Australia: Comet Ridge, QER Ink Farm-In Agreement

Coal seam gas explorer Comet Ridge Limited said it has signed a three-Stage farm-in agreement with Queensland Energy Resources Pty Limited (QER) to earn up to 75% of the Lake Galilee Farm-in Area.

The farm-in area is located in the south east of permit ATP 1015P, between the east and west parts of Comet Ridge’s ATP 744P, in which Comet Ridge has a 100% interest.

The Lake Galilee Farm-in Area consists of two separate areas totalling approximately 825 km2. These areas represent 21% of QER’s total permit area in ATP 1015P. QER will retain a 100% interest in the remaining area of ATP 1015P, while Comet Ridge will become Operator of the Lake Galilee Farm-in Area.

Comet Ridge Managing Director, Tor McCaul commented “This transaction creates a continuous acreage position across our key area in the Galilee Basin, expanding the Gunn Project Area to the east and allowing it to be appraised as a single project.

“We are very keen to commence exploration and appraisal drilling in the Lake Galilee Farm-in Area to better understand the eastern extent of our Gunn Project Area.”

In October 2011 Comet Ridge and QER each completed significant seismic acquisition programmes in this part of the basin, with the results being shared under the terms of a data sharing agreement. When combined with the historical seismic surveys acquired in the area, the data gives a detailed understanding of the stratigraphy of the Gunn Project Area, the Lake Galilee Farm-in Area and the area extending towards the eastern boundary of ATP 744P.

Following this, in early 2012, Comet Ridge completed a geophysical interpretation of a major Airborne Gravity survey over the eastern part of Galilee Basin. The survey was acquired by Geoscience Australia and the Geological Survey of Queensland.

Comet Ridge has now integrated both seismic and gravity surveys into its geological models.

Comet Ridge plans a three well exploration and appraisal drilling programme in this part of the Galilee Basin for 2012, which will further appraise the extent and characteristics of the coals in the Gunn Project Area. 3C Contingent Resources in the Gunn Project Area currently stand at 1870 PJ.

All permitting and approvals are progressing to schedule, with the first well expected to spud in September.

One pre-pilot production well (Gunn 2) is planned in ATP 744P with two core wells in the Lake Galilee Farm-in Area which will meet Stage 1 farm-in commitments. Two of these wells will provide valuable information across the Gunn Project Area, while the third and most easterly well will test a different play concept.

Mr McCaul added “Comet Ridge has entered a new phase, with appraisal drilling recently commenced at ATP 337P Mahalo, and planned to commence in the Galilee Basin, both in Queensland”.

“The team has worked very hard over the past two years on improving Comet Ridge’s technical understanding across its portfolio, including the Galilee Basin and ATP 337P Mahalo in Queensland, the Gunnedah Basin in New South Wales, and in New Zealand, where significant gas resource bookings have been made over all of these areas.

“This technical work has also led to some strategic transactions, including the farm-in we are announcing today, the recent Gunnedah Basin acquisition announced on 21 June, and the Davidson Prospecting acquisition, also in the Gunnedah Basin, in late 2010.”

“The part divestment of ATP 337P Mahalo to the Queensland Government owned Stanwell Corporation Limited at the end of 2011, was also significant in funding the Mahalo work programme this year while also retaining substantial upside for the company,” he said.

Comet Ridge is well positioned for growth in 2012/13, with three wells planned in the Galilee Basin, and up to 12 wells (including two pilots) at Mahalo.

Comet Ridge has had discussions with several parties to examine the feasibility of developing gas fired electricity generation to supply the significant Galilee Basin coal mine province being proposed along the eastern boundary of Comet Ridge’s ATP 744P. The development of these coal mines is expected to result in the construction of high voltage power transmission infrastructure from the East Coast power network to the edge of ATP 744P, allowing locally generated electricity to be supplied directly to the coal mines or into the power network.

Supplying gas to domestic gas customers via Queensland’s gas network, and/or to the Gladstone LNG projects, are longer term commercial options that are also under consideration.

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LNG World News Staff, July 30, 2012; Image: Comet Ridge