Petsec Energy announced the re-establishment of Tranche 3 under its Convertible Note Facility (the “Facility”), which expired on 5 January 2018, which will provide the Company with access to a further US$5 million to fund the Company’s share of drilling and completion costs associated with the proposed Hummer B-2 appraisal/development well offshore Louisiana, USA.
All other fees, terms and conditions are typical of a facility of this nature and include the granting of security, penalty interest rates and early repayment costs.
The re-establishment of Tranche 3 of the Facility together with the re-establishment of Tranche 2 in February 2018 (refer ASX Release dated 22 February 2018) provides the Company with the financial flexibility and capacity to continue to implement its strategy in its USA and MENA businesses.
Tranche 3 covers the Company’s cost of participation in the recently announced Hummer B-2 appraisal/development well (refer ASX Release dated 10 May 2018), which we anticipate will deliver additional reserves and value to the Company and its Shareholders.
The B-2 appraisal/development well will be drilled from the Main Pass Block 270 “B” Production Platform, with a planned bottom hole location some 6,000 feet to the East of the B-1 exploration discovery well which is currently producing at gross rates of approximately 18 million cubic feet of gas per day plus 370 barrels of oil per day. This B-2 well is the first of potentially 3 to 8 appraisal/development wells required to develop the Hummer Gas/Oil Field which extends over a strike of five miles within the Main Pass Block 270,273,274 leases which cover 15,000 acres, in some 200 feet of water.
The well is designed to test, at an optimum structural position, six potential oil and gas reservoirs, these being the five oil and gas reservoirs intersected in the B-1 well and a deeper horizon not tested by the B-1 well, but productive in the area.
The primary objectives of the B-2 well are two sand reservoirs with proven oil and gas reserves determined from the B-1 well (Cawley, Gillespie & Associates, independent reserve engineers), one of which is categorised as Proved Developed Producing (PDP) the other Proved Undeveloped (PUD). These reservoirs are also productive in similar nearby fields (Main Pass 280/283 Field Complex).
The B-2 well is planned to drill to a measured depth (MD) of 18,559 feet with a true vertical depth (TVD) of 16,624 feet. The well is anticipated to take approximately 80 days to drill and reach total depth, with an expected spud date in mid-July 2018. Completion of the well for production is estimated at two weeks and production is anticipated within 4 to 6 weeks of well completion. Production is estimated to begin in midDecember 2018. The estimated net cost to the Company to drill the well is approximately US$2.6 million, and US$1 million for well completion and production facilities.
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