The Otway-1 gas well is a conventional, vertical well located within Petroleum Exploration Permit 169 (PEP 169) about 400 metres, but on the opposite side of a fault, from the existing Iona gas storage field and associated facilities.

The well will be drilled to a depth of around 1,500 metres and will target gas in both the Waarre Sandstone and the Eumeralla Formation, and oil in the Pebble Point Sandstone. The Waarre Sandstone is very productive, with gas flow rates up to 50 TJ/d having previously been achieved at other nearby locations. The Waarre Sandstone is the basis of historic gas production at the Iona gas field which is now utilised as a gas storage reservoir.

The Company’s target resource (see note) at Otway-1 is 11.25 Bcf of gas and 185,000 barrels of oil (net to the Company). Target gas production rate for Otway-1 is 7 TJ/d, based upon gas productivity from other, historic wells.

The Eumeralla Formation is known to contain gas and has previously, at the Skull Creek-1 well location (nearby to Otway-1), flowed gas at a rate of 7.5 TJ/d.

Given the proximity of the Otway-1 well to existing infrastructure the Company envisages it will be possible to bring the well on line quickly. 

PEL169 is 49% owned, and presently operated, by the Company. The remaining 51% is held by Armour Energy Limited.

Note: The resource estimate is based upon gross 17 Bcf in the Eumerella Formation, 5.5 Bcf in the Warre Sandstone and gross 370,000 barrels oil in the Pebble Point Sandstone. The Eumerella Formtion estimate is an in-house estimate prepared by Mr Tim O’Brien, MSc in Geology and Geophysics, member of PESA, SPE and AAPG. The Warre and Pebble Point estimates are probabilistic estimates independently prepared by Dr Greg Blackburn, BSc (hons), PhD, Terratek Petroleum Consultants Pty Ltd, February 2011.