(Asia-Pacific) - Australian explorer Santos Ltd. has raised its exploration expenditure to $169.2 million from $140.5 million spent last year, saying 17 of the planned 25 wildcat wells will be drilled outside Australia.
Eight of the 17 wells would be drilled in Indonesian concessions, especially the Kutei acreage.
"Oil is the main target for the Kutei and East Java exploration wells which represent the next potentially high volume opportunities in the company's Indonesia strategy," said Santos' managing director John Ellice-Flint said in a financial report released on January 25.
Two of the wildcats would be drilled in its emerging Timor-Bonaparte region and seven would be drilled in Santos' new areas of interest – three in Egypt and four in the shallow water GoM.
Santos is scheduled to drill two wells in Carnarvon Basin offshore Western Australia, one well in Queensland's Bowen Basin, two in the Otway Basin, and three wells in the onshore Cooper Basin.
Materiality is weighted toward 3Q and 4Q 2006 when the Lynedoch and Evans Shoal South prospects will be drilled in the Timor-Bonaparte along with exploration wells in the Kutei and East Java basins in offshore Indonesia.
"This 2006 program takes Santos another step toward its stated policy of building a more globally-focused exploration effort as a key plank in our overall growth strategy," Ellice-Flint said.
"In the Timor-Bonaparte, the Lynedoch and Evans Shoal South prospects hold significant LNG potential and provide us with the opportunity to build on the Caldita gas discovery made in the same area late last year.
"These big impact wells are supported by a suite of high-value gas and oil prospects both internationally and domestically."
Santos' projects update:
Bayu Undan LNG (Santos 10.6%) -- The project was over 99% complete at the end of the quarter.
The LNG tank cooldown has begun, and the first cargo is now expected to be dispatched during early February 2006.
Agreements are in place for three or four pre-contract cargos to be sold prior to March 1, 2006.
John Brookes (Santos 45%) -- First gas production from John Brookes was achieved during September 2005, and construction and commissioning of the onshore CO2 removal plant was completed during December 2005.
Casino (Santos 50%, operator) -- Approximately 96% complete at the end of 4Q 2005 and ahead of schedule, expected to achieve "ready for start-up" status during late January 2006.
Actual timing for first gas is dependent on availability of TRUenergy's Iona gas plant.
The main activity during the quarter was the laying and stabilization of the subsea pipeline.
Total project capex is expected to remain within 10% of the original budget at project sanction of $208 million.
Oyong (Santos 40.5%, operator) -- The oil development phase was approximately 90% complete at the end of the quarter.
The seven-well development drilling program has been completed, with five wells drilled and completed as oil wells and two for future gas wells.
Contracting for the floating storage and offtake (FSO) vessel was completed and contracting and conversion of the production barge progressed.
Due to the timing of the conversion of the FSO and production barge, the target first oil date has slipped from early 2006 to late in 2Q 2006.
First gas deliveries are expected during 1Q 2007. As a result of additional development drilling costs and higher barge conversion costs, the anticipated gross capex for both phases is forecast to increase by approximately 30% to $130 million.
During the quarter, Santos' participating interest decreased from 45% to 40.5% due to the requirement to effect a proportionate assignment of 10% to an Indonesian government nominated participant.
Maleo (Santos 75%, operator) -- Approximately 40% complete at the end of the quarter.
The mobile offshore production unit is being converted and upgraded in a shipyard in Sharjah. Engineering and procurement activities are underway for the Maleo spurline.
Development drilling of four wells will commence in January 2006 and the project remains on schedule for first gas in the second half of 2006.
Cooper Basin (Santos 60% - 100%, operator) --Five gas wells and 10 oil wells were connected during the quarter.
During the quarter, Santos progressed plans for its exploitation strategy to improve the recovery of oil from the Cooper Basin using a low-cost scaleable approach centered on the application of modern seismic technology and state-of-the-art drilling rigs.
The first of three automated, truck-mounted light-duty drilling rigs arrived in Australia during December 2005 and is currently undergoing pre-drill testing.
Start-up drilling in the Tintaburra block, ATP 299 P in southwest Queensland, is anticipated in late January or early February 2006.
The second rig arrived in Australia during January 2006 and is expected to be in service by early in the second quarter.