Pancontinental to redevelop Walyering Field in the Northern Perth Basin
Wednesday, May 16, 2018

Pancontinental Oil & Gas has provided an update on its plans to appraise and redevelop the Walyering Conventional Gas Field in the onshore, Northern Perth Basin.

The results of a recent independent resources estimate give very positive encouragement for the project.

The Company, via a farm in agreement with UIL Energy has the right to earn a 70% operated interest in the southern part of Exploration Permit EP 447 covering the Gas Field. Walyering was discovered and originally placed on production for a limited period in the 1970’s by WAPET. The discovery well flowed naturally at up to 13.5 MMCFD from conventional sandstone reservoirs of Jurassic age. The field is mapped to be larger than, but shares similar geology to, the productive Gingin West – Red Gully Gas and Condensate Field on trend to the south.

The Walyering Gas Field is crossed by the Parmelia Gas Pipeline and the Brand Highway, giving it an excellent position relative to infrastructure as shown in the accompanying map. The project is subject to standard onshore Australia, PRRT fiscal conditions.

Pancontinental believes that most of the structure that covers an area of over 10 km² remains untapped by early drilling that was poorly positioned on either flank of the structure. This was mainly due to inaccurate mapping based on the early (1970s) 2D seismic grid. Pancontinental assesses there is a 57% chance of finding gas in the Central High, the crest of which is mapped more than 200m shallower than the highest gas intersected in the peripheral wells but requires 3D seismic to provide better definition of the mapping at the gas reservoir levels. A circa 90km² 3D survey is planned for November this year. The survey will be managed and funded by Pancontinental and is estimated to cost less than $2.0 million. Permitting for this survey that includes environmental approvals, is advancing.

In the event that the 3D data supports the size of the undrilled field compartments consistent with the current mapping, then Pancontinental will consider drilling of at least one appraisal / development well in 2019. If that drilling is successful, identifying recoverable gas in excess of the current P90 or Low resource estimate, then it is highly likely the field can be developed commercially.

Net to the Company, unrisked, recoverable Prospective Resources for Walyering, calculated on a Probabilistic Basis range from a Low or P90 of 14 Bcf gas plus 0.14 MMbbl condensate (or light oil) to a High or P10 of 158 Bcf gas and 4.4 MMbbl condensate.

These resource estimates date from May 2018 and were made after remapping the 2D seismic grid and tying this to well control on the structure that comprises four wells, three of which flowed gas on test naturally to surface. The well data is publicly available via the Department of Mines, Industry Regulation and Safety technical website WAPIMS. Extensive wireline log data and whole core data was also available and used in the analyses. The sandstone reservoirs are at depths between 2,900m and over 3,800m.

If the planned 3D data is acquired and supports Pancontinental’s structural and gas resource mapping, the Company considers the principle risk to commercial development will be effective drilling and completion of producing wells. That is, enabling the reservoirs to flow naturally at high rates as in Walyering-1. Of three wells that encountered and flowed gas to surface from the Jurassic reservoirs, the Walyering-1 discovery well had the least mechanical difficulties and the lowest mud weights used, impacting less on the reservoirs during drilling and completion. There is high confidence that improved, modern drilling mud  chemistry, not requiring high mud weights, will support effective drilling and testing in future wells. This has already been demonstrated by the Walyering-4 well that was drilled into the top of the Upper Sands in a non-trapping compartment off the west flank of the structure in 2001. KCL polymer based muds were used in this well resulting in good hole conditions throughout.

Partners in the project at completion of Pancontinental’s farmin will be: Pancontinental Oil and Gas NL (Operator) 70%; UIL Energy Ltd 30%

Commenting on progress at the project and the upgraded resources potential, Pancontinental CEO John Begg said:

'We have been steadily working away on Walyering behind the scenes and are very pleased with the increased scale and materiality that has emerged for Pancontinental. That there is a prominent central high, with the reservoir top hundreds of metres higher than the historic gas intersections seems very clear from our mapping. The position relative to infrastructure could not be better for this project to advance.'

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