January Activity Update
January 17 2003 - 2:00AM
UK Regulatory
RNS Number:2980G
Fusion Oil & Gas PLC
17 January 2003
Fusion Oil & Gas plc
("Fusion" or "the Company")
January 2003 Activity Update
Update on licence interests offshore West Africa prior to preliminary results
announcement in March 2003.
In September 2002 the Company announced that it had completed a farmout deal
with various subsidiaries of Amerada Hess Corporation in relation to its license
interests in The Gambia, Croix du Sud and Ntem. With the exception of The
Gambia, all regulatory consents to the assignments of interests have been
received.
AGC - Croix du Sud (Fusion 20%)
Government consent to the assignment of interest and operatorship of this
license to Amerada Hess was granted on 6 November 2002 and acquisition of a
1,500 square kilometre 3D seismic survey commenced on 22 November 2002. The
survey was completed ahead of schedule on 28 December 2002 and delivery of the
processed data volume is anticipated during Q2 2003. This high resolution data
set will allow detailed assessment of the identified prospects and selection of
targets for initial drilling.
Cameroon - Ntem Licence (Fusion 20%)
Government consent to the assignment of interest and operatorship of this
license to Amerada Hess was granted on 12 December and acquisition of 1,500
square kilometres of 3D seismic commenced on 7 January. Survey completion is
expected during February 2003 with delivery of a preliminary data volume
anticipated during Q2 2003.
This 3D dataset will enable Fusion and Amerada Hess to prioritise potential
drilling targets in the identified lead inventory. The specific experience of
Amerada Hess in its successful Rio Muni (Equatorial Guinea) exploration
campaigns to the south of Ntem will aid this assessment.
A recent oil discovery, Coco Marine-1, drilled by ConocoPhillips in December
2002 to the north of the Ntem license has positive regional implications.
Further drilling activity in the vicinity of the Ntem license is anticipated
during 2003, with key exploration wells by ChevronTexaco to the south and
Perenco/ExxonMobil to the east of the license.
The Gambia (Fusion 100%)
Fusion has been in the process of seeking Government consent to the assignment
of an 80% interest. Recent changes in those responsible for the administration
of oil and gas affairs in The Gambia have resulted in the Government
re-assessing the status of the Petroleum Production Licence. As a consequence,
the contractual position and continuing commercial merits of this licence are
being reviewed. Fusion will make a statement regarding this licence following
clarification with the relevant authorities.
Mauritania (Fusion 6% in PSC B, 3% in PSC A)
Chinguetti (PSC B)
The results of the 2002 drilling on the Chinguetti Field confirmed the presence
of oil across the whole structure in excellent quality reservoir sands with a
net to gross ratio from all three wells in the range 25 to 40%. Production
testing on Chinguetti-4-2 resulted in a flow of 1,560 barrels of oil per day
constrained by sand influx. The restriction of flow by loose sand is a common
problem in high-quality friable reservoirs and analysis of test results suggests
that appropriately designed production wells will flow at significantly higher
rates. The Chinguetti-4-4 well encountered a 114 metre oil column which
included an additional 69 metres of oil below the lower limit predicted by the
3D seismic data.
It is anticipated that the joint Woodside/Agip Chinguetti Field development team
will complete basic design and feasibility studies during Q2 2003, at which
point the Joint Venture will meet to sanction the preparation of a field
development plan. First oil production is projected for late 2005 or early 2006
at a peak rate of approximately 75,000 barrels of oil per day. Fusion's current
reserve estimates are in the range 100 to 150 million barrels.
Banda (mostly PSC A)
The 2002 Banda discovery well (Chinguetti-4-3) successfully tested a new play
concept encountering a 110 metre gas column overlying a 23 metre oil column in
excellent quality reservoir sands with a net to gross ratio in the region of
40%. Fusion's preliminary estimate of potential reserves is in the region of 80
to 100 million barrels. Given the stratigraphic nature of the trap however the
thickness and distribution of the oil column could vary within the accumulation
and there is considerable scope for revision to these reserve estimates.
Appraisal drilling on the Banda feature is anticipated during 2003.
2003 Work Programme
The PSC A and PSC B Joint Ventures have agreed to drill up to 5 wells during
2003. These include 2 firm exploration wells, 1 contingent exploration well and
2 contingent appraisal wells on the Banda discovery. It is expected that a
decision regarding the Banda appraisal drilling will be made in Q2 2003
following completion of post-drilling technical studies.
Forward Strategy
Fusion is currently evaluating how best to ensure maximum value is delivered to
shareholders from this early drilling success and investment in extensive 3D
seismic which has identified an extensive portfolio of prospects and leads.
AGC - Cheval Marin (Fusion 10%)
Processing of the 2,500 square kilometres of 3D data acquired during 2002 will
be complete during February 2003. The 2003 work programme is focussed upon
delivering a prospect and lead inventory from these new data from which drilling
locations can be selected. Preliminary interpretations of the fast-track data
volume are encouraging.
Gabon - Iris and Themis Marin (Fusion 38.57%)
These Joint Ventures, operated by Fusion, have been sufficiently encouraged by
the results of 2D seismic acquired during 2002 to accelerate the exploration
programme and utilise an available seismic vessel to acquire two 3D seismic
surveys on favourable commercial terms. Both surveys will undergo pre-stack
depth migration to overcome sub-surface complexity that has compromised previous
exploration in the region. The Themis Marin survey (296 square kilometres) was
completed in December 2002 and the Iris Marin survey (334 square kilometres) was
completed earlier in January 2003. Delivery of final processing is expected Q2
2003, enabling exploration targets to be identified prior to the end of 2003.
Saharawi Arab Democratic Republic (SADR)/Western Sahara - Technical Cooperation
Agreement ((Fusion 100%)
Most of the technical data required for this study have been acquired and
technical studies are underway. Fusion will present preliminary results of the
study to representatives of the SADR during February.
Alan Stein, Managing Director of Fusion, commented:
"Continued success with the drill bit in Mauritania provides Fusion with a
number of options to further develop the Company. We are in discussions with
third parties and advisors to ensure this success is of optimal benefit to the
Company and its shareholders. Elsewhere, acquisition of large 3D seismic
programmes in AGC, Cameroon and Gabon has the potential to deliver step-function
growth in asset value and we are actively pursuing new projects that will
complement the asset base and capitalise on the expertise of the Company. Apart
from The Gambia we are making excellent progress with all projects. "
17th January 2003
For further details please refer to the company's web page www.fusionoil.com.au
or contact:
Fusion Oil & Gas plc Tel: +61 89 226 3011
Alan Stein, Managing Director Fax: +61 89 226 3022
Australia e-mail: astein@fusionoil.com.au
Peter Dolan, Chairman Tel: 020 8891 3252
England Fax: 020 8891 1555
e-mail: peter@fusionoil.demon.co.uk
College Hill Associates Tel: 020 7457 2020
Justine Hibbert Fax: 020 7248 3295
James Henderson e-mail:justine.hibbert@collegehill.com
james.henderson@collegehill.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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