume demonstrated by the well(s) and for evaluating the
potential for economic recovery. Estimated recoverable quantities
within such a discovered (known) accumulation(s) shall initially be
classified as Contingent Resources pending definition of projects
with sufficient chance of commercial development to reclassify all,
or a portion, as Reserves.
Where in-place hydrocarbons are identified but are not
considered currently recoverable, such quantities may be classified
as Discovered Unrecoverable, if considered appropriate for resource
management purposes, a portion of these quantities may become
recoverable resources in the future as commercial circumstances
change or technological developments occur.
Determination of Commerciality
Discovered recoverable volumes (Contingent Resources) may be
considered commercially producible, and thus Reserves, if the
entity claiming commerciality has demonstrated firm intention to
proceed with development and such intention is based upon all of
the following criteria:
-- Evidence to support a reasonable timetable for development.
-- A reasonable assessment of the future economics of such
development projects meeting defined investment and operating
criteria.
-- A reasonable expectation that there will be a market for all
or at least the expected sales quantities of production required to
justify development.
-- Evidence that the necessary production and transportation
facilities are available or can be made available.
-- Evidence that legal, contractual, environmental and other
social and economic concerns will allow for the actual
implementation of the recovery project being evaluated.
-- To be included in the Reserves class, a project must be
sufficiently defined to establish its commercial viability. There
must be a reasonable expectation that all required internal and
external approvals will be forthcoming, and there is evidence of
firm intention to proceed with development within a reasonable time
frame. A reasonable time frame for the initiation of development
depends on the specific circumstances and varies according to the
scope of the project. While 5 years is recommended as a benchmark,
a longer time frame could be applied where, for example,
development of economic projects are deferred at the option of the
producer for, among other things, market-related reasons, or to
meet contractual or strategic objectives. In all cases, the
justification for classification as Reserves should be clearly
documented.
To be included in the Reserves class, there must be a high
confidence in the commercial producibility of the reservoir as
supported by actual production or formation tests. In certain
cases, Reserves may be assigned on the basis of well logs and/or
core analysis that indicate that the subject reservoir is
hydrocarbon-bearing and is analogous to reservoirs in the same area
that are producing or have demonstrated the ability to produce on
formation tests.
Project Status and Commercial Risk
Evaluators have the option to establish a more detailed
resources classification reporting system that can also provide the
basis for portfolio management by subdividing the chance of
commerciality axis according to project maturity. Such sub-classes
may be characterized by standard project maturity level
descriptions (qualitative) and/or by their associated chance of
reaching producing status (quantitative).
As a project moves to a higher level of maturity, there will be
an increasing chance that the accumulation will be commercially
developed. For Contingent and Prospective Resources, this can
further be expressed as a quantitative chance estimate that
incorporates two key underlying risk components:
-- The chance that the potential accumulation will result in the
discovery of petroleum. This is referred to as the "chance of
discovery"
-- Once discovered, the chance that the accumulation will be
commercially developed is referred to as the "chance of
development".
Thus, for an undiscovered accumulation, the "chance of
commerciality" is the product of these two risk components. For a
discovered accumulation where the "chance of discovery" is 100%,
the "chance of commerciality" becomes equivalent to the "chance of
development".
Project Maturity Sub-Classes
Development projects (and their associated recoverable
quantities) may be sub-classified according to project maturity
levels and the associated actions (business decisions) required to
move a project toward commercial production.
Project Maturity Sub-Classes
Project Maturity terminology and definitions have been modified
from the example provided in the 2001 Supplemental Guidelines,
Chapter 2. Detailed definitions and guidelines for each Project
maturity sub-class are provided in Table I. This approach supports
managing portfolios of opportunities at various stages of
exploration and development and may be supplemented by associated
quantitative estimates of chance of
commerciality. The boundaries between different levels of project maturity may be referred to as
"decision gates".
Decisions within the Reserves class are based on those actions
that progress a project through final approvals to implementation
and initiation of production and product sales. For Contingent
Resources, supporting analysis should focus on gathering data and
performing analyses to clarify and then mitigate those key
conditions, or contingencies that prevent commercial
development.
For Prospective Resources, these potential accumulations are
evaluated according to their chance of discovery and, assuming a
discovery, the estimated quantities that would be recoverable under
appropriate development projects. The decision at each phase is to
undertake further data acquisition and/or studies designed to move
the project to a level of technical and commercial maturity where a
decision can be made to proceed with exploration drilling.
Evaluators may adopt alternative sub-classes and project
maturity modifiers, but the concept of increasing chance of
commerciality should be a key enabler in applying the overall
classification system and supporting portfolio management.
Reserves Status
Once projects satisfy commercial risk criteria, the associated
quantities are classified as Reserves. These quantities may be
allocated to the following subdivisions based on the funding and
operational status of wells and associated facilities within the
reservoir development plan:
-- Developed Reserves are expected quantities to be recovered
from existing wells and facilities
-- Developed Producing Reserves are expected to be recovered
from completion intervals that are open and producing at the time
of the estimate
-- Developed Non-Producing Reserves include shut-in and behind-pipe Reserves
-- Undeveloped Reserves are quantities expected to be recovered through future investments.
Where Reserves remain undeveloped beyond a reasonable timeframe,
or have remained undeveloped due to repeated postponements,
evaluations should be critically reviewed to document reasons for
the delay in initiating development and justify retaining these
quantities within the Reserves class. While there are specific
circumstances where a longer delay (see Determination of
Commerciality, section 2.1.2) is justified, a reasonable time frame
is generally considered to be less than 5 years.
Development and production status are of significant importance
for project management. While Reserves Status has traditionally
only been applied to Proved Reserves, the same concept of Developed
and Undeveloped Status based on the funding and operational status
of wells and producing facilities within the development project
are applicable throughout the full range of Reserves uncertainty
categories (Proved, Probable and Possible).
Quantities may be subdivided by Reserves Status independent of
sub-classification by Project Maturity. If applied in combination,
Developed and/or Undeveloped Reserves quantities may be identified
separately within each Reserves sub-class (On Production, Approved
for Development, and Justified for Development).
Economic Status
Projects may be further characterized by their Economic Status.
All projects classified as Reserves must be economic under defined
conditions.
Based on assumptions regarding future conditions and their
impact on ultimate economic viability, projects currently
classified as Contingent Resources may be broadly divided into two
groups:
Marginal Contingent Resources are those quantities associated
with technically feasible projects that are either currently
economic or projected to be economic under reasonably forecasted
improvements in commercial conditions but are not committed for
development because of one or more contingencies.
Sub-Marginal Contingent Resources are those quantities
associated with discoveries for which analysis indicates that
technically feasible development projects would not be economic
and/or other contingencies would not be satisfied under current or
reasonably forecasted improvements in commercial conditions. These
projects nonetheless should be retained in the inventory of
discovered resources pending unforeseen major changes in commercial
conditions.
Where evaluations are incomplete such that it is premature to
clearly define ultimate chance of commerciality, it is acceptable
to note that project economic status is "undetermined." Additional
economic status modifiers may be applied to further characterize
recoverable quantities; for example, non-sales (lease fuel, flare,
and losses) may be separately identified and documented in addition
to sales quantities for both production and recoverable resource
estimates (see also Reference Point, section 3.2.1). Those
discovered in-place volumes for which a feasible development
project cannot be defined using current or reasonably forecast
improvements in, technology are classified as Unrecoverable.
Economic Status may be identified independently of, or applied
in combination with, Project Maturity sub-classification to more
completely describe the project and its associated resources.
APPENDIX 3
Definition of Prospective Resources, P90, P10, P50, Pmean
While there may be a significant risk that sub-commercial or
undiscovered accumulations will not achieve commercial production,
it is useful to consider the range of potentially recoverable
volumes independently of such a risk.
Prospective Resources are those quantities of petroleum which
are estimated to be potentially recoverable from undiscovered
accumulations. These estimates are derived from volumetric
estimates for the reservoir size, estimates of the reservoir
characteristics (porosity, permeability, oil saturation). The basis
of these estimates would be available geological and geophysical
data, and the data from any existing wells in the given area.
Any estimation of resource quantities for an accumulation is
subject to both technical and commercial uncertainties and
consequently there will be a range of estimates which in general
will be substantially greater for undiscovered accumulations than
for discovered accumulations. In all cases, however, the actual
range will be dependent on the amount and quality of data (both
technical and commercial) which is available for that accumulation.
As more data become available for a specific accumulation (for
example wells and reservoir performance data) the range of
uncertainty would be reduced.
Probabilistic methods are normally used to quantify the
uncertainty in these estimated quantities and the results of the
analysis are typically presented by stating resource quantities at
the following levels of confidence:
-- P90 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 90% probability that the
quantities actually recovered will equal or exceed the estimate.
This is therefore a low estimate of resource.
-- P50 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 50% probability that the
quantities actually recovered will equal or exceed the estimate.
This is therefore a median estimate of resource.
-- P10 resource reflects a volume estimate that, assuming the
accumulation is developed, there is a 10% probability that the
quantities actually recovered will equal or exceed the estimate.
This is therefore a high estimate of resource.
-- Pmean is the mean of the probability distribution for the
resource estimates. This is often not the same as P50 as the
distribution can be skewed by high resource numbers with relatively
low probabilities.
This information is provided by RNS
The company news service from the London Stock Exchange
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