Drillsearch Energy

With platforms focusing on mature oil, wet gas, new oil and unconventional resources, one might think that Drillsearch Energy Limited is spreading itself rather thin. But the oil and gas exploration and production company, listed on the ASX since 1987, is using its diverse businesses to emerge from the pack, taking advantage of opportunities that others have missed.

With more than 20 years of experience, they are primarily focused on the Cooper/Eromanga Basins, which span southwest Queensland and the northeast of South Australia. In fact, Drillsearch is the largest acreage holder in the region where it has a balanced portfolio of high-impact exploration, development and production interests presenting significant growth potential.

Mature oil business

Drillsearch’s mature oil business offers long-term production cash flow thanks to its assets in the Cooper Basin that principally focuses on the Tintaburra Block joint venture. “We are trying to increase our ownership interests and exposure in that production area,” adds Brad Lingo, managing director.

Drillsearch has 17 permits covering over 27,000 square kilometers in the basin. They own 50 per cent or greater interest in 15 and operate 14 of those 17 permits.

The Cooper is Australia’s premier onshore oil and gas basin and has been in production since the mid-1960s, supplying most of the gas to the Australian east coast. Drillsearch is an existing producer in a joint venture with Santos Ltd., the leading operator in the basin, and with Base Petroleum, the next biggest company in the basin.

Cumulative production from the basins since 1977 holds a total of 270 million barrels of oil, 82 million barrels of condensate, 123 million barrels of LPG and 5.5 trillion cubic feet of sales gas.

Drillsearch’s strategic vision is to become the basin’s leading mid-tier oil and gas exploration and production firm. It aims to achieve this by exploring its current acreage for oil and gas, and pursuing opportunities to expand through the acquisition of assets directly or through friendly mergers.
Wet gas business

“We are also working on development projects, predominantly focused on commercialization of numerous wet gas discoveries that we have made,” says Lingo. “Our acreage is well positioned; most if not all of it is in close juxtaposition to major infrastructure and therefore ready access to markets.”

Lingo says that Drillsearch is one of the only firms in the basin that is currently targeting gas. “We have gone out there realizing that it has been a long ignored and undervalued resource,” he adds. “Our acreage is focused on areas that are both gas-prone but the gas also has a high condensate of oil content and LPG content. Out of 12 wells, we made 10 discoveries. We have a very high exploration success rate there.”

The core area, which is centered on PEL106, is covered with 3D seismic. The firm is currently focused on four major wells, but Drillsearch has identified six new drilling locations, which Lingo calls “appraisal development and near-fill exploration to increase our reserves, increase our confidence in our reserves and to demonstrate high levels of sustained deliverability.”

New oil business

The new oil business is Drillsearch’s most important growth platform. It is principally focused on the Western Flank Oil Fairway, which is the far western margin of the Cooper Basin. It has been unlocked through the use of modern technology, predominantly high-definition 3D seismic.

In that area, Drillsearch holds a joint venture interest with Base Energy in a permit called PEL91. “In August of last year we had our first oil discovery there,” says Lingo. “So far our drilling success has been 100 per cent on 3D seismic.”

Drillsearch has also announced a new five-well drilling program, which it intends to kick off by December 2010, and is targeting five oil prospects with a total prospective resource of 7.5 million barrels.

Unconventional resources

Drillsearch has also identified significant exposure to unconventional resources within the Cooper Basin. One of the identified resources has 40 trillion cubic feet of gas in place.

“When we were drilling the wet gas wells we recognized that we were encountering significant unconventional resources,” explains Lingo. “We are in the process of appraising that resource and we have also put together a two-year work program to take those identified resources to contingent resources to proven reserves. We think for those reasons we offer a unique opportunity for investors interested in oil and gas.”

In the meantime, Drillsearch is keeping very busy. While focusing on its four main business platforms the firm is focusing on development, going out and identifying overlooked and bypassed opportunities.

“We have an extremely strong groove pipeline,” says Lingo. “We are looking to increase our production base, both organically and through acquisition. We are also looking to expand our development aspect base, so we are a company on the move. What we want to do is be the premier asset and project developers in the Cooper Basin. We are focused on being the technical leaders and applying state of the art technology in oil and gas production and development to open up opportunities that others have missed.”

drillsearch.com.au