Strong drilling results and expansion into Asia
P o s i t i v e p e r c e p t i o n s o f S a n t o s a s a m a t u r i n g o i l a n d g a s c o m p a n y i n A s i a c o n t r i b u t e d t o a s u c c e s s f u l n e w c o u n t r y e n t r y i n V i e t n a m , a d d i n g a n o t h e r d i m e n s i o n t o t h e C o m p a n y ’ s i n t e r n a t i o n a l p r o i l e i n 2 0 0 6 .
In a year in which Santos recorded strong drilling results in its traditional search areas, both onshore and offshore Australia, the success of the Company’s ‘growth through exploration’ strategy was underscored by its experience in Vietnam.
Santos continues to consider other opportunities in Asia and was granted acreage in the Bengal Basin, in the northern Bay of Bengal offshore India, in early 2007.
The Amulet-1 discovery, also in the Carnarvon Basin, yielded a 28-metre oil column with a subsequent sidetrack and appraisal well helping to define a significant oil accumulation. Further appraisal drilling in 2007 will establish the number of oil accumulations present at the Amulet field.
In Indonesia, the Wortel-1 exploration well discovered gas and flowed at 18.5 mmscf/d. Further appraisal drilling of the Wortel structure is planned in 2007.
Santos drilled 25 exploration wells in 2006, with discoveries in the Timor/Bonaparte region, Carnarvon Basin, Cooper Basin, Vietnam and Indonesia.
The Barossa-1 well in the Timor/ Bonaparte region offshore Northern Territory flowed gas at a rate of 30 mmscf/d and provided valuable reservoir data. An ongoing exploration and appraisal effort, also incorporating the nearby Caldita field, will aim to convert the area’s gas into feedstock for a second train at the Wickham Point LNG plant, near Darwin.
In the Carnarvon Basin, the Gnu-1 well flowed gas at 26 mmscf/d and considerably enhanced Santos’ Western Australian gas portfolio. Gnu has added to the reserves of the adjacent Reindeer field for which commercialisation options are being considered by the project operator, Apache.
SUCCESSFUL ENTRY TO VIETNAM
Santos recorded strong oil and gas flows from the Blackbird and Dua discovery wells after farming into the Nam Con Son Basin off Vietnam’s southern coast in 2006.
Blackbird yielded oil from four zones and flowed at rates of more than 3,700 bopd and 2.5 mmscf/d, while Dua flowed at 5,500 bopd and 6.76 mmscf/d.
Two appraisal wells provided information on the Dua reservoirs and studies in 2007 will consider the type and scale of potential development options. Santos is acquiring 3D seismic data to delineate the Blackbird structure and, with the two discoveries in close proximity, consideration will be given to joint development of Dua and Blackbird.
Santos’ standing as a professional and skilled explorer saw the Company become operator of a joint venture in the Song Hong Basin, offshore northern Vietnam.
16 Santos Annual Report 2006
Santos funded the acquisition and interpretation of 2D seismic data in this prospective area and has committed to shooting a 3D seismic program and drilling an exploration well within three years.
The strong long-term political, education and trade ties that exist between Australia and Vietnam are now delivering in a commercial sense, and Santos is the most active Australian exploration company operating in the country.
PROGRESS IN KYRGYZSTAN AND EGYPT
Santos established a sound platform for exploring the prospective Fergana Basin in western Kyrgyzstan with the completion of a reinterpretation of Soviet-era seismic data. Santos will undertake a 2D seismic program in early 2007 and apply technology and techniques not previously employed in the region to plan a drilling program.
In Egypt, Santos drilled two unsuccessful wells in 2006; however, seismic data previously acquired is being reprocessed to allow improved imaging.
2007 FOCUS ON NEAR-FIELD EXPLORATION
With drilling rig and service costs to remain high in the current competitive market, Santos will sharpen its focus on near-field exploration and appraisal of recent successes in the year ahead.
The Company’s exploration budget reflects this prudent stance and has a greater emphasis on seismic acquisition and less on drilling. Twelve exploration wells with a budget of $173 million are planned for 2007, with oil as the principal target.