CORPORATE UPDATE
August 18, 1999
OTCBB Trading Symbol: INDX
You may sometimes have felt, in the last few months, that not much was happening on the oil exploration front in Indo-Pacific Energy Ltd. However, as is often the case, while little was visible on the surface, there was a lot of strategic activity occurring, which needed to be brought to a level of certainty before I could sensibly update you on our activities.
I am pleased to update you on our progress in the onshore Taranaki Basin; while I will be writing to you again soon to advise you on our drilling plans in New Zealand's East Coast Basin and our activities in Papua New Guinea and the Timor Sea, offshore Australia.
The onshore Taranaki Basin is a very active oil and gas exploration and production area, in which more than 300 million barrels oil equivalent of oil and gas has already been discovered. Indo-Pacific has established its exploration and production position right in the heart of the production area, with its share in the producing Ngatoro oil and gas field and its nearby exploration permits PEP 38720 and 38723, and also its share in PEP 38716, where it participated in the recent Huinga-1 well.
Early this year the New Zealand government gazetted (ie offered for application) various blocks of acreage within this area to the exploration industry, and set in place a vigorous bidding competition for these key exploration areas. This effectively became a three way competition between Indo-Pacific, the Fletcher Challenge Energy group, and Westech Energy, the exploration subsidiary of Energy Corporation of America. The end result of this is that Westech won three blocks (PEP's 38732, 38733 and 38734) with very aggressive exploration proposals, Indo-Pacific and its associated company Millenium Oil won PEP 38736, while Fletcher Challenge did not secure any acreage.
As the New Zealand government has reported in the July issue of its own publication 'NZ Petroleum News', this is expected to lead to a renewed phase of exploration activity in the area, with a considerable amount of 3D seismic and many exploration wells being drilled over the next few years. This activity will commence in the next few months, with Westech planning substantial 3D seismic surveys and drilling activity before mid 2000, while Indo-Pacific itself will be drilling its Clematis-1 well in the heart of the area in the next few months as well as acquiring further seismic in most of its existing and new acreage.
The Clematis-1 well will be drilled to a depth of about 5000 feet in the northwestern part of PEP 38720, to test the oil bearing potential of Mt Messenger sandstones in a structure situated adjacent to the Inglewood Fault. A drill site has been secured, and it is expected that Clematis-1 will be drilled between September and November this year. In the event of discovery, similarly profitable oil production to that from the adjacent Ngatoro and Kaimiro oilfields could be readily and immediately established. Crude oil can be transported the short distance to the oil export port of New Plymouth, where it can be sold to one of several competing purchasers. The high quality of typical Taranaki oil ensures that a premium to world average price can be secured, and that high operating profits can be obtained.
The new PEP 38736, although relatively small in area (~ 1800 acres) is very strategically situated in the transition region between the McKee oil field and the Tariki trend. It is also adjacent to the PPL 38706 area, which was held until recently by Indo-Pacific and Fletcher Challenge Energy for the purpose of appraising the northern extent of the Tariki-2C oil pool. Despite production of more than 80,000 barrels of oil from Tariki-2C since its discover last year, it has become clear that this oil pool cannot extend far into PPL 38706, and consequently PPL 38706 was relinquished at the end of July.
However, the Mt. Messenger play area within PEP 38736 has been mapped as extending southwards along the Tariki fault trend throughout the adjacent PPL 38706 area; and on this basis Indo-Pacific recently applied to extend the newly granted PEP 38736 to incorporate all the area held under the old PPL 38706 (~ 5,800 acres). This application has been formally accepted by the New Zealand authority, and subject to completion of statutory processes the extension of area of PEP 38736 should be confirmed within the next 2-3 months.
This would then secure for Indo-Pacific and associated companies, the exploration rights over all the prospective area between the McKee and Tariki fields, and will allow the Company to initiate its planned exploration program in PEP 38736 and its adjacent PEP 38723. This includes selected additional seismic data acquisition in the next few months to detail leads already identified at the Mt. Messenger level (~5,000 foot depth), at Tikorangi Limestone level (~ 7000 foot depth) and Tariki Sandstone level (8-10,000 foot depth). Existing wells attest to the hydrocarbon trapping potential within the combined PEP 38736/706 area, with heavy gas samples being recovered from the old (1920's) Tarata-1 well , while the Tariki North-1 well intersected apparent hydrocarbon bearing Mt. Messenger sandstones at about the 4,000 foot depth, and possible gas or oil pay within the Tariki sandstones intersected in the 9,000 foot depth range.
A considerable advantage of Indo-Pacific's acreage is that any discovery made within these areas lies within existing pipeline infrastructure, and discoveries of either oil or gas can be rapidly brought on stream. Crude oil is readily sold, while gas markets such as the huge methanol plants in north Taranaki provide ready outlets for additional gas discoveries.
Shareholders can look forward to the drilling of Clematis-1 this year, and to an ongoing stream of activity from now on, by both Indo-Pacific and other acreage holders in this area, which will develop and enhance the value of the Company's onshore Taranaki exploration holders and may bring about increased and continuing production revenue.
On Behalf of the Board
"David J Bennett"
David J Bennett
Chief Executive Officer
For further information please contact Mr. Gary Saik, Investor Relations Officer. Telephone (415)951-1917, Fax (415)951-1916, or e-mail: gs@indopacific.com.
The information included in this news release comprises both historical and forward-looking information or statements as defined by the Private Securities Litigation Reform Act of 1995. The Company relies on the safe harbor of this act and cautions that t here can be no assurance that forward-looking statements will prove to be accurate given that resource exploration activity is inherently a high risk business. |
