Santos has made a major oil discovery next to its $US2bn Dorado project off WA
Santos delivers “great result’’, striking oil right next to its $US2bn Dorado project which is nearing a final investment decision.
Santos has made a “significant” oil discovery off the Western Australian Coast, adjacent to the Dorado oil project it is developing with Carnarvon Energy.
The find, which Carnarvon has a 30 per cent stake in, lit a fire under the smaller energy company’s shares, pushing them up 14.1 per cent to 36c on Wednesday.
Shares in the much-larger Santos edged down 0.3 per cent to $7.77.
The energy major said on Wednesday it had intersected a 60m hydrocarbon column with 46m of net oil paying the northern culmination of the Pavo structure, with the resource assessed as containing 43 million barrels of oil.
It is understood that this is the second biggest oil discovery in Australia since Dorado itself was discovered about five years ago. The discovery is situated 46km east of the Dorado field in the Bedout Sub-basin, offshore WA.
Santos said there were also high hopes for the southern region of the Pavo structure.
“The result at Pavo-1 also significantly de-risks the hydrocarbon bearing potential of the separate southern culmination of the greater Pavo structure,’’ Santos said in a statement.
“The southern culmination has an additional best estimate P50 prospective resource of 40 million barrels of oil gross (Santos 70 per cent interest).
“Probability of geologic success for the prospective resource in the southern culmination is assessed at 60 per cent.’’
Santos managing director Kevin Gallagher said it was a great result, and could add value to the Dorado project, which Santos expects to make a final investment decision on later this year.
“The Pavo-1 success is expected to support a potential low-cost tie-back to the first phase of the proposed Dorado development, with Pavo north having an estimated break-even cost of less than $US10 per barrel, and future gas production from the Bedout basin providing a source of supply into our existing domestic gas infrastructure in Western Australia,” Mr Gallagher said.
“With the global oil and gas markets seeing increased volatility, low-CO2 oil and gas resources at Dorado and Pavo add significantly to Australia’s national energy security.
“It is also very encouraging for the next exploration well in the current campaign, Apus-1, which offers another potential nearby low-cost tie-in opportunity to the Dorado development.
“The Pavo-1 well result also proves the petroleum system in the basin is effective over a greater area, de-risking a number of nearby low-cost opportunities.”
The Pavo-1 well was drilled in a water depth of 88m and the rig is continuing to drill to its target depth of about 4200m.
Once drilling is completed, the rig will move to Apus-1 which is 20km to the southwest.
Santos has an 80 per cent stake in the Dorado project, with Carnarvon owning the other 20 per cent.