Perth, July 28, 2008 AEST (ABN Newswire) - Sun Resources NL ("Sun Resources")(ASX:SUR)(PINK:SNRDF) is delivering on its strategy of building significant cash flow in the USA Onshore Gulf Coast and applying this revenue to capture and participate in larger scale, high impact exploration projects, particularly in SE Asia.
HIGHLIGHTS
- Thailand - Planning for a high resolution airborne magnetic survey over entire L20/50 Concession completed. Contractor working through permitting and targeting commencement of survey during the September Quarter.
- Thailand - Approval process and planning continuing for early Q1 2009 drilling of "twin well" to Nong Bua-1 in L20/50 Concession Block.
- USA - Record revenue received in May on the back of record gas production in March 2008 from onshore Texas & Louisiana assets.
- USA - Up to four exploration wells planned for onshore Texas Gulf Coast leases during the second half of 2008 with two in the September 2008 quarter on the F1 and Meek prospects.
- USA - Planning has commenced for 3D Seismic to be shot over West Flour Bluff Gas Field in late 2008.
- Corporate - Oil and Gas production revenue increases to $716,658 for the Quarter, a record for Sun.
- Corporate - Subsequent to the Quarter a placement of notes to raise $4 million was approved by shareholders and the placement finalised which, in addition to cash at 30 June 2008 of $1.1 million, ensures Sun is very well funded to progress its international oil & gas exploration programme.
1 THAILAND EXPLORATION
L20/50 Block, Onshore Phitsanulok Basin (Sun Resources - 50%)
Update
Planning was completed during the June 2008 quarter to commence the acquisition of a high resolution airborne magnetic survey covering the whole concession area. The survey contractor is currently working through permitting with departments of the Thai government and is targeting commencement of the survey during the September Quarter. The new aeromagnetic data, integrated with old seismic data currently being reprocessed will together provide a more detailed view of the subsurface. This will allow the Joint Venture to target the acquisition of modern seismic in the most prospective part of the concession in early 2009. Carnarvon Petroleum Limited ("Carnarvon"), the Joint Venture operator, is progressing with well planning for the drilling of a "twin well" to Nong Bua-1. However, delays to the EIA (environmental assessment) approval process have resulted in the likely spud date now early Q1 2009.
Background
Sun Resources and Carnarvon accepted the L20/50 block award from the Thai Government at the official signing ceremony in Bangkok on 21 January 2008 and Carnarvon, as operator, immediately commenced exploration activities on the concession. The 3,947km2 block is located in the southern portion of the Phitsanulok Basin which hosts the largest onshore oil and gas accumulation in onshore Thailand, the Sirikit Field. To date the Sirikit field has produced ~180 million barrels of oil equivalent ("mmboe'') is currently producing ~30,000 boepd and has reserves of some 200 mmboe.
L20/50 has only been lightly explored with the last effort some 25 years ago, in a time of low oil prices. Previous work has demonstrated that oil has been generated within the L20/50 concession.
One previously drilled well at Nong Bua-1 in 1982 intersected significant oil shows which the Joint Venture believes may allow near term production and cash flow on the block from a "twin well" of Nong Bua-1. Nong Bua-1 was not brought on production because it required artificial lift to bring the oil to surface, and this higher cost production at the then time of prevailing low oil prices was not considered by the operator as it was fully committed to the development of the prolific Sirikit Field.
2 UNITED STATES OF AMERICA
A. OIL AND GAS DEVELOPMENT & PRODUCTION
The table below summarises Sun Resources' actual net working interest (WI%) production for the quarter and compares it with the previous quarter. Production for the quarter was attributed to Lake Long, Louisiana, (Sun Resources - 10%), Project Margarita, Texas, (Sun Resources - 37.5%) and Flour Bluff Gas Field, Texas, (Sun Resources - 20.00 to 24.1667%).
Revenue for the quarter has increased substantially as a result of rising energy prices and the 60 day lag between production and receipt of payment, delivering a record quarterly revenue for Sun. The Company has an exciting US exploration drilling programme planned over the next 12 months which is targeting further increases in oil and gas revenues over the coming financial year.
------------------------------------------Production June '08 March '08 Variance(Sun WI%) Quarter Quarter (%)------------------------------------------Gas (mmcf) 83.56 91.60 -8.8%Oil (barrels) 1,437 1,716 -16.2%Revenue US$716,658 US$310,716 +130.6%------------------------------------------Units: mmcfg - million cubic feet;
Lake Long, Louisiana, USA (Sun Resources - 10%)
The SL328 #9 well continued to produce during the quarter from 24 feet of net pay in the Middle Hollywood Sands behind pipe. At a latter date, after production decline, the 13 feet of net pay in the Upper Hollywood Sands will be recompleted through tubing. Gross reserves at these levels are approximately 3 billion cubic feet of gas equivalent ("bcfge").
Project Margarita, Texas, USA (Sun Resources - 37.5%)
Production for the quarter continued from the Agavero and Dona Carlota Gas fields, plus the Milagro Oilfield (now entirely oil production).
Flour Bluff Gas Field, Texas, USA (Sun Resources - 20.00 to 24.1667%)
Production for the quarter continued from existing well bores. A 3D seismic programme is scheduled for late 2008 over the West Flour Bluff Gas Field which will detail current reserves and target additional reserves. Following the 3D seismic programme development drilling will commence to further increase production rates.
B. OIL AND GAS EXPLORATION
Sun Resources will have a material equity position in the following exploration wells currently scheduled for the second half of 2008:
---------------------------------------------------------Project Prospect Interest Potential Comments---------------------------------------------------------Margarita F#1 37.5% 0.6 bcf FrioViking Meek 12.5% 18 bcfe Middle WilcoxRedback Redback3* 20.0% 58 bcfe Middle Vicksburg---------------------------------------------------------* Subject in part to successful farm-out negotiations
Project Margarita, Onshore, South Texas, USA (Sun Resources - 20% to 37.5%)
The "Shallow Wells Programme" of 2007 resulted in a 50% success rate with 3 commercial discoveries that are currently producing gas and liquids. Two additional "shallow" prospects remain, F#1 and TB#18, with F#1 planned for drilling in early August 2008, subject to site preparation and rig availability. F#1 is considered a relatively low risk well and will target ~2.5bcfe.
The "Deep Wells Programme" consists of a number of deeper, larger volume, but higher risk Wilcox prospects in the deep gas prospect inventory having potential un-risked recoverable volumes of 5 to 200 billion cubic feet of gas ("bcfg"), refer table below. The Cazadores Prospect (20 to 60 bcfg) is the most advanced prospect with the joint venture currently generating farm-in interest for possible drilling in the first quarter of 2009.
----------------------------------------Prospect Gross Potential Comments----------------------------------------Cazadores 20 to 61 bcf Upper WilcoxW2A 100 to 200 bcf WilcoxW2B 16 to 32 bcf WilcoxW3 15 to 38 bcf WilcoxAgave 67 to 208 bcf Cook Mountain----------------------------------------
Project Redback, Onshore, South Texas, USA (Sun Resources - 20% to 37.5%)
The geophysical interpretation of the five top-ranked prospects in the Redback Project inventory was completed during the June 2008 quarter. The two highest ranked prospects are targeted for farm out during the Summer NAPE expo in Houston in late August 2008. It is hoped that at least one prospect will be drilled during the last quarter of 2008. Sun Resources expects to farm down from the current 37.5% WI to retain a 20% WI through the first well.
The top-ranked prospects in the prospect inventory have multiple targets in the productive Vicksburg Sands with high upside potential for both gas and oil as accompanying condensate. Cumulative upside potential of the inventory is 72 bcfg and 1.9 million barrels of oil ("mmbo") as condensate (ie up to 88 bcfge). On trend to the Redback area are production analogues of the recognised prospects from the same targeted stratigraphic level. Individual wells from these analogues have produced at high initial daily well production rates of 3 to 4 mmcfgd with 100 to 140 bod.
Meek Prospect, Onshore Texas, USA (Sun Resources 12.5%)
Sun Resources, post quarter finalised its farm-in to a new Joint Venture with Mueller Exploration Inc to take a 12.5% working Interest (10%NRI) in the Meek Prospect in Wharton County of Southern Texas. This opportunity also allows Sun Resources to develop a relationship with Mueller Exploration's prospect generator, Viking International, who has a very successful business model, similar to Wandoo Energy. The prospect is now fully farmed out and subject to the normal approval processes, site preparation and rig availability, is likely to be drilled in August 2008 as Ammann Heirs #1.
The Meek Prospect targets 16 bcfg with 269,000 bo (18 bcfge) in stacked, highly productive, Middle Wilcox (Meek) sands. Nearby production wells in Meek sands are good analogues and have produced similar order of reserves to that being targeted by Sun Resources at the Meek Prospect in 4 to 5 year production periods. The Meek Prospect is relatively low risk because it has been keyed off an adjacent producing field in the Meek sands by using good 3D seismic. Seismic attributes indicate the presence of hydrocarbons conforming to the prospect structure.
Eagle Project, Onshore San Joaquin Basin, California, USA (Sun Resources 10.0%)
Sun Resources elected to withdraw its support for this project at the end of June quarter 2008. The Eagle farm-out effort continued without success during the quarter despite interest stimulated by the recent surge in oil prices. The operator, Victoria Petroleum NL, remains hopeful of consummating a farm-out in the near future.
3 MALTA EXPLORATION
Offshore, Southern Mediterranean Sea (Sun Resources 20%, farming down to 5% after 2D Seismic and 2 wells fully funded by Anadarko International Energy Company) This very high impact project is still awaiting settlement of border issues between Malta, Tunisia and Libya. It has been farmed out to Anadarko International Energy Company ("Anadarko"), one of the world's largest independent oil and gas exploration and production companies. Anadarko has agreed to free-carry Sun Resources for 2D seismic and two wells (a likely US$100+ million programme) following which Sun Resources would maintain a 5% contributing interest. Renewed exploration of the area will be discussed with the government of Malta in the coming quarter.
4 AUSTRALIA EXPLORATION
WA-254-P, Offshore Carnarvon Basin, W. Australia (Sun Resources 7.86% to 9.25%)
The operator of WA-254-P, Apache Northwest ("Apache"), continues to evaluate the exploration potential of the permit from reprocessed and new 3D seismic data. Sun Resources and two other joint venture parties continue an active divestment process of their combined 24.8% to 29.8% working interest in the permit which contains the stranded Sage Oilfield. The process commenced in late April 2008 and will hopefully be concluded during the third quarter of 2008.
WA-257-P, Offshore Carnarvon Basin, Western Australia (Sun Resources 9.64%)
Sun Resources NL elected to withdraw from this permit on 26 May 2008. Final technical studies by the operator on newly acquired 3D seismic over the western two thirds of the permit indicated the presence of only small leads. Neither these nor the current, very high risk, prospect inventory (Hekla and Sextent) justify moving forward into a well commitment year commencing in July 2008.
5. MINERAL EXPLORATION/INVESTMENT
No activity for the Quarter. The Joint Venture on the Butterfly gold tenement in the North Coolgardie Mineral Field, Western Australia in which the Company has a 5% NPI interest remains current.
6. CORPORATE
During the Quarter Sun announced a placement of convertible notes to raise $4 million. Hartleys Limited, the Company's corporate adviser, was Broker to the Offer. Subsequent to the Quarter, the placement of notes was approved by shareholders and the placement finalised, which in addition to cash at 30 June 2008 of $1.1 million, ensures Sun is very well funded to progress its international oil & gas exploration programme. The convertible notes will list on the ASX on July 25th 2008 under the code SURG.
ENDS
Contact
Matt Battrick
Managing Director
Sun Resources NL
Tel: +61 8 9388 6501
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