News From The Basin Gives Juniors Cause For Celebration
The Age
Tuesday October 22, 2002
A flurry of recent announcements suggests that the Perth Basin is likely to remain an exploration hot spot.
The overlooked onshore/offshore Perth Basin is proving to be a happy stomping ground for a string of hardy junior oil explorers who have long been looking for something worthy of a decent celebration.
News flowing out of the Perth Basin yesterday was giving the juniors cause for celebration on several fronts. It also suggested that the Perth Basin would remain an exploration hot spot.
First up there was the news that the Jingemia 1 exploration well in the onshore Perth Basin was testing oil shows in the primary objective.
Then came confirmation from the partners in the 2001 offshore discovery, Cliff Head, that reserves were more like 110 million barrels, up from an earlier estimate of 80-100 million barrels.
That was followed by the news that the US-owned Apache, the Carnarvon Basin specialist, was increasing its recently obtained Perth Basin exposure though a farm-in deal on theWA-325-P and WA-327-P permits.
The permits are next to each other in the offshore northern part of the basin, and bring with them ``nearology" exposure to the permit containing the Cliff Head find and the Morangie 1 well, now being drilled by an Origin Energy-led partnership.
Garimpeiro's interest this week is not the heavyweight Origin but Perth-based Norwest Energy NL, headed by Ivan Burgess. He has just returned from a roadshow of the eastern states that looks to have had the desired effect. The stock has risen to 9.3 cents, with Burgess' recent shoeless presentation to punters at Jimmy Watson's wine bar also highlighting the broader potential of the Perth Basin. ``It could become equally prolific as the Carnarvon Basin," Burgess suggested.
Norwest's exposure to the unfolding excitement of the Perth Basin is about as good as it gets. Of immediate interest is its agreement to take a 7.5 per cent free-carried interest in the Morangie 1 well that is now being drilled. It is a 250-million-barrel target.
Norwest is also a 5 per cent partner in the upgraded Cliff Head oil permit and a 10 per cent partner in the TP/15 permit that contains the 360-million-barrel Twin Lions prospect.
All up, Norwest will be involved in four wells in the coming months - Morangie, Cliff Head 3, Twin Lions and Mentelle, a 50-million-barrel play in the Cliff Head permit. Depending on results from those, another four wells could be drilled.
It's a big program with lots of leverage for a company whose current market value of about $13 million is pretty much covered by the single success to date at Cliff Head.
It has been a miserable year for the junior explorers looking to snag something big in Western Australia's remote West Musgraves region.
The region was put on the map by WMC in May 2000 when the miner revealed some high-grade nickel/copper hits at the Babel and Nebo magnetic anomalies. The results triggered a mini-boom in exploration stocks with ground positions in the region, as well as spawning a number of floats, including ReLode and West Musgrave Mining.
Interest has since fallen away owing to a lack of fresh success, and the realisation that as most of the prospective ground is Aboriginal reserve, the pace of exploration is necessarily slow.
The good news for the juniors is that WMC itself is back in the West Musgraves, kicking off a drilling program designed to test for high-grade massive sulphide ore bodies in and around the Babel and Nebo finds, as well as complete infill drilling on ``one part" of Babel to increase confidence in resource estimates.
There will also be a test of the Gerar prospect, 10 kilometres north of Babel, and drill holes into new targets generated from ongoing survey work. Given the rumblings of discontent with WMC's demerger plan, it's a fair bet that the group is looking for good news to pass on to shareholders.
Some exciting exploration results from the West Musgraves in the months ahead would certainly help juice up the package of non-alumina assets WMC is going to house under what will become WMC Resources.
No one is rushing out to buy the explorers active in the West Musgraves for some leveraged exposure to what WMC is up to on its own tenements. But just a sniff of something special from WMC's efforts could have a dramatic rub-off effect on the likes of ReLode and West Musgrave Mining.
© 2002 The Age