Santos finds gas, oil at Hiu Aman-1 well
Santos finds gas, oil at Hiu Aman-1 well
Bloomberg, Sydney
Santos Ltd., Australia's third-largest oil and gas company, said natural gas and oil were discovered at the Hiu Aman-1 well drilled by Unocal Corp. in the Kutei Basin off Indonesia.
Initial analysis showed the 25-meter deep discovery in the Donggala Production Sharing Contract area is mostly gas, Adelaide- based Santos said on Thursday in a statement.
While the well had been seeking oil, the gas is "wet," so it contains liquids such as condensates, said Kathryn Mitchell, a spokeswoman.
Santos is increasing exploration spending by 21 percent this year as it seeks to replace falling output from the Cooper Basin in central Australia. The Hiu Aman-1 well, the first of three to be drilled this half in the Kutei Basin east of Kalimantan, was targeting a prospect that Santos said could hold more than 100 million barrels of oil.
"At a preliminary glance it looks positive, but it's too early to discuss commercial significance," said Luke Smith, an oil and gas analyst at ABN Amro Australia Ltd. in Sydney.
"It has however enhanced the prospectivity of the petroleum system in the Kutei Basin a little more and upgrades the significance of the additional targets planned for the area."
The discovery follows Santos's find at the Jeruk field off East Java, which may be the company's largest ever oil find, it said on Jan. 20. Jeruk holds more oil than Santos's original estimate of 170 million barrels, which was made before any wells had been drilled at the field.
The drill-rig used at Hiu Aman will move to the second Kutei Basin target, Orca, and is scheduled to start drilling on Monday, Santos said. The Orca prospect, located in the same permit, has the potential to contain between 100 million and 250 million barrels, Santos has estimated.
"This is frontier exploration acreage and the results of Hiu Aman-1 are very encouraging as they indicate an active petroleum system in the trend," Santos Managing Director John Ellice-Flint said in the statement issued in Sydney, which was lodged with the exchange.
"While it is early days, and the significance of the discovery won't be confirmed until further appraisal, the initial signs are positive."
Santos agreed in November to buy all Total SA's and Inpex Corp.'s stakes in the Donggala permit, giving it a 65.5 percent stake, which will fall to 50 percent after it sells part of its interest to Unocal.
The purchase is still subject to approval from an Indonesian regulator. Santos is due to take over as operator of the permit from Unocal on Dec. 31. Unocal already owns 19.6 percent of the permit, while PT Pertamina owns 15 percent.