Central Petroleum's central Australian unconventional oil and gas resources valued at A$412m

Central Petroleum's (ASX: CTP) unconventional gas and oil resources located in central Australia have been estimated at a value of $412 million following the release of two new reports.

The company has also provided an update on its drilling program in the Pedirka Basin in central Australia.

The interim independent valuation reports were written by Mulready Consulting Pty Ltd with contributions by Holt Campbell and Payton Pty Ltd and DSWPET Pty Ltd.

Central's preferred valuation for the upstream component (exploration and potential production) of the fully risked prospective resources in Central’s acreage in the Amadeus and Southern Georgina Basins is $412 million.

The preferred valuation for the proposed downstream component (ultra-clean transport fuel production from Fischer Tropsch GTL plant) is $5 billion, should gas discoveries prove sufficient to supply the 5TCF of gas which would be required.

Significantly, a recurring factor in both reports is the fact that the unconventional petroleum sector is virtually unknown in Australia, whereas in North America it has become a major factor in the continent’s fuel supplies.

These valuations are based on very early stage exploration generally in Australia for unconventional petroleum and will warrant re-visiting as more transactional, exploration and possible production data become progressively available.

John Heugh, Central’s managing director, said “interest in Australian unconventional acreage and recent farmin deals into unconventional acreage have escalated considerably which has been confirmed with the BG Group’s farmin to Drillsearch’s Cooper Basin acreage imputing a valuation of approximately $300/net acre.”

“It is noteable that the Drillsearch farmout to the BG Group was a much smaller acreage but a much richer deal than previous unconventional farmout deals in Australia which collectively have imputed values ranging from approximately $10 to $35/net acre."

If further exploration brings success, the implied valuation of farmout deals per net acre of promising Australian unconventional acreage may gravitate closer to the far more lucrative North American valuations.

Central aims to selectively and progressively farmout portions of its vast acreage to different companies on successively better terms as exploration success in and around the Company’s acreage progresses.

Both Rodinia and Petrofrontier (CVE: PFC) have current drilling programs in areas close to Central which may de-risk the company’s acreage should those companies have exploration success.

The company said it does not wish to enter in to early broadacre deals over all or most of its acreage with the one company.

Drilling Update

The company is planning contingently to re-enter the Surprise-ST1 well late September 2011 to accelerate a program over the next 6-12 months focussed on re-entry and testing of Surprise-ST1 (10 MMbbls UOIIP-P50) for oil potential in both conventional and unconventional horizons.

Significant oil shows were encountered in several horizons in December 2010 and based on porosity and permeability measurements, a 9 metre cored section with abundant oil shows was reported by RPS Energy to be capable of flowing between c.500-1,000 bbls/day subject to sufficient oil saturation.

Access road and drill pad maintenance and upgrading is well advanced and a contract with ADS Rig 6 is being finalised.

Central is planning to test both the conventional and unconventional potential of the Surprise structure.

The Surprise prospect has geological parallels to the geology of the Mereenie field, which is believed on discovery had over 300 MMbbls of oil in place of which less than 10% has been extracted to date.

The company is planning other wells before the year’s end incuding the drilling of Mt Kitty-1, a large condensate/helium/gas prospect (UGIIP 2 TCFG, 100 BCF helium-P50) and the drilling of Madigan-1.

Madigan-1 is the first well on a giant structure in the Pedirka Basin thought to have UOIIP potential of over 4 billion barrels (P50) based on preliminary mapping of new seismic acquired in 2010.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19157/central-petroleums-central-australian-unconventional-oil-and-gas-resources-valued-at-a412m--19157.html