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Sacramento Gas Basin Dempsey Gas Project

Project Summary

Location:
Central-Northern, Sacramento Gas Basin, California
Project Size:
Over 4,500 net acres (18 square kilometers)
Joint Venture Partners:
  • Sacgasco Limited (Operator) 50.00%
  • Empyrean Energy PLC 30.00%
  • Xstate Resources Limited 10.00%
  • Pancontinental Oil and Gas NL* 10.00%

 Via 100% subsidiary Bombora Natural Gas LLC

Geology:
The Dempsey structure is a large 3-way dip, fault- bound structure continuing from shallow levels down to economic basement rocks and defined by 3D seismic.
It is located in the central Northern Sacramento Gas Basin within a multi-field, gas producing area.

It has lesser volume reservoir targets within an existing producing field area, mapped on 3D seismic and overlying multiple, much larger, stacked targets interpreted within sandstones of Early Cretaceous age.

The Early Cretaceous reservoirs have not often been drilled in the Basin (just 16 partial well penetrations) and most of these were very old wells that were not drilled on structure.

There is strong evidence that the gas trapped in the shallow, traditional producing zones such as the Kione and Forbes Formations, has been generated by source rocks within the underlying Early Cretaceous section.

Primary reservoir targets are in the Ladoga and Boxer Formation sandstones.

A circa 3,200m well would be required to test all target levels in the structure.

Setting

Through the acquisition in July 2017 of Bombora Natural Energy Pty Ltd, the Company has acquired an evolving asset position in the Sacramento Gas Basin in north-central California.

California is a very large user of natural gas, consuming between 7 and 11 Bcf of gas per day. Most of this gas is imported from outside the State. As a result local producers achieve a premium price for their gas compared with most other states in the USA.

Strategy

Pancontinental has finalised and secured a range of gas projects in the Sacramento Gas Basin, mostly at the post-discovery phase. In other words gas has already been found in these projects but has not yet been proved commercial. This is designed to reduce technical risk and through positions relative to infrastructure and gas markets, support a rapid transition to production with any drilling success.

The Company continues with its partners to actively acquire additional prospects and acreage on trend with its existing projects. This will provide follow up growth opportunity.

The Dempsey Gas Project

The Dempsey Prospect is located in the central, Northern Sacramento Gas Basin in an area of producing gas fields connected to the California gas network.

Dempsey is the first of several projects planned to appraise existing gas discoveries that Pancontinental is acquiring through the acquisition of Bombora.

An existing gas plant owned by the Dempsey Joint Venture, through which Sacgasco (the Dempsey project operator) is producing and selling gas, could be used to fast-track the development of any gas reserves proved by Dempsey-1.

California consumes on average 7 Bcf of gas per day, peaking up to 11 Bcf per day, and it imports some 90% of these requirements. Gas prices routinely trade at a premium to the Henry Hub domestic benchmark. The current gas price for Dempsey area gas is around US$ 3.20 per Mcf (circa A$4.20/Mcf).

The unit cost of drilling and development in the Sacramento Gas Basin is very low by international standards, providing a healthy environment for commercialising new gas resources.

There have been over 11 Tcf of gas produced from shallow reservoirs in the Sacramento Gas Basin and production is extensively connected into California’s vast domestic gas market.

Bombora interprets that the gas charge into the producing shallow reservoirs has been concentrated via migration into the underlying Dempsey structure. It is this large poorly explored underlying structure that Dempsey- 1 will test.

The Dempsey structure is part of a regional high trend that Bombora interprets to be located in a favourable “first out of the Basin” position for hydrocarbon charge from mature source rocks in a kitchen area to the west.

The Dempsey structure is mapped on good quality 3D seismic data, regional 2D seismic and tied to well control.

Seismic interpretation shows a robust, 3-way dip, fault bounded closure up to 15km² (3,700 acres) in area, with conventional sandstone reservoir targets mapped at seven stacked levels. A number of the reservoir targets show amplitude anomalies that may represent the presence of gas. Individual closures vary from 80 acres to 3,700 acres.

Estimates of reservoir quality and thickness are based on in-field well control at the two shallower, potential gas field extension levels. Regional data from 16 wells has been used in estimating the prospective resource in the older, Early Cretaceous age reservoirs.

The principal technical risk for the larger, deeper reservoir targets is considered by Bombora to be reservoir quality.

Bombora believes that the chance of encountering gas at the shallow levels is very high with some risk that the reservoirs are not separated from existing producers and have been depleted. At the deeper target levels Bombora assesses the chance of discovering gas at up to 40%, which is high by industry standards for exploration targets.

Due to the strong local gas market and ready access to producing infrastructure, if gas resources in the range estimated are discovered then a commercial development at Dempsey is virtually certain.

Schematic X-Section across the Dempsey Gas Prospect

Recoverable Gas Potential Dempsey

Based on its 10% net position in this project, potential recoverable gas resources have been estimated for the Dempsey Gas Project (per PCL ASX release dated 5 July 2017).

Dempsey Net Recoverable Resources

Recoverable Prospective Resources

(Gross Best Estimate)

 

768 Bcf*

Recoverable Prospective Resource Pancontinental/Bombora

(Net Best Estimate @10% earned interest)

 

77 Bcf

These estimates include the net effect of applicable royalties.

Forward Programme

The Dempsey-1 well spudded on 2 August 2017 with drilling and evaluation continuing throughout September 2017. The well has a planned total depth 3,000m (10,200 feet).

Contact Us

Level One
10 Ord Street
WEST PERTH WA 6005

T: + 61 8 6363 7090
F: + 61 8 6363 7099

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