A 2D reprocessing project to identify gas signatures from seismic data in PEL 113 has identified several gas prospects. The results from a similar project in PEL 102 are currently being evaluated.

Remapping of oil leads and prospects in PEL 100 has been completed and the economic justification for an extensive 3D seismic program along the southern licence area is complete. Heavy rain early in 2010 and persistent follow-up local rain has prevented seismic recording in PEL 100 until late in 2011.

All South Australian Cooper Basin exploration licences (PELs 90, 93, 100, 102 and 113) have now been renewed for a further five year period and PEL 516 has recently been granted.

Guaranteed exploration in the Cooper/Eromanga for Stuart will be significantly reduced (except for PEL 516) during the next five years which will allow more time for evaluation of new acreage. Exploration for oil will aim to replace produced oil reserves, increase the reserves base, increase production rate, cashflow and profitability. Exploration for conventional and non conventional gas will commence.

Unconventional Gas

Unconventional gas exploration has commenced with well data sent to USA based consultants to get resource estimates for coal and shale gas. The northern licences, PEL 90 and 102 contain thick gaseous coals, particularly in the late Permian Toolachee Formation. The resource potential for coal gas is above 12 trillion cubic feet in the licence areas currently held. The next step in evaluating the coal gas potential will be the drilling , coring and testing of Paning 2 in PEL 90.

In the south, PEL 516 contains large volumes of Roseneath and Murteree Shale which has been estimated to contain a resource of 38 to 60 trillion cubic feet of gas in place.

Rock samples have been analysed for maturity and carbon content and the next stage will involve coring and testing both shales in the soon to be drilled Vintage Crop 1 exploration well.

Ownership of the Allunga Trough #1 well will be transferred from Santos to Stuart Petroleum. Stuart will perforate the Roseneath and Murteree Shale sections of the well before conducting injectivity tests. Results will be used to design fracture stimulation programs in future shale gas evaluation wells to be drilled in the Allunga Trough.

Cooper/Eromanga Basin 2010/2011 Drilling Program

Stuart drilled one exploration and two development wells during 2010. In 2011, one exploration well will be drilled in the first half in PEL 516. This will be Vintage Crop 1, with multiple Eromanga Basin oil targets and shale gas evaluation targets in the Permian Roseneath and Murteree Shales.

Production

Acrasia was Stuart’s first exploration well and spudded on the 29th March 2002. The well was an oil discovery and was brought online in July of the same year. The Acrasia field now has four production wells from which a total of over 600,000 barrels has been recovered.

The initial Worrior discovery well was drilled in late 2003 and the field now has 6 production wells, with 3 main reservoirs at depths between 1400m and 1800m. Worrior has become the centrepiece of our field operation. Advanced remote monitoring and communications systems are used to manage the operation, together with 1,300 kW of installed pumping capacity to bring oil to the surface. The produced oil from the field is of an extremely high quality and all major pumping systems on site run directly on crude rather than diesel, delivering in excess of a 50% saving in fuel costs. As of June 2010, 3.3 million barrels had been extracted from the field. Crude produced from the nearby Arwon field is shipped via Worrior.

Harpoono was discovered in 2004. The field and its satellites (Rimfire, Revenue, Comic, Dunoon and Might & Power) have since produced a total of nearly 200,000 barrels. The Harpoono field and all satellite fields other than Dunoon were sold effective 30 June 2010.

Padulla 2 was drilled in 2005, twinning the original Padulla 1 well drilled by another operator in 1986 which was plugged and abandoned, having only encountered minor oil shows which were judged to be sub-economic. Padulla 2 was an oil discovery, however initial flow rate expectations from the Murta formation at a depth of 1200m were modest, of the order of 60 barrels per day. However an extremely successful hydraulic fracturing campaign carried out in early 2006 forced a rethink when production rates were briefly boosted above 1,000 barrels per day. The modular surface facilities were quickly reconfigured to include extra storage and pumping capacity. Like Worrior, the crude is of a high quality and is used to fuel the on site pumping systems directly. The field has produced a total of over 240,000 barrels of oil.

Cleansweep was drilled at the end of 2007 and encountered oil in the Birkhead formation. A small modular production facility was installed and the well was brought online in January 2008.

The Derrilyn and Toparoa fields, in which Stuart has a minority interest are both operated by Santos. Crude from these fields goes directly by pipeline to Santos’ Limestone Creek oil satellite and from there to Moomba.

New Ventures

>b>Port Bonython

Port Bonython Fuels Pty Ltd, a wholly owned subsidiary, has been established to construct and operate a fuels storage, processing and supply facility at Pt Bonython near Whyalla in South Australia's upper Spencer Gulf. This project will have the capacity to import & distribute 500 million litres of fuel annually.

Potential World Class Gas Recources

Shale Gas

During 2010, Denver-based unconventional gas expert MHA Petroleum Consultants (MHA) delivered a Scoping Study on the potential for generation and entrapment of natural gas in the Roseneath and Murteree Shales in Stuart's 100% owned Petroleum Exploration Licence (PEL) 516, in the southern Cooper Basin.

Coal Gas

Stuart holds extensive areas underlain by coals of the Permian aged Toolachee and Patchawarra Formations.

Mine For

oil, gas

Location of operation(s)

South Australia, Victoria, Western Australia

Australian Basins

Cooper, Eromanga

Address

Level 7 , 22 King William Street
ADELAIDE, SA, AUSTRALIA

Phone

(08) 8410 0611

Email

Website

http://www.stuartpetroleum.com.au

Last Updated

27/01/2011