OGX Concludes Drill-Stem Test in Santos Basin

- OGX Concludes Drill-Stem Test in Santos Basin

Monday, August 29, 2011
OGX S.A.

OGX has concluded the drill-stem test performed in the Santonian section of well 1-OGX-47-RJS, in the BM-S-59 block, in the shallow waters of the Santos Basin. OGX has a 100% interest in this block.

"With a successful exploration campaign underway in the Santos Basin, we initiated the drill-stem test phase. This is the first of a series of tests which has obtained significant productivity data from our sandstone reservoirs and represents an important step in broadening our understanding of this basin and in beginning the development of this area," commented Paulo Mendonça, OGX's General Executive Officer and Exploration Officer.

Following the discovery announced on July 1, 2011, a drill-stem test was performed in a vertical well in the Maceió accumulation. Besides the presence of gas, the test confirmed the existence of condensate of about 50° API that should account for around 20% of the hydrocarbon volume of this structure. The results of this test, with three production intervals, indicate a production potential of 1 million cubic meters per day in a vertical well, which could reach 2.5 million cubic meters per day in a horizontal well, both at Absolute Open Flow.

The test information is extremely important to the Company, because when combined with the accumulations of Natal (OGX-11), which will be the next well to be tested, and Aracaju (OGX-19), which will be tested in a Discovery Appraisal Plan, indicate the existence of one more important gas and condensate region in Brazil.

The well OGX-47, named 'Maceió', is located in the BM-S-59 block and is situated approximately 110 kilometers off the coast of the state of Rio de Janeiro at a water depth of approximately 185 meters. The Ocean Quest rig initiated drilling activities on May 24, 2011.

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Magellan, Santos Finalize Evans Shoal Talks

- Magellan, Santos Finalize Evans Shoal Talks

Monday, July 25, 2011
Magellan Petroleum Corp.

Magellan and Santos have now finalized discussions regarding an appropriate resolution of all remaining issues relating to the non-closure of the Evans Shoal transaction. The Company and Santos have agreed that $10 million of the sums deposited in connection with the Evans Shoal transaction will be returned to the Company and that the Asset Sale Deed should be terminated.

The process of unwinding the Evans Shoal transaction has allowed the Company and Santos to look at their joint operations in the Northern Territory, Australia. This has lead to productive discussions towards rationalizing and more efficiently exploiting their respective interests in the Amadeus Basin, and creating new commercial opportunities. The Company is working with Santos to satisfactorily conclude these discussions in the near term.

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Santos to Steer Eastern Star Gas

- Santos to Steer Eastern Star Gas

Wednesday, July 20, 2011
Santos Ltd.

Santos has reached binding agreements to give effect to:

• the acquisition of 100% of the outstanding ordinary shares in Eastern Star Gas Limited (ESG); and
• the subsequent sale of a 20% working level interest in ESG's permits in the Gunnedah Basin, northern New South Wales, for A$284 million to TRUenergy Holdings Pty Ltd (TRUenergy).

Pursuant to these transactions, Santos will assume operatorship and own 80% of ESG's coal seam gas (CSG) permits with TRUenergy owning the remaining 20%.

The acquisition of ESG will be conducted via a recommended Scheme of Arrangement (Scheme) under which ESG shareholders will receive 0.06803 Santos shares for every ESG share held.

Based on Santos' closing price of A$13.23 on July 15, the transaction values ESG at A$0.90 per ESG share or A$924 million, and represents a 3P reserves multiple of A$0.50 per gigajoule.

The acquisition of ESG builds on Santos' existing interests in the Gunnedah Basin. Following completion, Santos will have the largest natural gas reserves position in NSW, with 1,216 PJ of 2P reserves and 2,238 PJ of 3P reserves.

TRUenergy, a leading energy retailer with significant power generation interests in Eastern Australia, represents an ideal partner to develop ESG's permits in joint venture with Santos.

Santos is one of Australia's largest domestic natural gas producers and has a long track record of working with local communities to safely and sustainably produce natural gas.

Santos Chief Executive, David Knox, said, "This transaction represents the next major step in Santos' eastern Australia gas strategy and positions the company to meet the expected increase in demand for natural gas from both domestic power generation and export LNG markets."

"The acquisition of ESG is a unique opportunity to consolidate our Gunnedah Basin interests and establish the leading position in Australia's next major natural gas province."

"Santos has been working in regional Australia for more than 50 years, including 15 years exploring for and developing coal seam gas."

"Santos is committed to developing the coal seam gas industry in the Gunnedah Basin without impacting the important role the region plays as an agricultural producer. The growth of the natural gas industry in the Gunnedah Basin will bring new jobs and additional investment to local communities across the region," Mr. Knox said.

Proposed Acquisition of ESG

Santos and ESG have entered into a Scheme Implementation Deed (SID) under which it is proposed that Santos will acquire all of the issued and outstanding ordinary shares of ESG, other than the shares already held by Santos and TRUenergy.

Santos currently owns approximately 20.9% of the issued and outstanding ordinary shares of ESG and TRUenergy owns approximately 3.8%.

Proposed Joint Venture arrangements with TRUenergy

Santos has entered into a series of binding arrangements with TRUenergy, which give effect to:

• the sale by TRUenergy of its 39 million shares in ESG to Santos at A$0.90 per share resulting in proceeds of approximately A$35 million; and
• the acquisition by TRUenergy of a 20% interest in ESG's CSG permits and a pro rata share of other assets previously owned by ESG for approximately A$284 million

resulting in net cash consideration to Santos of approximately A$249 million. The sale will take effect on the second business day following completion of the Scheme.

The cash proceeds from TRUenergy fully cover Santos' anticipated incremental capital expenditure to fund its share of the ongoing development of the Gunnedah Basin to the end of 2014.

The agreements with TRUenergy are conditional on the successful completion of the Scheme and regulatory approvals.

Mr. Knox said, "Santos welcomes TRUenergy, one of Australia's largest integrated energy companies, as our joint venture partner in developing this major natural gas province."

TRUenergy's Managing Director, Richard McIndoe, said, "We are pleased to become joint venture partners in the Gunnedah Basin with Santos. With such a qualified partner developing and operating the field, TRUenergy can focus on its core strengths of power generation and retailing with confidence that our equity gas will be available when we need it in the future."

Santos' position in the Gunnedah Basin

Santos first acquired interests in the Gunnedah Basin in 2007, and in 2009 acquired a 20% holding in ESG and a 35% equity interest in various exploration permits operated by ESG.

In addition to the permits held by ESG, Santos' other Gunnedah Basin assets (for which it is already operator) include:

• 25% of PELs 1 and 12 (Santos can increase its interest to 65% via farm-in);
• 15% of PEL 456 (Santos can increase its interest to 50% via farm-in); and
• 100% of PELs 450, 452 and 462.

Assumption of operatorship and majority interest in the various CSG permits will allow Santos to undertake coordinated development of its Gunnedah Basin acreage.

Santos Vice President Eastern Australia James Baulderstone said, "Santos will develop our coal seam gas business working in cooperation with farmers and existing rural businesses in the region, continuing our 50-year track record of building beneficial partnerships with landowners and local communities."

"We are aware of a number of important issues raised by local farmers and other land users concerning the longer term development of the Gunnedah Basin, one of which is the proposed Narrabri to Wellington pipeline. We are confident we can address community concerns in that regard and we will be explaining these plans to the community in the near future, once we have completed our review of Eastern Star's plans."

"We also look forward to ESG staff joining Santos and the important role they will play in developing our assets in NSW," Mr. Baulderstone said.

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QGEP Purchases Shell Stake in Santos Basin

- QGEP Purchases Shell Stake in Santos Basin

Tuesday, July 05, 2011
QGEP Participacoes S.A.

QGEP Participacoes announced that Queiroz Galvao Exploracao e Producao S.A. ("QGEP"), a wholly owned subsidiary, has entered into a purchase and sale agreement for the acquisition of 10% of Shell Brasil Petroleo Ltda's participating interest in Block BM-S-8 located offshore in the Santos Basin. Shell currently owns a 20% working interest in the block, which is operated by Petrobras, and owned by a consortium comprised of Petrobras, Petrogal and Shell.

The transfer of Shell's participating interest to QGEP is subject to approval by the ANP.

"This farm-in agreement demonstrates our strategy of building value by investing in high quality assets that diversify and strengthen our portfolio," said Jose Augusto Fernandes Filho, QGEP's Chief Executive Officer.

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OGX Hits Hydrocarbon Pay in Santos Basin

- OGX Hits Hydrocarbon Pay in Santos Basin

Friday, July 01, 2011
OGX S.A.

OGX has identified the presence of hydrocarbons in the Santonian section of 1-OGX-47-RJS well, in the BM-S-59 block, in the shallow waters of the Santos Basin. OGX holds a 100% working interest in this block.

"This discovery in conventional reservoirs of the Santos Basin contributes significantly to the development of our assets in this region. When combined with the discoveries that we have already made, we will be able to optimize the operational structure of this area by taking advantage of the economies of scale," commented Mr. Paulo Mendonça, General Executive Officer and Exploration Officer of OGX. "Following the drilling campaign, we will intensify both the appraisal process of the several discoveries for this basin, as well as the development of the production model for the region," added Mr. Mendonça.

A hydrocarbon column of approximately 131 meters was encountered in the sandstone reservoirs of the Santonian section with about 51 meters of net pay. This discovery is located 2.9 kilometers from the Natal accumulation which was discovered through the drilling of well OGX-11.

The OGX-47 well, named as Maceió, is located in the BM-S-59 block and is situated approximately 110 kilometers off the coast of the state of Rio de Janeiro at a water depth of approximately 185 meters. The Ocean Quest rig initiated drilling activities on May 24, 2011.

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BG Doubles Santos Basin Net Potential

- BG Doubles Santos Basin Net Potential

Thursday, June 30, 2011
BG Group

BG Group on Thursday issued a material upgrade for its interests in the pre-salt Santos Basin, offshore Brazil.

Mean Total Reserves and Resources* are now estimated to amount to some 6 billion barrels of oil equivalent (boe) net to BG Group, with an upside potential of 8 billion boe net. Existing discoveries account for 96% of the mean Total Reserves and Resources.

The mean Total Reserves and Resources represents a doubling of BG Group's previous best estimate of 3 billion boe prevailing at the time of the Group's February 2010 Strategy Presentation.

The aggregate range of Total Reserves and Resources net to BG Group is from 4 billion boe (P90) to 8 billion boe (P10)**.

These new estimates result from BG Group's internal analysis based on probabilistic modelling of its Santos Basin interests. The analysis used a wealth of drilling, appraisal and other data that BG Group has gained or developed in relation to those interests, including:

• a total of 29 wells drilled in our existing discoveries; two wells drilled on Lula since November 2010 proving particularly important in delineating the flanks of the field. Other wells have demonstrated excellent connectivity in the reservoir;
• a total of 19 drill stem tests on current discoveries;
• the shooting and analysis of over 14,400 square kilometers of 3D seismic;
• full analysis of a completed extended well test (EWT) on Lula Sul and early results from the Guara EWT indicating the very large hydrocarbon volumes connected to each of these wells;
• production from the first permanent floating production, storage and offloading vessel on Lula which commenced in October 2010;
• development plans that include enhanced recovery processes to improve ultimate recovery factors for these giant fields; and
• cost optimization, potential debottlenecking of facilities and greater well productivity enhancing the economic viability of later phases of development.

BG Group Chief Executive Sir Frank Chapman said: "The doubling of our estimated Santos Basin mean reserves and resources is clearly significant and demonstrates the continued rapid evolution of our understanding of these enormous discoveries. Robust economics and solid progress with the fast-track development program will see gross installed production capacity rising steadily to reach more than 2.3 million boe per day by 2017. I believe this - alongside progress with major ventures in Australia, the US and across our global portfolio - will transform the scope, scale and value of BG Group."

* Total Reserves and Resources are defined by BG Group as the aggregate of proved and probable reserves plus discovered resources and risked exploration.

** The Total Reserves and Resources upgrade announced today is based upon probabilistic modelling by BG Group of its interests in the Santos Basin, in accordance with Society of Petroleum Engineers (SPE) guidelines. The data has been analyzed, interpreted and verified by BG Group and not by the Operator or other Consortium partners.

BG Group has interests in five blocks in the Santos Basin, offshore Brazil

• BM-S-9 (30%) containing the Guara, Carioca, Abare and Iguacu discoveries and prospects.
• BM-S- 10 (25%) containing the Parati and Macunaima discoveries and prospects.
• BM-S-11 (25%) containing the Lula, Cernambi and Iara discoveries and prospects.
• BM-S-50 (20%) containing prospects including Sagittario.
• BM-S-52 (40%) containing the Corcovado discovery.

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Santos Acquires Stake in Carnarvon Basin

- Santos Acquires Stake in Carnarvon Basin

Friday, June 10, 2011
Santos Ltd.

Santos announced its acquisition of a 75% interest in the Carnarvon Basin permits WA-323-P and WA-330-P that host Winchester, a large prospect which has a geological setting similar to the recent Zola gas discovery.

The farm-in agreement with Octanex N.L was conditional on various regulatory approvals including renewal of the permits, which have now all been received.

Santos Vice President WA & NT, John Anderson, said Winchester presented a significant growth opportunity for Santos in Western Australia, and planning was underway for a 3D seismic survey later this year.

"Under the arrangement with Octanex we have three years in which to drill a well, but we interpret Winchester as a robust prospect so we are considering bringing that forward, possibly by the end of next year," he said.

"It's an attractive prospect, in shallow water and if successful, is well located for a variety of development options."

Under the farm-in, Octanex will be free-carried in respect of its 25% interest through the 3D survey, the first well and other exploration costs, except for any follow-up wells.

Santos is operator of both permits.

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Santos Strikes Additional Oil Pay at Finucane South Well

- Santos Strikes Additional Oil Pay at Finucane South Well

Wednesday, June 01, 2011
Tap Oil Ltd.

Tap Oil provided the following update on Santos' Finucane South-1A exploration well, offshore Carnarvon Basin, Western Australia.

Logs have confirmed the well is a new field oil discovery encountering some 18.5m of excellent quality net oil pay in the Late Jurassic Angel Formation. The interpretation is based on both LWD (Logging While Drilling) and wireline logs, including pressure testing and sampling over the target interval. Early evaluation indicates the discovery could exceed the pre-drill mean estimate of 8 million barrels.

Location

The Finucane South-1A well is located in permit WA-191-P, in the northern end of the Carnarvon Basin. The well location is latitude 19° 18' 17.927" S and longitude 116° 45' 31.697" E.

Progress

During the period from 06:00 hours WST on May 25, 2011 to 19:00 hours WST on May 30, 2011 the corrosion cap was set over Finucane South-1A with the well suspended. The rig was then ASXskidded over to the Finucane South-1 location and abandonment completed. The rig was released at 19:00 hours on May 30, 2011.

Background

The Finucane South discovery is located at the northern end of the Carnarvon Basin, approximately 15km east of the Mutineer facility. Finucane South-1A was drilled to identify additional resources to supplement the discovered resources contained in the adjacent Fletcher Field.

Finucane South is a moderate-sized structural closure mapped at the base of the Cretaceous regional seal. Water depth at the well location is approximately 140m. Finucane South-1A was drilled 2km SSW of the Finucane-1 well (1978) which intersected oil shows at the top of the Angel Formation despite having been drilled off structure.

Based on Finucane South-1A's proximity to other wells in the area (notably Finucane-1 and the Fletcher oil wells) plus its coverage by reprocessed 3D seismic, the risk attached to drilling can be categorized as low-moderate.

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Santos' Evans Shoal Sale Falls Through

- Santos' Evans Shoal Sale Falls Through

Wednesday, June 01, 201
Santos Ltd.

Santos announced in March 2010 that it had agreed to sell its 40% working interest in NT/P 48 (Evans Shoal) in the Bonaparte Basin to Magellan Petroleum Australia Limited.

Santos today announced that the sale transaction will not complete because the conditions to completion have not been satisfied by the May 31, 2011 deadline.

Santos therefore will retain its 40% interest in NT/P 48 and will remain as operator of the permit. Santos will also retain a $15 million non-refundable deposit paid by Magellan.

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Santos Hits Oil Pay at Finucane South

- Santos Hits Oil Pay at Finucane South

Wednesday, May 25, 2011
Santos Ltd.

Santos has announced an oil discovery at Finucane South in the Carnarvon Basin, offshore Western Australia. Well logs and wire line testing have confirmed a net oil column of 18 meters in excellent quality reservoir sands in the Angel Formation. The well was drilled using semisub Stena Clyde.

The Finucane South oil discovery is located approximately 7 kilometers from the Fletcher oil field discovered in 2009 and approximately 14 kilometers from existing oil production facilities at Mutineer Exeter. Both Finucane South and Fletcher are located within WA-191-P.

Engineering studies for a dual field development of the Finucane South and Fletcher discoveries are well advanced, with the WA-191-P participants expected to be in a position to make a final investment decision before the end of 2011.

A number of development options have been considered, including a sub-sea tie back to the Santos operated floating production, storage and offloading facility servicing Mutineer Exeter. This would enable first oil production from Finucane South and Fletcher by the end of 2013.

Santos Vice President Exploration and Subsurface Trevor Brown said the Finucane South result was on the high side of pre-drill expectations and is another valuable discovery for Santos following the Zola gas discovery in April this year.

Santos Vice President WA & NT John Anderson said Finucane South when combined with Fletcher would allow the WA-191-P partners to progress an oil development with an exceptionally quick cycle time to first oil production.

The well will be suspended after finalization of the evaluation program.

Santos holds a 33.4% interest in WA-191-P and is operator. Other participants are Kufpec Australia (33.4%), JX Nippon Oil & Gas Exploration Corporation (25%) and Tap Oil (8.2%).

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Santos Mulls Suspending Finucane South Well

- Santos Mulls Suspending Finucane South Well 

Wednesday, May 18, 2011
Tap Oil Ltd.

Tap Oil provided the following update on the Finucane South-1A exploration well, offshore Carnarvon Basin, Western Australia.

Location/Proposed Depth

The Finucane South-1A well is located in permit WA-191-P, in the northern end of the Carnarvon Basin. The well location is latitude 19° 18' 17.927" S and longitude 116° 45' 31.697" E. Finucane South-1A is planned to take approximately 20-25 days from spud to reach a final total depth of approximately 3,500m.

Progress

During the period from 0600 hours WST on May 11, 2011 to 0600 hours WST on May 18, 2011, Finucane South-1A drilled from 684m to 2,057m using semisub Stena Clyde. Casing of 133/8" (340mm) has been set at 2,049m. Current operations are preparing to drill ahead in 121/4" (311mm) hole.

Forward Plan

Tap Oil provided the following update on the Finucane South-1A exploration well, offshore Carnarvon Basin, Western Australia.

Location/Proposed Depth

The Finucane South-1A well is located in permit WA-191-P, in the northern end of the Carnarvon Basin. The well location is latitude 19° 18' 17.927" S and longitude 116° 45' 31.697" E. Finucane South-1A is planned to take approximately 20-25 days from spud to reach a final total depth of approximately 3,500m.

Progress

During the period from 0600 hours WST on May 11, 2011 to 0600 hours WST on May 18, 2011, Finucane South-1A drilled from 684m to 2,057m using semisub Stena Clyde. Casing of 133/8" (340mm) has been set at 2,049m. Current operations are preparing to drill ahead in 121/4" (311mm) hole.

Forward Plan

The well will be drilled to total depth and a decision taken to plug and abandon or suspend the well.

Background

The Finucane South prospect is located at the northern end of the Carnarvon Basin, approximately 15km east of the Mutineer facility. Finucane South-1A is being drilled to identify additional resources to supplement the discovered resources contained in the adjacent Fletcher Field. Tap estimates the Finucane South prospect has a potential gross mean recoverable oil volume of 8 million barrels.

Finucane South is a moderate-sized structural closure mapped at the base of the Cretaceous regional seal. The underlying Late Jurassic Angel Formation primary target will be intersected at approximately 2,960m below sea level. Water depth at the well location is approximately 140m. Finucane South-1A is being drilled 2km SSW of the Finucane-1 well (1978) which intersected oil shows at the top of the Angel Formation despite having been drilled off structure.

Based on Finucane South-1A's proximity to other wells in the area (notably Finucane-1 and the Fletcher oil wells) plus its coverage by reprocessed 3D seismic, the risk attached to drilling can be categorized as low-moderate.

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Karoon to Contract Blackford Dolphin for Santos Program

Karoon to Contract Blackford Dolphin for Santos Program

Thursday, May 05, 2011
Karoon Gas Australia Ltd.

Karoon, as operator of five blocks in the Santos Basin, on Thursday signed a letter of intent to contract with Dolphin Drilling Ltd, for the Blackford Dolphin semi-submersible drilling rig. The completion of the final drilling agreements is subject to final negotiations and is expected by the end of June 2011.

This letter of intent covers the drilling of three wells in Karoon's Santos Basin blocks, to begin in the first half of 2012. These will be located about 280 kilometers off the coast of the State of Sao Paulo, Brazil, in water depths of approximately 400m.

The Blackford Dolphin is a semi-submersible drilling rig, currently operating in Brazilian waters, and was the preferred drilling rig for Karoon's upcoming Santos Drilling Program. Karoon will be targeting several prospects in this drilling program along with satisfying its second period work commitments. Prospects within Karoon's Santos Basin Blocks contain several large drilling targets will be announced at the completion of seismic interpretation later in 2011.

Preparations are currently being carried out to obtain all the necessary regulatory and other approvals, long lead items have been ordered and a specialists team of drilling engineers has commenced well planning and pre-drilling engineering.

Karoon's wholly owned subsidiary, Karoon Petroleo & Gas S.A., has entered into the Letter of Intent and currently owns 100% of the Santos Basin Blocks 1037, 1101, 1102, 1165 and 1166.

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