Cervantes Farmout: Metgasco and Vintage Commit to Drill the Cervantes Prospect in the RCMA-Operated Jingemia L14 License Area in the North Perth Basin

Cervantes Farmout: Metgasco and Vintage Commit to Drill the Cervantes Prospect in the RCMA-Operated Jingemia L14 License Area in the North Perth Basin
Perth Basin, Western Australia, 21 November 2019

RCMA Australia Pty Ltd (“RCMA”) is pleased to announce that on the 14th of November 2019 it executed a farmout term sheet with Metgasco Ltd (ASX: MEL) (“Metgasco”) and Vintage Energy Ltd (ASX: VEN) (“Vintage”) for the drilling of the Cervantes oil prospect (the “Cervantes Prospect”) in the Jingemia L14 License Area in the North Perth basin (the “Field”) (the “License Area”) (the “Term Sheet”).

On the 9th September 2019, RCMA and Metgasco entered into a binding farmout agreement in which Metgasco conditionally agreed to fund the drilling of the Cervantes prospect with estimated recoverable contingent oil resources of more than 17 million barrels. In return for drilling this prospect, Metgasco will earn a 60% participating interest in any hydrocarbons discovered. With that agreement Metgasco also secured rights to nominate an additional uncommitted prospect for drilling in the Licence Area from 31 March 2020, and to introduce a farminee for both exploration wells sharing exploration costs on the same terms. RCMA welcomes the introduction of Vintage to the Licence Area, with their pedigree and success in onshore oil and gas in Australia, as introduced farminee.

L14 Licence and Surrounding Oil and Gas Fields, Prospects, and Infrastructure

Vintage and Metgasco will share the funding of the drilling of the Cervantes Prospect 50/50 up to a capped cost of AUD8 million. Given this commitment,  RCMA will be carried fully on the cost of the Cervantes Prospect up to the cap and, should the right to drill an optional well be exercised on or after 31 March 2020, RCMA will be carried on the same terms for that well, taking the exploration commitment to two wells and AUD16 million.  

With the completion of the reprocessing of 2D and 3D seismic and updating and upgrading of prospect mapping late in 2019, RCMA intends to seek expressions of interest for drilling at least two of remaining seven prospects in 2020, both of which possess the same structural features as the Cervantes Prospect, significant estimated recoverable continent oil and stacked reservoirs. The uplift from reprocessing being conducted by Earth Signals is significant and this work will enable higher probabilities of success for all drilling campaigns.

In addition, and together with further farmouts or on a standalone basis RCMA is willing to offer a 50% interest in Jingemia oil production including all production upside from the Field from in-fill drilling and further enhancements to water flood.  As part of this deal RCMA will absorb abandonment liabilities, retain 100% facilities ownership, and offer an average cost of operating processing tariff and crude oil offtake arrangement to investor(s). 

A reserves certificate is currently being prepared for the existing Field. Previous work conducted by LEAP Energy prior to the installation of electric submersible pumps (“ESPs”) and upgraded water flood facilities indicated that the remaining economically recoverable crude oil reserves of the Field are between 900,000 and 1.1 million bbls.  The average cost of operating per bbl will decrease with any new oil discovery on licence thus materially enhancing Field life, reserves, and return on investment.

RCMA Australia holds a 93.722% interest in the highly oil prospective License Area, which contains both the producing Field and the Cervantes Prospect committed for drilling in 2020. RCMA is in the process of finalising the acquisition of the remaining 6.278% interest held by Norwest Energy NL. This transaction due to complete before year end subject only to DMIRS transfer formalities. 

Work completed by LEAP Energy confirmed that the Licence Area (spanning 9,835 acres) contains at least another 7 identified significant oil and gas prospects with stacked reservoirs including the prolific the Dongara, Kingia, and High Cliff sandstone formations.  RCMA is the operator of the Field and Jingemia production facilities. The Field is currently producing light sweet oil from a Dongara sandstone reservoir and the rate of production that is forecast to increase from 280 bopd to the order of 400 bopd once all four producing oil wells have been converted from jet pumps to ESPs and the water injection facilities are restored to full capacity.  

CervantesCross Section of the L14 License Area from Offshore to Waitsia Cross Section of the L14 License Area from Offshore to Waitsia

Production from the Field commenced late 2003 and to date 4.6 million barrels have been produced. Operating production facilities in place include four oil wells, four water injector wells, three water bores, oil and water tanks, two separators, oil and water piping and fiscal metering, an autonomous trucked oil export station,  22,000 bbls per day of  water injection capability, an associated  gas flare, centrifugal crude filter system to enable crude to be reliably used for plant fuel, state of the art compliance and document control systems, high speed communications and servers, a private sealed road to the Brandt highway, fire-fighting pondage, workshops, an office and mess hall, reverse osmosis water system and accommodation, kitchen, dining, and recreational areas for up to seven staff.

Given the proximity of the Field to Dongara, all staff live in the Dongara township, reducing costs of operation significantly relative to other remote oil operations. Trucking costs for oil to the customer BP in Kwinana are less than AU$3.90/bbl, and a deep-water port at Geraldton is available for oil export by pipe and ship in the event of the Cervantes discovery coming in as prognosed; this offers reduced logistics issues and increased netbacks from better pricing relative to the Brent marker crude. 

Media Contact

For more information please contact

Christopher Newport

RCMA Australia Pty Ltd

Contact No        : +61 467 456043
Email                 : chris.newport@rcma.com

David Maher

Jade Energy Holdings Pte Ltd
Email      : david@jade-holdings.com

ASX Releases

Metgasco’s ASX release click here

Vintage’s ASX release click here

About Jade Energy Holdings and RCMA Australia Pty Ltd

Jade Energy Holdings Pte Ltd (“Jade”) is the 100 percent shareholder of RCMA Australia. Jade leverages market expertise and industry knowledge to develop and invest in energy related initiatives across the entire value chain. www.jadeholdings.com

The information contained in this document has been compiled by Jade Energy Holdings Pte Ltd and its affiliates (hereby known as “Jade”) as at the date of transmission to you. While Jade has taken reasonable care to ensure the accuracy and completeness of the information provided, Jade assumes no responsibility for any errors or omissions. Jade will not be liable for any loss or damage of any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered due to any omission, error, inaccuracy, incompleteness or otherwise, or any reliance on such information. The information contained in this document may contain forward-looking statements relating to future events and/or the future financial or other performance of the oil market and/or Jade. “Forward-looking statements” include statements that are not statements of historical fact (including without limitation those containing statements of belief, expectation, anticipation, plans, or similar expressions). Forward-looking statements are made based on current expectations and assumptions and involve risks and uncertainties, and there are a number of factors which could cause actual results to differ significantly from those contained in forward-looking statements. Forwardlooking statements speak only as at the date on which they are made, and Jade disclaims any and all obligation to update any forward-looking statement. The opinions expressed in this document are the author’s personal views and must not be construed as representing the opinion of Jade as a company. Further, the opinions expressed in this document should not be considered or construed as professional financial investment advice1

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