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Schematic Regional Geology of the Northern Perth Basin Voyager Acreage.
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Nockatunga Project SW QLD Maxwell Oil Field development opportunities (March 2003).
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Cliff Head trend density of 2D seismic data coverage.
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Voyager Energy

Less Exploration Is More For Voyager

The highs and lows of the exploration business have been magnified in recent months for a group of junior oil and gas exploration companies during the drilling of five wells in the offshore Perth Basin. One of the new kids on the block involved in the exploration programme, which started with the spudding of the Cliff Head-3 appraisal well in the WA-286-P permit area on January 6th, has been Voyager Energy.

Voyager listed on the Australian Stock Exchange on September 12th, 2001 with a modest asset portfolio built mainly in two parts. These were some staple oil production from a small project in southwest Queensland and some wildcat exploration acreage in the Perth Basin.

Voyager had taken a long, hard look at the Perth Basin, before floating on the ASX, and liked what it had seen. Managing Director, John Begg, said he believed the Perth Basin had unrecognised potential after he first became interested in the area while working with Discovery Petroleum, and subsequently as the manager of Premier Oil, between 1996 and 2000. Begg said Voyager decided to take a stake in the region when it bought into a two well farmin deal with Australian Worldwide Exploration (AWE) covering the WA-286-P offshore licence area and EP 368 onshore licence area.

Arradale-1, the first well in the programme, was drilled in November 2001 in the onshore block and turned out to be a dry hole. The well cost Voyager about $500,000. "We felt that paying a promote on two wells to get a position primarily in the offshore block was still a cost effective means of getting in [to the Perth Basin] while it was under-rated by the industry", Begg said. "We believed the prospects in the offshore area were high quality and, once drilled, had the potential to revolutionise the area."

"We viewed Arradale-1 virtually as a loss leader to be in the offshore acreage", he said. "We've still got 20% in EP 368 and that acreage has some merit, but the Arradale well was high risk, high reward and that's not our game plan. We only want to drill prospects that we think have got a better than 20% chance of success."

Within two months of the dry hole, Voyager had participated in its first success when the offshore acreage lived up to its potential with the discovery of a significant new oil field at Cliff Head. Through the farmin with AWE, Voyager had managed to secure a 5% interest in the project, although its equity was originally going to be higher.

"The original deal provided for us to have a 10% interest subject to demonstration of capacity to pay", Begg said. "As often happens, the float took longer to get away, while in the meantime AWE were getting a lot of interest from other parties with fewer conditions attached. It got to the point where Wandoo Petroleum made a firm offer but wanted 25%, so we had our position whittled back to accommodate their entry. We thought AWE handled the process brilliantly and were very fair to us."

Voyager has pursued the quality instead of quantity theory when it comes to drilling wells. Cliff Head-3, which flowed at 3,000 bopd, kicked off the five well programme, in the WA-286-P block.

"Our plan was to drill fewer wells, but good ones, and be prepared to pay the market price of entry", Begg said. "It paid off because Cliff Head came in, but we rolled a pretty big dice with Cliff Head. We were punting at the time probably 35-40% of our available capital. We knew we had resources to fall back on if the programme had gone badly because of our strategy of underpinning what we do with production."

Following the Cliff Head-3 appraisal well was the much anticipated Twin Lions-1, with estimates of a possible 100 MMbbl oil field straddling the border with the adjacent TP/15 permit area. But the well failed to roar, finding only water in the target reservoir.

Voyager Director, Ray Barnes, said more data would be collected for the Twin Lions prospect. He said the seismic coverage of the prospect was not ideal, mainly due to access problems caused by numerous reefs and shoals in the coastal strip, leading to some uncertainties in the mapping. "The key ingredient of this play is the capacity of the Kockatea Shale to provide you with a seal", Barnes said. "If the displacement of the faults, and we are talking about a very faulted terrain, is greater than the thickness of the Kockatea Shale, then it doesn't seal."

"It seems there is enough uncertainty in the data we've got from the mapping that, at the particular elevation we intersected the reservoir, the thing could leak", he said. "It's going to be a risk for many of the larger structures on the trend because they are the ones with the biggest faults and greatest amounts of throw." With the benefit of the well information, Barnes said he didn't think the structure was mapped correctly pre-drill. "We think it is more likely to be a structural issue, we didn't quite image it right when we mapped it pre-drill", he said.

Other wildcat drilling activities in WA-286-P have included two further dry holes: Mentelle-1, which recorded immovable oil shows in the target zone on February 14th and Vindara-1, which had a similar result on February 24th. A final well in the current programme, Cliff Head-4 is being drilled to determine the size of the Cliff Head field for development options. As PESA News goes to press, at least a 30 m oil column has been reported in the well. Begg expects Cliff Head to come on stream by early 2005, providing net production of over 1000 bopd.

As well as WA-286-P, TP/15 and EP 368, Voyager has interests in another three offshore permits and one onshore permit in the Perth Basin, all acquired in the past 12 months. This includes onshore EP 413 where the Jingemia-1 well found a 30 m oil column and recorded oil flows of about 2,000 bopd over a 10-day production test in December, 2002.

Jingemia-1 is scheduled to undergo a three to six month production test programme before being brought on at full scale production of up to 5,000 bopd by early 2004.

Voyager will also be on the lookout for additional targets for drilling in EP 413 later this year.

Voyager farmed into WA-226-P in January 2002, which led to the drilling of Morangie-1 in October, revealing a 35 m residual oil column in good sands beneath the regional seal.

The company was awarded two large offshore licences in July 2002, WA-325-P and WA-327-P, and has since farmed down to Apache Energy, retaining 15% equities in each licence. Begg said more than 2500 km of 2D seismic had already been acquired and 3D acquisition was planned for April-May 2003.

Begg said Voyager now has a good coverage of most of the play fairway where Cliff Head style geology is likely to be replicated. He said the results of the Morangie-1 well, although it was plugged and abandoned, showed it was possible that more discoveries could be made on the trend. "3D seismic is planned in the Morangie area to firm up other prospects, which include the 100 MMbbl potential Fiddich structure", Begg said. Barnes said he hoped the 3D seismic coverage would resolve the structural problems that manifested at Morangie and Twin Lions, leading to another round of exploration drilling in early 2004.

While the media spotlight has been firmly on the Perth Basin in recent months, Voyager has been busy working on boosting production at its Nockatunga project in southwest Queensland. Voyager has a 40.9% equity in the project with operator Santos, after acquiring its interest in December 2000, before floating on the ASX.

Production expansion at Nockatunga is ongoing with a new production well, Thungo-7, online in October, contributing 80-100 bopd to gross production. Begg said there was about 30 MMbbl in place in several shallow oil fields at Nockatunga, with only about 3.5 MMbbl so far produced. "Voyager is looking at ways to further boost production by employing different drilling techniques and getting a multi-well programme up and running", he said.

"We think you could apply horizontal well technology at Nockatunga, so that instead of 80 bopd production wells with modest paybacks, you could have 200 bopd wells with rapid payback of the capital investment.

"We are particularly enthusiastic about the prospects for the Maxwell field which has in place reserves in the order of 10 MMbbl, and yet less than 900,000 bbl have been produced. We have put forward a proposal [to Santos] and we are working on some other variations of the theme. Our engineering advice is that the likelihood of success is high. It's a matter of picking the right spot, reaching agreement with the operator about how to proceed, and then funding it."

Voyager has divested other non core assets that were picked up as part of the original IPO portfolio. These included two exploration licence application areas in Queensland sold for cash, and the company's large interest in the remote EP 104, Point Torment gas field appraisal project in the Canning Basin.

Voyager had a 37.4% interest in the latter project but sold its equity to Gulliver Productions in January for $50,000 with a clawback option to back into the permit at a reduced level to capture upside if appraisal drilling, planned for Q2 this year, is successful.

"We have really tidied up the whole portfolio", Begg said. "We had some other application areas over in Queensland that came with the Nockatunga project that were tied up in Native Title disputes which, although it is a worthy process, was very time consuming."

The asset streamlining process has enabled Voyager to concentrate its critical personnel and financial resources on its Perth Basin activities and to hold larger equities in some of the offshore licences. "We've got 15% in WA-325-P and WA-327-P; that level could really be company making stuff for us", Begg said.

Begg is excited about Voyager's future, saying the Perth Basin trend has potential equal to the eastern flank of the Carnarvon Basin and exploration of the area was in its infancy. "Although Twin Lions was a disappointment, ultimately we will be able to show, I'm sure, quite clearly what we didn't get right", he said. "The long-term potential is quite exciting. We've got a position in that and the challenge will be our ability to keep up with our bigger partners."

The Perth Basin experience is providing a blueprint for Voyager as it looks at the bigger picture and identifies similar 'trend approach' opportunities domestically and interna-tionally. "If everything goes swimmingly in the Perth Basin over the next 24 months, then we will continue to funnel most of our resources towards that", Begg said. "Or, if it looks like it's going to be a case of two steps forward, one step back, we might then implement another strategy to acquire a position elsewhere. I'm not saying where at this stage, but we are setting up for that. It's always good to have a Plan B.