QUARTERLY ACTIVITIES REPORT
JUNE 2010
PPP has seen significant activity since the end of the March quarter.
Early in July, PPP received the requisite approvals to acquire a 5% interest
in the Block 07/03 Production Sharing Contract from Premier Oil Vietnam South
BV. Successful completion of this farmin represents an important step for
PPP and we look forward to building on this new country entry position. PPP
has now completed entry to two new ventures since 2009, as part of our South
East Asia growth strategy.
Participation in these new ventures, together with the recent Tui wells
spudded during the last quarter, has resulted in exposure to 6 high potential
wells since May 2009, when the farmin to CRD-1X well in Vietnam, an oil and
gas discovery, was initiated. Disappointingly, subsequent well results
including the Tui exploration wells have not been successful. However, PPP
remains optimistic about the remaining exploration potential in the Tui Block
in New Zealand, JPDA06-103 and in Vietnam Block 07/03 where we are also
focussing on an early appraisal of CRD-1X.
In addition to participation in these attractive ventures, PPP''s cash flow
remains strong, firmly underpinned by Tui production, with remaining reserves
of 2.23 MMbbls net to PPP at end June. In addition, the Company has no debt
and significant cash reserves of A$87.5 million, which together with cash
deposited in support of the Tui FPSO lease contract, and a further US$10.3
million scheduled to be returned to PPP during the next few weeks as a result
of completion of the Block 07/03 farmin, is equivalent to approximately A$105
million or approximately 18 c/share.
This strong cash position and broadening regional exposure provides a highly
competitive basis for the Company''s continued pursuit of additional
attractive new opportunities in the South East Asia and Australia-New Zealand
region with the aim of further expanding the exploration and production
portfolio.
Further details on these and other project activities are summarised over.
New Zealand
Tui Area Oil Project (PMP 38158) Taranaki Basin (PPP interest 10%)
Production from the Tui Area oil fields totaled 978,000 barrels (PPP 97,800
barrels) for the June quarter, averaging 10,733 barrels a day. Production
for the financial year end 30 June 2010 was 4.8 million barrels (PPP 0.48
million barrels), while total cumulative field production to the end of June
2010 was 28.2 million barrels (PPP share 2.8 million barrels). PPP''s
operating revenue from Tui during the quarter was US$7,034,000.
At the end of the period three of the four Tui Area wells continued
production, while Pateke 3H is shut in pending planning and execution of a
workover to repair that well''s artificial lift system. Production from
Pateke 3H should recommence mid Q4 2010 subject to rig availability and
equipment delivery. Forecast production for the financial year ended 30 June
2011 is 2.8 million barrels (PPP 0.28 million barrels), including allowance
for Pateke 3H downtime.
The Tui SW prospect was evaluated by Tui SW-2 which encountered oil shows in
the objective F10 sandstone, the reservoir in the adjacent Tui Field, but
evaluation by wireline logging indicated that an economic accumulation of oil
was not present. Tui SW-1, which spudded on 2nd May, had to be abandoned due
to deteriorating hole conditions and difficulties with running the 13 3/8"
casing.
Kahu-1 was spudded on 28th June, immediately east of the Tui Oil Field,
targeting Kapuni Group sandstones within a large incised valley feature. The
well reached a total measured depth of 3,835 metres, but no significant
hydrocarbons were detected within the target sandstone reservoirs.
The results of the Tui SW-2 and Kahu-1 wells will now be analysed and
incorporated into Tui field studies and assessment of remaining prospects.
PEP 38483 Taranaki Basin (PPP interest 14.091%)
The Bahamas shallow gas play continues to be marketed as a farmout
opportunity by the Operator (AWE) on behalf of the JV partners.
Vietnam Block 07/03
PPP Vietnam (PPPV) has completed the acquisition of a 5% interest in the
Block 07/03 Production Sharing Contract from Premier Oil Vietnam South BV
(POVS).
Under the terms of the original farmout agreement with POVS, PPPV agreed to
acquire a 15% equity in Block 07/03 by funding part of POVS''s costs of the Ca
R?ng ?? exploration well, CRD-1X, subject to PetroVietnam and Vietnamese
Government approvals.
Under the terms of the Petroleum Law in Vietnam and the Block 07/03
Production Sharing Contract, PetroVietnam exercised its right of pre-emption
to the extent of 10% of PPPV''s proposed 15% farmout interest
Since receiving notice of PetroVietnam''s pre-emption, PPPV has been required
to contribute under the terms of the original farmout agreement with POVS at
the level required to earn a 15% interest, pending approvals of the
acquisition of a 5% interest by PPPV and a 10% interest by PetroVietnam
Exploration Production Corporation Ltd.
Following the approvals referred to above, POVS will now refund to PPPV all
sums contributed by PPPV in excess of those commensurate with the acquisition
of a 5% interest; the sum involved is approximately US$10.3m.
The farmin exploration well Ca R?ng ??, CRD-1X, drilled in June 2009, was a
discovery, and established approximately 90m net pay comprising both oil and
gas within multiple stacked reservoir layers. Appraisal planning is
currently ongoing, with the possibility of a well being drilled in Q4 2010-Q1
2011.
JPDA 06-103 (PPPV interest 15%)
Work is ongoing to integrate the results of the Lora-1 and Lolotoe-1
exploration wells, and the implications for prospectivity and selection of
targets for future drilling.
Australia
Carnarvon Basin TL/2 (PPP interest 23.2%) and TP/7 (4) (PPP interest 4.157%)
Apache, the Operator, recently proposed the Bath-1 and Barberry-1 exploration
wells for drilling in TL/2 and Laurel-1 in TP/7(4). PPP evaluated these
opportunities and determined that they did not meet PPP''s risk-reward
criteria and hence PPP elected not to participate. Apache has now drilled
all of these wells on a sole risk (100%); none of which found commercially
significant hydrocarbons in the exploration objectives.
The Bath-1 well (TL/2) as prognosed, did encounter oil in the shallower
Birdrong Sandstone which is the oil bearing reservoir of the existing Taunton
discovery, and these results will be incorporated into the existing
evaluation.
Under the TL/2 and TP/7 Joint Operating Agreements, non-participating joint
venture partners retain the right to participate in a successful discovery
subject to back-in penalties.
Financial Highlights (unaudited)
Assets include: Cash held* A$87.5m
Receivables for oil sales (gross) A$4.7m
Receivables Premier US$10.3m
Tui oil inventory (WMP share) 7,755.0 barrels
Income tax refund A$3.0m
Liabilities include: Accrued royalty taxes
A$4.2M
PPP is free of any debt. *Cash at 30 June 2010 excludes cash deposited
A$5,531,000 (June 2009 A$7,488,000) in support of the Tui FPSO lease
contract.
Production & Reserves
Tui Area Fields (PPP 10%) Year ended 30/06/2009
MMbbls Period ended 30/06/2010
MMbbls
PPP total net production 0.91 0.48
PPP remaining net reserves 2.68 2.23
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Notes:
1. References to PPP, and the company, are to be read as inclusive of
the subsidiary companies within the consolidated PPP group.
2. Where appropriate activities and events occurring after 30 June 2010
have been recorded in this report.
3. Except where otherwise stated, dollar amounts are in AUD currency
For further information please contact:
Tom Prudence
Chief Executive Officer
Pan Pacific Petroleum NL
Telephone: + 61 2 9957 2177
www.panpacpetroleum.com.au
End CA:00197833 For:PPP Type:QUARTER Time:2010-07-30:13:12:04