palta-1 reporting., page-14

Interesting article re Palta in today's Australian.OXX doesn't get a mention.


"Energy juniors cheer Shell's $60m gas drill off WA

by: Barry Fitzgerald
From:The Australian
October 10, 201212:00AM


THE mighty Shell is about to roll the dice on a $60 million gas exploration well called Palta 1, some 50km to the west of the Ningaloo marine park in the southern Exmouth Basin off the coast of Western Australia.

Its proximity to the marine park, with its friendly dolphins, means the 60-day Palta 1 drill will be closely watched by those with a green bent out there, who would rather see Shell look elsewhere. So there will be no cheers from them if Palta 1 is a success.

But there is a bunch of juniors ready to cheer Shell on. Chief among them is WHL Energy (WHN), the former windmill hopeful which decided a couple of years back that the good old-fashioned fossil fuel business of oil and gas offered it a brighter future than the alternative energy business.

WHL has a one-third interest in WA-460-P, the permit adjacent to Shell's WA-384-P where Palta is to be drilled. What's more, WHL estimates that the Palta structure to be tested by Shell extends into its permit. So if Palta potentially has 13.5 trillion cubic feet of gas, about 2.5tcf could sit in WA-460-P.

So a success by Shell with Palta would drag WHL into the ranks of the liquefied natural gas project players, along with its equal one-third partners in WA-460-P, Strike Energy (STX) and the privately held Cottesloe Oil & Gas. Mind you, the 13.5tcf estimate for the Palta structure is a WHL estimate, not Shell's.

Still, the $60m price tag on drilling Palta tells us that Shell thinks it could be big enough to become an LNG candidate, most likely with Shell's floating LNG development solution. With one or two exceptions, there hasn't been a more expensive exploration well drilled in Australia. But it could be a duster, which is why the oil and gas industry continually reminds Canberra that it needs a fiscal regime that acknowledges that sort of risk.

All Shell is saying is that it expects to spud in Palta this month, weather permitting. WHL said yesterday that the industry whisper was that drilling would start in the next seven or eight days. That too would be subject to fine weather. Needless to say, interest in WHL will pick up when drilling begins.

WHL itself said yesterday that it was about to be taken along for an "exciting ride" that will cost its shareholders nothing, given it is Shell money that is being spent, in an adjacent permit to boot.

Hartleys follows WHL and has a 12.5c a share price target within the next six months. That compares with yesterday's closing price of 3.5c a share, giving WHL a market capitalisation of just under $50m. That would be a bit rich if "nearology" to Palta 1 was all WHL had on its books. Actually, it is kind of secondary, until the result from Palta is known anyway.

WHL's main go is a big exploration play offshore the Seychelles which a consultant suggests has a prospective resource of 3.5 billion barrels of oil. Fine-tuning of the prospects and leads is under way there ahead of introducing a joint venture partner with deep pockets to pick up the running. Interest is said to be high thanks to the oil and gas successes across the waters off the coast of east Africa.

A farm-out for WHL's Otway Basin basin permit Vic/P67, offshore from Port Campbell in western Victoria, is also being worked on. The permit is home to the 1993 gas/condensate discovery by BHP called La Bella. It comes with a contingent resource of 158 petajoules of gas, with exploration upside coming from adjacent leads. More to the point is that the permit is surrounded by existing production infrastructure, making it a near-term development opportunity in the increasingly higher-priced market for gas on the eastern seaboard.
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