IT DID not flow oil but Essential Petroleum's East Wing exploration well near Timboon in western Victoria has done the next best thing by recording a strong gas flow.
Melbourne-based Essential reported that a 12-metre zone in the well (2210.7 to 2222.7 metres) had flowed gas at a daily rate of up to 9 million cubic feet through a relatively small surface choke.
A deeper zone was tested for oil but was found to be water bearing. Managing director John Remfry was nevertheless "cock-a-hoop" about the gas find higher in the well.
The find is close to established pipeline infrastructure in the region and, according to the company, should enable the "rapid development of this exciting new discovery".
Analysts said an onshore gas find of 1 billion cubic feet of gas would probably deliver cash of about $4 million given current prices. Essential had a pre-drill target for East Wing of 5 billion to 9 billion cubic feet of gas.
Essential shares gained 0.4¢, or 6.6%, to close at 6.4¢ , valuing the company at $39.5 million.
The well is in the onshore portion of the Otway Basin. The same Pecten High geological feature is home to the Casino, Henry and Halladale gas fields in the offshore portion of the basin where some 400 billion cubic feet of gas has been found and developed.
The East Wing target was identified from a seismic survey originally shot by Santos. Essential believes East Wing could be on the edge of a trend, which it is now keen to follow up.
Chairman John Cornelius said the find was "highly significant" and would lead Essential to further opportunities in its permits. The permit containing East Wing is wholly owned by Essential.
Essential's main pitch for the big time in the Otway Basin remains its share in the offshore permit Vic/P46 where the operator, Beach Petroleum, is planning to drill a target later this year.
EPR Price at posting:
6.4¢ Sentiment: Buy Disclosure: Held
