Here are details from the briefing: "Title: Open Briefing®. Eastern Star Gas. CSG Farm-in Opportunity Record of interview: corporatefile.com.au Eastern Star Gas (ASX code: ESG) announced an agreement with Orion Petroleum to farm-in to coal seam gas exploration acreage in the Bowen, Surat and northern Gunnedah Basins. Can you explain these farm-ins in the context of your broader growth strategy? MD David Casey The Orion farm-in represents an excellent fit with ESG’s growth strategy, allowing an ability to significantly grow our exploration acreage position and resource base in an area adjoining one of our key assets. This opportunity will allow for any exploration success in these farm-in areas to be quickly commercialised and jointly developed with our PEL238 programme. corporatefile.com.au Can you provide more details on this agreement with Orion Petroleum? What conditions need to be met for it to proceed? MD David Casey The farm-in requires three coreholes to be drilled; one in each of the PELs 6, 426 and 427 plus 100 km of seismic acquisition in PEL6. ESG will earn a 40% working interest in PEL426 and a 50% interest in the remaining two permits, PEL6 and 427. Drilling a further corehole in PEL6 will earn a further 25% interest in this permit. ESG will operate the farm-in and is expected to complete Stage 1 of this farm-in by the end of the calendar year.
corporatefile.com.au How confident are you on the prospectivity for gas? What exploration techniques have ESG used to conclude that the farm-in could contain a highside prospective gas resource of 3,500 Bcf? How have you targeted these three coreholes? COO Peter Lansom There has been a detailed geological and engineering review of all the corehole and seismic data in the permits. This has shown considerable resource potential in all three permits in coals slightly younger than those targeted in ESG’s PEL238 permit. In particular, the permits contain a large potential resource in the Walloons coal measures, a prolific CSG target in Queensland’s Surat Basin acreage. corporatefile.com.au If the drilling program proves successful, how and where will the gas be monetised? MD David Casey The success of the drilling programme will, in the first instance, result in the identification of a prospective gas resource. Although further work, including pilot production of gas, will be required to upgrade the resource to a reserve, early success with the drilling programme will nonetheless strengthen the foundation upon which our gas marketing effort is based. Looking to the future, we are pursuing a portfolio of market opportunities that we envisage being developed in a staged manner. The opportunities include use of gas in, and expansion of, the Wilga Park Power Station; supply of gas into the NSW gas market, using arrangements we have entered into with the APA Group; and supply of gas for electricity generation. In addition, we are investigating some particularly large scale and high value opportunities that will allow us to realise the full potential of our gas portfolio. An exciting aspect of the new acreage is that, on one hand, it reinforces our Narrabri CSG Project so, with modest pipeline infrastructure extensions, gas could be used to supplement the supply into NSW. On the other hand, the acreage also extends to the Queensland border, so gas could also potentially be monetised through that state. corporatefile.com.au ESG entered into a Heads of Agreement with APA Group to investigate options for early gas delivery into the NSW gas markets. What specific options is ESG investigating? Can you comment on the broad timeframe for early gas delivery? MD David Casey The first option to be investigated is the relatively simple development of a gas pipeline lateral to connect the Narrabri CSG Project with the Central Ranges Gas Pipeline, which APA now owns. This would allow gas to be easily delivered to anywhere in NSW, or even Victoria. APA has already committed
to front-end engineering and design work for the pipeline, so gas could conceivably be delivered into the NSW gas market within 18 to 24 months. During the front-end work phase, we will also be looking for opportunities to upsize the new pipeline to cater for future loads. ESG will endeavour to take advantage of these opportunities and have them advanced before a final commitment to purchase pipe material is made. corporatefile.com.au Can you provide an update on the MOUs with Babcock & Brown Power in light of recent announcements? MD David Casey From our perspective, it is business as usual for Babcock & Brown. NSW needs around 300 to 350 MW of new electricity generation to be installed annually, environmental imperatives mean gas is the fuel of choice, and we are on the cusp of having reserves in place to meet ESG’s initial market requirements. Babcock & Brown is pursuing quality development opportunities, and its proposed power station development is one of them. corporatefile.com.au Can you provide an update on PEL 238 corehole appraisal program? COO Peter Lansom To date we have just completed drilling our fourth hole in the programme, Dewhurst 7. The programme has been very successful, confirming the new geological model and areal extent across the Dewhurst prospect of thick Bohena Coal Seam development with good coal quality, permeability and gas content. Dewhurst 7 reached total depth yesterday and wireline logs show a Bohena coal thickness of 22 metres which is another excellent result and the thickest intersection of Bohena coal to date. The corehole rig will then move to Dewhurst 5 before moving north to evaluate the Edgeroi and Blue Hills prospects. In addition to the ongoing corehole programme we also envisage the 2008 Seismic Acquisition programme will commence within the coming days. This is an important part of the 2008 PEL238 Exploration Programme and will assist to further delineate the structure and thickness of coal development in the Dewhurst, Yallambee and Turrawan prospects. corporatefile.com.au What is the status of the Lateral Programme? COO Peter Lansom We are pleased to advise that the Schramm TXD rig has arrived in the country and is currently undergoing final fit-out before mobilising to site. While this does represent a delay to our expected start date, AJ Lucas, the drilling contractor, has offered to provide additional rigs to get the programme back on schedule if required. At this stage we do not see this as a requirement given the capacity and capability of the TXD rig to make up for the lost time and we expect to spud the first well of this programme in late September or early October.
corporatefile.com.au Thank you Peter and David."
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