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With its recently announced drilling program, Mosaic Oil will continue to focus on unlocking shareholder value through an accelerated drilling campaign for 2009-2010 designed to move 2P and 3P gas into commercial production. In the Surat-Bowen Basin new exciting business opportunity, the underground gas storage in the Silver Springs-Renlim gas field, the largest gas field in south east Queensland, has progressed well. Mosaic has 100% ownership of the Silver Springs-Renlim field and other nearby partially depleted gas and oil fields which could become underground gas storage and/or carbon capture storage facilities in the future. The Silver Springs-Renlim field has the potential capacity to store up to 100PJ of gas for any prospective LNG ramp-up production. Outright ownership of the Churchie and the Churchie West Fields In early April, Mosaic Oil signed an agreement with Santos Ltd (ASX: STO) to acquire Santos’ interest in several production licences with the associated pipeline licences, production facilities, gas sales contracts and exploration permits in the southern Surat-Bowen Basin. All production licences, pipeline licences and exploration permits involved in this transaction are currently operated by Mosaic Oil. The acquisition is of both commercial and strategic value to the Company, and the purchase considerations will be paid from the existing cash reserves of Mosaic Oil together with its ongoing cash flow. There will be no equity raising or bank debt required to complete this transaction. The company has already accelerated the appraisal and development activities of the Churchie Field by drilling the Churchie-11 gas/condensate development well. The first well for the year was a success and is expected to be contributing to Mosaic Oil revenue streams as early as 3Q2009, with a more detailed assessment of the full commercial impact of the well to be confirmed later in the year after further testing and analysis. The 2009 drilling campaign gets underway Mosaic Oil has signed a drilling contract with MB Century Resources for their Rig#7 to drill up to 6 wells in the Surat-Bowen Basin, Queensland. The drilling campaign in the 2009 calendar year will be divided into two programs and commenced with the successful Churchie-11 well in May 2009. The first program will comprise four wells. These include Churchie-11 gas and condensate development which proved successful and two low to medium risk, liquids rich gas and oil development wells at the Taylor Field following the success at Taylor-18 & Taylor-19 in 2008. Waggamba-5H will be worked over to clean out the interpreted blockage in the horizontal section which has adversely affected the well production performance. Interpretation of cuttings, hydrocarbon shows and logs recorded while drilling has suggested that this well should perform similarly to Waggamba-4H. The second program is scheduled to commence later in the year following the seismic acquisition and re-processing programs in the first half of 2009 calendar year. This second drilling program will comprise at least one additional gas and oil development well at Taylor as well as a farm-in oil exploration well in ATP 608P (Stratton Block). This well is subject to the positive interpretation of a 2D seismic program currently being acquired by Mosaic Oil. A trend of growing profitability The strong start to 2009 follows on the success of previous years for the company. Mosaic Oil delivered a net profit result for FY2008 of $4.1 million as a result of the high prices achieved for oil and gas and representing a 56% increase on the previous year. This continues a trend of growing profitability since FY2004, with increases in revenue and EBITDA highlighting the strong and ongoing success of the business. A strong cash flow position will ensure the 2009 drilling campaign is adequately funded. Click on the link for more detail on the FY2008 results.  |
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