Mr Maxwell said the drilling results pointed to a find within the range of expectations given before the well, which suggested a “best estimate” of 70.5 billion cubic feet and potentially as much as 137 bcf.
The Annie well is the first in an $80 million, two-well exploration program by the partners aimed at finding new gas for the south-east. The second well, Elanora, is targeting a potentially bigger gas resource but has a slightly lower chance of success.
The well, which was drilled more than 2 kilometres below the seabed in the Otway Basin, found gas over a depth of 70 metres, of which 62m has been deemed “net pay”, or technically capable of commercial production. The gas would be produced through the Minerva gas plant, which is due to be sold by BHP to Cooper and Mitsui after production ceased on September 3, as per a deal announced in May last year.
RBC Capital Markets analyst Ben Wilson said that pending positive results from further analysis at the well, Annie-1 “should be a simple development” and may even defer the timing for a development well expected to be needed at an existing field, Henry.
“Given its proximity to Cooper’s Henry and Minerva fields (15km from Henry and 11km from Minerva) and ample capacity in the recently acquired Minerva gas plant, Annie should be a strong brownfield development,” Mr Wilson said.
News of the find in the VIC/P44 permit came as further results from a discovery reported last week off the Western Australian coast showed more gas was found in a deeper part of the exploration well. The West Erregulla-2 well drilled by Strike Energy and Warrego Energy also found gas in the deeper High Cliff sandstone, after last week reporting a discovery in the Kingia sands.
Warrego managing director Dennis Donald described the 10 metres of “net pay” discovered in the High Cliff, coming on top of the gas found at shallower levels, as “a really excellent result”.
The partners would now complete the well and run flow tests which would help determine the size of the field. They are considering “a number of options” to bring the gas to market, Mr Donald said.
Still, the market seems to have expected more from the results, with shares in 50:50 partners Strike and Warrego closing sharply lower after initial gains. Warrego closed down 18 per cent while Strike ended 11 per cent lower, although both stocks remain well above levels before the initial discovery last week was announced.