Thanks to Mud on SS:
From www oilbarrel
Norwest Energy Set To Profit As Puffin Prepares For Lift Off
Timings may have slipped - and this is far from uncommon in today’s overheated oil and gas sector - but Australia’s Norwest Energy is still on track for first cash flows from the Puffin oilfield off the coast of Western Australia this year. The Front Puffin FPSO is due to arrive on location in permit AC/P22 in the Vulcan sub-basin of the Timor Sea next month with first production of 30,000 barrels per day from two horizontal wells due shortly after.
ASX and Frankfurt-listed Norwest may only be due a trickle of this output - it has a 1.25 per cent over-riding royalty interest in the field - but it is still reckoned to be worth A$70 million, greater than the company’s current market cap. Importantly for a small company, this royalty interest involves no expenditure for Norwest.
Puffin has shaped up into a very nice project. The reservoir statistics are reassuring, with porosity of 29 per cent, water saturation of 11 per cent and a very healthy recovery factor of between 50 and 69 per cent and there have been significant reserves upgrades as the field development work has progressed. What’s more, Puffin has additional potential. This year’s production will come from the 40 million barrel Puffin North East field but field operator AED also plans to bring Puffin South West, another possible 40 million barrel deposit, onstream in the first half of 2008. An appraisal/development well will be drilled in October with a targeted flow rate of 25 to 32,000 bpd.
This will be a nice addition to Norwest’s existing production from its 1.278 per cent interest in the Jingemia oilfield in the onshore Perth Basin. During the most recent business quarter, this amounted to 2,555 barrels or around 28 barrels per day. It isn’t much but it does help keep the lights on, generating around A$1 million a year.
The company also holds exploration interest in Australia. In the Perth Basin, the Freshwater Point prospect will be drilled later this year or early next but of more interest is the company’s 24 per cent interest in AC/P32 in the Vulcan sub-basin, where there are plans to drill the Azalea/ Wisteria multi-target well. Azalea is a large stratigraphic play that could hold 180 million barrels of recoverable oil while Wisteria is a deeper conventional target, possibly holding some 20 million barrels recoverable.
The company also holds an option to negotiate with local aboriginal communities for the EP139 permit in the onshore Bonaparte Basin in the Northern Territories. This is a block that has not been explored since the 1960s, when a number of wells encountered hydrocarbon shows. There is now added impetus to explore this acreage given that a new gas line is set to cross the block – this is key as infrastructure can make or break a project in the vast emptiness that is Australia.
In more recent years, Norwest, like so many Australian firms, has taken steps to diversify overseas, targeting projects in the US, the UK and India. Now the company is withdrawing from its shale gas interests in the US Appalachians, seeking to extract value from a project where drilling success has been mixed but the acreage is gaining in value.
The UK North Sea, with its low cost “drill or drop” promote licences, has been a favoured destination and Norwest can now boast interests in eight blocks. It has 25 per cent of Blocks 48/1b and 48/2c, where the operator is seeking a drilling rig to drill the Cobra prospect. This is a tight gas project with 65 to 95 bcf of proven reserves with potential upside of 450 bcf.
Blocks 47/8d and 47/13c (Norwest 50 per cent) in the Southern North Sea are believed to hold an extension of the 850 bcf Amethyst gas field, which lies to the northwest. Norwest also holds 50 per cent of adjoining block 47/7, which is also ontrend, and updip, of Amethyst. In the Inner Moray Firth, the company has 25 per cent of 12/16b, 12/17a and 12/22b, near the 150 million barrel Beatrice oilfield and where a number of leads and prospects have been identified.
Norwest has also opened an office in India but has yet to sign any upstream projects here. It has, however, built relationships with Indian firms, among them Bharat Petroleum and Tata, which have farmed into its projects in Australia and the North Sea. These relationships with some of the power players in India’s booming upstream industry, not to mention the backing of Indian finance for its Australian and UK ventures, could prove very worthwhile further down the road. In the meantime, investors will be keen to see Puffin brought onstream and those cash flows start to boost the balance sheet.