On the 14 August 2017, The Board of Sun Resources NL (“Sun” or “the Company”) announced that the Company and Pinnacle Exploration Pte Ltd (“Pinnacle”) secured a new oil project through bidding on open acreage in the inland waters of the State of Louisiana, USA. The parties have named the field “Bowsprit”.
Details of the Louisiana Oil Lease
Sun and Pinnacle have, subject to execution of the formal lease documents with the State of Louisiana in the coming weeks, been awarded a Petroleum Lease of 1,000 acres (4km) in the Breton Sound Area of Louisiana. Consistent with an MOU between the parties previously executed, the Lease interests will be on a 50/50 working interest basis. Sun paid 100% of the initial leasing cost of approximately A$300,000.
The lease is located approximately 70km southeast of New Orleans in approximately 10m of water. There are 16 historical wells, drilled between 1952 and 1982, within the lease and extensive existing 2D and 3D seismic over the lease. The lease is near the boundary of St Bernard and Plaquemines Parishes that covers the transition zone from onshore to the federal waters offshore Louisiana. The two Parishes have produced a combined 1.2 billion barrels of oil and 5.2 trillion scf of gas since 1978. The area is a prolific hydrocarbon province with over 1,800 wells drilled in the St Bernard parish alone.
In order to protect the commercial sensitivity of the project during the land nomination and bidding phase, the Directors of Sun agreed to loan the Company A$110,000 to cover a portion of the leasing costs with the balance funded from existing cash.
Sun and Pinnacle have conducted extensive internal work assessing the project, based on public domain and purchased data. Sun has had two independent consultants review the project and verify its potential, but has not commissioned a full independent reserves assessment, pending successful bidding on the lease and purchase of all the related field data. The information included in this document is predominately Sun’s assessment.
Bowsprit is assessed to contain an undeveloped conventional Miocene aged oil sand at a depth of approximately 7,400ft (2,255m) that is located above a deeper 9,500ft gas field that was developed in 1960s by Shell and produced through to 1990s. Consequently, the Bowsprit field contains 14 vertical well penetrations and has demonstrated producible oil. The 20 to 50ft thick oil sand was flowed successfully from two wells and produced approximately 75,000 bbls of oil, but was not of commercial significance at the time (~40 bopd). The deeper gas field was abandoned and the area relinquished by the former owner in the 1990s prior to the advent of horizontal drilling.
The co-venturers have determined that the Bowsprit structure can be developed with up to four horizontal wells and could potentially be produced through a simple unmanned production platform. Saratoga Resources drilled and produced a 750ft horizontal well in an analogous quality, albeit thinner sand, 12km south of Bowspirt. In the last 3 years the well has produced over 460,000 bbls of oil and is still producing at over 300 bopd. Sun anticipates drilling wells with longer horizontal sections in a thicker column of oil in Bowsprit.
Over the next few months, Sun plans to purchase the 3D seismic available over the field, integrate the data into a detailed 3D technical model, prepare a full field drilling and development plan, and then commission a formal independent reserves assessment.
Subject to funding (via farm out or capital raising) it is anticipated drilling of the first well could commence as early as March 2018.