Kea Disappointed by AU Drilling Results

- Kea Disappointed by AU Drilling Results

Monday, July 11, 2011
Kea Petroleum plc

Kea Petroleum expects to terminate the initial flow test program on Wingrove-2 in the coming week.

Several intervals of thin sands within the Upper Miocene Urenui Formation at depths of 1100 to 1300 m were simultaneously tested, and flowed oil and gas at low rates, together with considerable amounts of water It is considered that economically viable oil flow rates will not be achieved in this well.

The Mount Messenger Sands, typically several hundred meters deeper than the Urenui Sands, were not flow tested, as earlier log analysis had indicated they are water bearing in Wingrove-2. However, these remain as prime exploration targets in this area, as they are typically thicker and better reservoir quality. They will be the target of further drilling later this year.

Surat Basin, Australia

The Hoadleys-1 exploration well has been terminated at a depth of 2149m, after intersecting the target Precipice Sands, which were water bearing with no oil shows. The well is now being cased and suspended, in order that consideration can be given to drilling the deeper South Cabawin target with a heavier duty rig at a future date. A rig is presently being assessed for the drilling of Nangwarry-1 in the Otway Basin in South Australia, and may be suitable for South Cabawin also.

South Cabawin is defined on 3D seismic as a similar structure to the Cabawin Field, 20 km north along trend where the discovery well averaged 120 barrels of oil and one million cubic feet of gas per day in a 22 day flow test. The present rig is not considered capable of drilling to beyond 3000m to test the Permian coal measures in which the Cabawin discovery was made. Another rig is presently being assessed for this drilling operation.

David Bennet, Chief Executive, said, "It is disappointing that the secondary target Urenui Sands in Wingrove-2 have not produced oil at economically viable rates in this test. The primary target of Mt Messenger sands are proving to be very commercial oil producers elsewhere in this same basin; and our forward drilling program will be targeting Mt Messenger sands on our other prospects.

"Hoadleys was a relatively inexpensive exploration well with all the incumbent risks associated therein. The deeper South Cabawin target remains an attractive target yet to be drilled."

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Drilling Started at Kea's Well in Surat Basin

- Drilling Started at Kea's Well in Surat Basin

Tuesday, June 28, 2011
Kea Petroleum plc

Kea Petroleum announced that the Hoadleys-1 exploration well in the ATP837P license area in Australia's onshore Surat Basin was spudded on June 25, 2011, and has already run and set surface casing to 254m.

It is anticipated that the well will be drilled to a total depth of 2,200m by late July 2011, and will test for oil in the Lower Evergreen and Precipice Sands. Both of these targets are producers in the nearby Moonie oil field.

In the event of success Kea's gross median reserve estimate is approximately one million barrels, with a potential upside of up to several million barrels.

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Kea to Spud Surat Basin Well End of June

- Kea to Spud Surat Basin Well End of June

Wednesday, June 15, 2011
Kea Petroleum plc

Kea announced that the Hoadleys-1 well in the recently acquired ATP837P license area of Australia's onshore Surat Basin is scheduled to spud by the end of June. On that basis, it is anticipated that the well will be drilled to a target depth of approximately 2200m by late July.

Hoadleys-1 Australia

Hoadleys-1 is a test of Lower Evergreen and Precipice Sands, which are established producer formations at the Moonie oil field, approximately 20km to the south of the ATP837P license area. It is situated on a discovery trend, with the Cabawin gas field approx. 20km to the north and the Bennett oil field and Leichhardt gas field approximately 20km further north again. Hoadleys-1 is the first well on this discovery trend outside of Moonie to be located on 3D seismic. Elsewhere in the basin, a number of discoveries in recent years have demonstrated that 3D seismic is essential to identification of the low relief structures which form the oil and gas traps. In the event of discovery, the company's internal estimated gross median resource potential is approximately one million barrels, with upside of several million barrels. In the event of discovery, it may be decided to drill deviated producers from the Hoadleys-1 site to fully develop the field. Kea is operator of ATP837P and holds 50% of the permit, with 25% of the permit each being held by Energetica and Rawson Resources respectively.

Wingrove-2 New Zealand

At the Wingrove-2 site, electrical certification of downhole heating equipment to conform with New Zealand Standards has delayed start-up. Commissioning of the plant and commencement of flow testing is now scheduled to take place at the end of the current week. Although first oil into tank is expected to follow quickly upon commencement of testing giving an indication of initial flow rates, it is likely to be several weeks before a reasonable understanding of the stable, long term production rate is likely to be achieved, due to the requirement to optimize flow from the several isolated pay zones in the production interval between 1150m and 1300m depth. In the event that long term flow in excess of 100 barrels per day is achieved, several more wells are planned to fully develop the field, which is mapped over an area of several square kilometres. This drilling program is expected to start later this year. Kea has also identified several other similar shallow oil targets which may be included in the proposed drilling program.

Commenting on the developments CEO Dave Bennett said, "Our onshore Australia drilling program is continuing on schedule. The commissioning of Wingrove-2 production equipment has involved several technologies new to New Zealand. While it has been frustrating that this commissioning has caused some delays ,we believe that these delays are now behind us."

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