Santos has struck gas at its Winchester exploration well off the Western Australian coast, providing a potential source of gas for an expansion of Woodside Petroleum’s $15 billion Pluto liquefied natural gas project.
The well, in the WA-323-P permit, found 40 metres of net gas “pay”, Santos said on Thursday. It lies directly north of the pipeline taking gas from Woodside’s Pluto field to its LNG plant in Karratha.
Santos shares rose 2.3 per cent to $14.26, while those of junior partner Octanex, which holds 25 per cent of the permit, almost doubled, adding 19¢ to close at 40¢.
Senior executives at Santos didn’t comment specifically on the potential for gas from the field to help supply a second train at Pluto, but vice-president, WA and Northern Territory, John Anderson was enthusiastic, describing the find as a “significant outcome”. He said potential commercialisation options include processing gas from Winchester through jointly owned production facilities nearby, or through LNG production systems owned by a third party.
Santos’s head of exploration Bill Ovendon referred in a statement to “excellent reservoir quality” at the discovery and said the well would be drilled deeper to evaluate other targets.
Octanex said the location of the find “bodes well for commercialisation of the discovery, particularly so if the further drilling adds to the size of the resource and should it prove to be rich in gas liquids”.
While Santos covered Octanex’s costs for the drilling so far, the junior partner has agreed to contribute to the deepening of the well, according to Octanex chairman Geoffrey Albers.
OXX Price at posting:
40.0¢ Sentiment: Buy Disclosure: Held
