Transcription of Finance News Network Interview with IPB Petroleum Limited (ASX:IPB) Managing Director, Brendan Brown
Donna Sawyer: Hello I’m Donna Sawyer from the Finance News Network and joining me from IPB Petroleum (ASX:IPB) is Managing Director, Brendan Brown. Brendan welcome back to FNN.
Brendan Brown: Thanks Donna.
Donna Sawyer: For those not familiar with the Company, give us a quick recap of the scope and potential of your strategic positions in the Browse Basin.
Brendan Brown: Yeah well the scope of the position is such that we’ve got a very large acreage position, nearer to the shore and the potential is quite substantial. We’ve got independently assessed prospective resources attributable to IPB Petroleum, in the order of 670 million barrels of oil.
Donna Sawyer: You’ve recently increased your acreage in the Browse Basin at your exploration permit WA-485-P. Where’s that located and what’s behind the decision?
Brendan Brown: Well WA-485-P, we obtained under the Government Gazettal process and lies immediately north of WA-424-P permit, and immediately to the east of WA-471-P. And really finished off or complimented the existing position. We could see an extension of the existing oil play in WA-424-P, extending into WA-485-P. So we figured that that would be a really good additional acquisition to get. Such that if we have success with our first well at Pryderi in WA-424-P, we will have tied up the bulk of that particular play.
Donna Sawyer: The WA-485-P permit has recently been independently reviewed, resulting in an increase in the resource. So what are you now sitting on?
Brendan Brown: We’re sitting on, in WA-485-P, approximately 166 million barrels of mean prospective resource across 16 leads. And that’s been independently identified by a company called Isis Petroleum Consultants. That’s in addition to the 504 million barrels of mean prospective resource we have within our WA-424-P permit.
Donna Sawyer: So what’s the significance of that resource increase alongside the planned drilling of the Pryderi-1 well?
Brendan Brown: Well the significance of it was that within the M.australis play in WA-424-P, we’re entitled to somewhere between initially 75 per cent, but if we have success likely to be only 40 per cent, because CalEnergy will exercise an increase notice. So we would have 40 per cent of that play’s, roughly speaking 300 million barrels, so approximately about 120 million barrels net to IPB. So obtaining the permit further to the north, we’ve added another 166 million barrels net to IPB. So we’ve almost doubled our exposure to that particular play, which was quite meaningful for us.
Donna Sawyer: Let’s talk more about your Pryderi-1 plans now. Your JV with CalEnergy has recently been granted a 12 month extension to allow for drilling. What are the specifics of the extension and why was that necessary?
Brendan Brown: Well we were looking ahead as a joint venture at the available rig market, i.e. rigs that we could secure for drilling the well. And it became quite obvious that we wouldn’t be able to secure a rig in sufficient time, to drill the well by July this year. So we applied to the Government under the standard process and were granted a 12 month extension, for the time to drill the well. What it allows us is time to drill the well, assess the results before we go into the secondary term of the permit’s life, in what will be July 2014 now.
Donna Sawyer: So what needs to be accomplished in the additional timeframe?
Brendan Brown: Well notionally we’ll drill a well in the fourth quarter this year, and then we’ll obviously do a testing program. When we’re drilling the well, we’ll need to assess the results, work out the resources that are likely to be available. Work out what the play means, redo some inversion work and that might dictate, when and where we shoot additional 3D seismic. And also the likely timing of an appraisal well if we have success, where we’d locate that well and the testing program associated with that. So it gives us a bit of time after drilling the well to work on all of those things.
Donna Sawyer: So how’re things progressing towards drilling, and are you on track to commence this year?
Brendan Brown: Yeah look, the works progressed to date has been quite a substantial amount of work, particularly in the environmental plan and oil spill contingency plan, which are all standard submissions that go into a government before you drill a well. We’re scheduled to resubmit our environmental plan in the first week of August, so i.e. within the next week or so.
Donna Sawyer: What’s the outlook post drilling, and what’s next for IPB Petroleum and its permits?
Brendan Brown: Given the sort of impact of the first well, a lot will hinge on what that well actually is able to tell us. If it’s a success and we are likely to hit the – if we hit the most likely mean resource figure based on the result of the well, then it’s likely we’ll be planning towards drilling an appraisal well. And also be working concurrently on an expanded 3D seismic program, within WA-424-P. Also one of the other things that we’ll need to consider is, you know, co-ordinating seismic amongst the three permits to get some economies of scale, with mobilisation and so forth. So that would be the likely scenario in the event of post drilling Pryderi.
Donna Sawyer: Let’s talk about your financials. What’s your current cash position and how are you funding your work program, for the rest of the year?
Brendan Brown: Our current cash position as at the end of June, which we lodged this morning, was $2.6 million. And the bulk of our work program is i.e. the drilling of Pryderi and any success case testing, it will be fully funded by CalEnergy under the farm-out agreement. And we estimate that’ll be about $15 million, that’ll be spent on the drilling of that well. The rest of the work program, some additional studies and we’re looking at some other reprocessing activities and some other work, will be funded quite comfortably with the current cash balance.
Donna Sawyer: Finally Brendan, where would you like to see IPB by the end of the year?
Brendan Brown: I’d like to see IPB having drilled its well and obviously hopefully, having some success there and also planning to appraise the Pryderi discovery. And also, assuming that it is a discovery, then looking also to how we’re going to best manage the upcoming 3D surveys, in the rest of our permits.
Donna Sawyer: Brendan Brown thanks for the update on IPB Petroleum.
Brendan Brown: Thank you.