SUN RESOURCES NL - ASX: SUR

The data on Australian Shares.com is intended as a guide only and is compiled from information in the public domain. Data on this website should not be used to make an investment or trading decision.

Description

Sun Resources NL ("Sun Resources") is listed on the Australian Stock Exchange (ASX) under code SUR. Sun Resources' strategic levels of project equity, plus its modest market capitalization means that the company is very highly leveraged in its ongoing exploration programs. Key exploration assets are in the states of Texas and Louisiana in the United States of America, Thailand, Malta and Australia and a cash flow currently delivered from production assets in the onshore Gulf of Mexico region of the USA. Sun Resources' goal is to create shareholder value through strategic investments in proven oil & gas fairways, particularly onshore, where cash flow can be delivered quickly. Emphasis is on regions of the world that have excellent fiscal terms and low political risk; current focus areas are the onshore USA and Thailand.

Australia

Sun Resources is part of a consortium of companies exploring one permit in the Dampier Sub-Basin (WA-254-P). The basin has become Australia’s richest oil and gas province since Bass Strait, with reserves in excess of nine billion barrels of oil equivalent. Sun Resources is currently marketing it's Joint Venture interest (7.86% - 9.25%) ahead of the next well commitment from June 2010. Block 2 of WA-254-P contains the under developed Sage oil discovery, with a P50 oil in place resource of 15mmbbl (gross).

United States of America

Sun Resources is following and delivering a strategy of building up significant cash flow in the USA Onshore Gulf Coast and then applying these funds to develop and participate in larger scale, high impact projects, particularly in SE Asia.

Gas prices varied within a range of US$6 to 8 per mscf during 2007 and 2008, reflecting the use of gas for heating, and are generally 2-3 times the price received for gas within Australia. Gas price is a reflection of the current (and growing) 4 trillion cubic feet (“tcf”) pa gas imports over 19 tcf pa gas production (23 tcf pa gas consumption). Gas price is also being underpinned by the prospect of increased importation of liquefied natural gas (“LNG”) to satisfy demand. Gas prices peaked at US$13 per mscf during 2008, collapsed to US$3 per mscf in early 2009 (during the Global Financial Crisis) but now has recovered to the range of US$4.50-$5.50 per mscf.

Sun Resources current exploration and production emphasis is on both oil and gas in conventional geological settings and within conventional reservoirs, principally located on the South Texas Gulf Coast (Flour Bluff Gas Project, Projects Margarita, Redback and Meek) and Louisiana Gulf Coast (Lake Long Project). Recent drilling has been successful on Gulf Coast, South Texas and Louisiana USA projects, generating up to US$2mm net revenue in 2009, to provide significant cash flow to fund the Company’s exploration activities.

Thailand (50% Interest)

Resulting from two applications made during mid 2007 and presentations to government, the Company received Notice of Qualification to Bid from the government in early September 2007 and in late December 2007 was advised of the successful tender for L20/50. The Company with Carnarvon Petroleum accepted the block award from the government at the official signing ceremony in Bangkok on 21 January 2008.

Phitsanulok Basin and is 3,947 km2 in area and has been very lightly explored. The Phitsanulok Basin contains the largest onshore oil and gas accumulation in onshore Thailand, the Sirikit Field, with remaining reserves in excess on 200 million barrels of oil equivalent ("mmboe"). Current daily Sirikit production is 20,000bo, 55-55mmscfg and 275 tonnes of LPG. The field was brought into production in 1981 and to date has produced 180mmboe.

Carnarvon, as operator of the L20/50 block, is applying a similar exploration philosophy to exploration on the block in a basin that is a direct geological analogue to the nearby Phetchabun Basin where recent exploration by Carnarvon in the environs of Wichian Buri has been extremely successful and resulting production is now averaging 6-8,000bopd after peak rates around 15,000bopd.

Technical studies undertaken by the Joint Venture have determined the existence of a mature oil source kitchen in the deepest basinal areas adjacent to the identified leads, and have also demonstrated the potential for tacked volcanic reservoir targets in the leads as per the adjacent Phetchabun Basin where Carnarvon and Pan Orient have announced significant new oil discoveries in the “volcanic play”. The recent discovery by Carnarvon was the sixth commercial volcanic reservoir discovery made in the Phetchabun Basin Oil Field since only 2005.

The technical studies have confirmed that all previous exploration wells in the permit are “off-structure” mainly on deeper sandstone plays as per the Sirikit Oil Field, due north of L20/50, and are therefore not valid tests of this play. Despite the record of oil and gas shows in the Nong Bua-1 well, it too has been shown to be sufficiently beyond closure to warrant twinning of the well at this location until further seismic has been run to further delineate the prospect’s target sandstone reservoirs.

This exploration program is targeting an oil resource of similar size to that of Pan Orient and Carnarvon who are producing from the adjacent Phetchabun Basin, just 50 kilometres to the east. The string of discoveries by Carnarvon and Pan Orient has seen this field deliver average production of around 12,000 bopd, and the reporting of a recoverable resource in excess of 40 million barrels from a number of new oil pools in the volcanic play.

A 550km 2D seismic survey was acquired successfully during July and August 2009. At year end, this new data set was being integrated with the existing vintage seismic data to detail the prospects ready to select exploration drilling locations for 2010. A decision by the Joint Venture in early-mid January 2010 to drill between 1-4 weeks, targeting a mid 2010 spud date.

Malta (20% Interest)

The Malta Joint Venture comprises Sun Resources (20%) and Pancontinental Oil & Gas NL (“Pancontinental”) (80%) on two contiguous permit areas - ESA Area 4, Block 3 and ESA Area 5 in southern Maltese waters abutting Tunisia and Libya.

Large stacked Lower Cretaceous to Eocene age reef mound prospects such as Chianti and Limoncello were delineated inside Maltese waters in 2004 by Sun Resources and Pancontinental in ESA Area 5. These have speculative reserve potential, ranging from a mean recoverable oil potential of 455 mmbo for Chianti to 968 mmbo for Limoncello. The potential estimates are comparable with neighbouring commercial giant field analogues in Libyan and Tunisian waters.

At the Maltese Government’s request, the Joint Venture suspended the seismic survey in September 2005 to assist the Maltese government in facilitating the resolution of maritime border issues it has with both Tunisia and Libya. Progress, albeit slow, continues to be made on the matter. An Agreement between Malta and Tunisia was signed on 27 February 2006 for joint oil and gas exploration and exploitation in zones of the Continental Shelf located between Malta and Tunisia which in part encompasses the western area of the ESA in Area 5. Since the agreement, Malta and Tunisia, through a joint expert committee reporting to the two country’s Ministers of Foreign Affairs, have been working on the determination of the exact coverage of the joint exploration and exploitation zone between the two countries.

Similar discussions between Malta and Libya are ongoing to resolve the southern boundary issue in the southern area of the ESA, and it is hoped that a similar agreement between Malta and Libya will be forthcoming in the very near future. Pan Continental continues to actively monitor and lobby the border situation with the Government of Malta.

Mine For

oil, gas

Location of operation(s)

USA, Malta, Thailand, Mexico, Australia

Australian Basins

Carnarvon

Address

Unit 16, Subiaco Village, 531 Hay St
SUBIACO, WA, AUSTRALIA

Phone

(61 8) 9388 6501

Email

Website

http://www.sunres.com.au

Last Updated

24/02/2010