3D Energi Ltd said Tuesday it has voluntarily halted trading on the Australian Securities Exchange (ASX), having defaulted on the payment of its share of costs in a ConocoPhillips-led exploration campaign in the Otway basin offshore Victoria.
“Joint venture cash calls for the drilling program are higher than originally forecast and a balance of approximately $2.5 million remains outstanding by the company which it does not currently have”, Melbourne-based 3D Energi said in a stock filing.
“A default notice has been issued by the joint venture operator to the company with a remedy period to 6th February.
“Additional forecast company drilling program expenditure subject to cash calls due on 6th February is currently estimated at approximately $5.3 million, which if not paid by that date may well become the subject of an additional default notice and remedy period.
“Consequently, the company is implementing a suspension of the trading of its shares on ASX while it addresses its funding position and the implications of payment default on the level of its ongoing interest in the permit”.
3D Energi plans to resume ASX trading in the first week of February.
Earlier this month it announced the Charlemont-1 gas discovery, the joint venture’s second discovery under the VIC/P79 exploration after Essington-1. The newest well targeted the penultimate prospect in the Charlemont trend, which culminates with the La Bella discovery, according to 3D Energi.
“Phase 1 of the Otway Exploration Drilling Program has identified important new natural gas resources close to existing offshore gas production and processing infrastructure in the Otway basin, supplying the Australian domestic gas market”, 3D Energi executive chair Noel Newell said in a statement January 14 announcing the second discovery. “This enhances the strategic significance of the discovery and supports future development optionality, subject to further technical and commercial evaluation, consistent with the company’s objective of contributing new gas supply to a tightening East Coast market”.
Explaining the higher-than-expected costs, 3D Energi said Tuesday, “In the case of the Essington-1 well, the cost variance primarily reflects the decision to undertake an extensive wireline logging and Ora formation testing program following confirmation of a significant gas discovery in the Waarre A reservoir. These activities were undertaken based on success to appropriately assess the discovery and materially enhance technical understanding of the reservoir for commercial assessment”.
“For Charlemont-1, material incremental costs arose from a combination of weather-related delays during mobilization and the encounter of overpressured gas while drilling”, it added. “These conditions necessitated a revised well design, additional casing, sourcing of supplementary equipment, regulatory approval from NOPSEMA (National Offshore Petroleum Safety, and Environment Management Authority) and the execution of a more complex evaluation program. As a result, the Charlemont-1 well duration extended by approximately 14 days beyond the original planned schedule, which directly resulted in additional rig time and associated operational costs”.
The Transocean Equinox drilling rig has been transferred to another operator in the Otway region, 3D Energi said.
3D Energi owns 20 percent in the VIC/P79 exploration permit. ConocoPhillips is operator with a 51 percent stake. Korea National Oil Co owns 29 percent.
To contact the author, email jov.onsat@rigzone.com
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