Quarterly Report for the quarter ending 31 March 2013

Transcription

1 Quarterly Report for the quarter ending 31 March 2013 Fairway wells increase net production by over 300% since January Sydney #1 completed as Fusselman producer flowing oil and gas at 130 BOPD mcfgd Darwin #1 producing oil and gas at 110 BOPD mcfgd Darwin #2 producing oil and gas at 60 BOPD + 60 mcfgd New four well Fairway program to follow in Q3 Drilling to recommence at East Chalkley with Pine Pasture #3 oil development well scheduled for May 1. Operations Texas 1.1. Fairway Project Howard & Glasscock Counties (Target 60% WI) Drilling / Completion Sydney #1 Sydney #1 is located approximately 10 km south southeast of the Darwin wells (Fig 1). Drilling at Sydney #1 commenced on 26 December 2012 and was concluded on 8 February 2013 at a Total Depth of 3,101.7m (10,174 ft), after overcoming a number of technical issues while drilling. Wireline logs were run and the rig was released on 11 February Initial evaluation of the wireline logs indicated that in addition to Wolfberry pay, the well also had a potentially productive interval in the Fusselman formation. Shows were also noted in the deeper Ellenburger. On 18 March 2013 a completion rig was mobilised to the Sydney #1 location. The well was initially tested in the Ellenburger Formation at 3,083.4m (10,116 ft), recovering water with no shows of oil or gas. The zone was isolated and testing moved up to the Fusselman section. TARGET ENERGY LIMITED Address 6 Richardson St (Suite 5), West Perth WA 6005 Mailing Address PO Box 140 West Perth WA 6872 ABN Ph Fax admin@targetenergy.com.au

2 Quarterly Report for the quarter ending 31 March 2013 The Fusselman section was successfully flow tested with the zone flowing 70 barrels of oil in the first 12 hours of testing along with 3 barrels of water at a flowing tubing pressure of 600 psi. The well was brought on line on 28 March Average production to date has been 130 BOPD with 180 mcfgd and no water. Figure 1: Fairway Project area, West Texas Darwin In January 2013 a completion rig was mobilised to the Darwin #2 site to test the prospective Wolfberry section and to also test a deeper target (Ellenburger) that had been determined to be potentially productive in the adjacent Darwin #1 well. Testing later showed the Ellenburger Formation to be wet. Plans for the fracture stimulation ( frac ) of the Wolfberry section were transferred to Darwin #1 after partners determined that the fraccing program would be more effective in that borehole. Darwin #2 was then completed for production from the Devonian/Fusselman section. Following initial testing, the well was put on pump on 2 March 2013 at a steady rate of 60 BOPD with 100 mcfgd and 45 BWPD. 2

3 Quarterly Report for the quarter ending 31 March 2013 The Wolfberry frac in Darwin #1 will proceed at such time as the existing Fusselman production materially declines. The combined flow from the Darwin wells is approximately 170 BOPD with 200 mcfgd and 100 BWPD Forward Program Leasing Louisiana Darwin #3 & #4, Sydney #2 & #3 The Darwin #3 well will be drilled approximately 800 metres east of Darwin #1 and will target both the Wolfberry and Fusselman sections. The well will be drilled to approximately 3,070m (10,070 ft) and will take two weeks to drill and another two weeks to complete and test. Permitting is now progressing. Darwin #3 is now scheduled to commence in August as the first well in a four well program, which will include two more wells on the Sydney lease and a fourth Darwin well. The Fairway project lease holdings cover 3,492 acres. The partners are continuing to identify further leasing opportunities to expand the project East Chalkley (Target Energy 35% working interest) The East Chalkley project is an oil field appraisal and development program, approximately 33 kilometres southeast of the town of Lake Charles in Cameron Parish, Louisiana. The oil accumulation, on the east flank of the Chalkley Field, is a previously unidentified down dip oil leg associated with the gas field. Target participated in the successful drilling of the Pine Pasture #2 well in In late 2012 the operator commenced permitting a Waterflood Unit at East Chalkley and for the drilling of the next planned oil development well in the field (Pine Pasture #3) along with an injection well. Permitting is complete for Pine Pasture #3, with drilling scheduled to commence at the end of April or early May. Drilling is expected to take approximately three weeks to reach the programmed Total Depth of 3,000m (9,842 feet). The well will be drilled from the existing production facilities with the bottom hole to be approximately 272 metres south of the Pine Pasture #2 bottom hole location. Independent Reserve studies undertaken for Target have indicated that the field may have up to 1.7 million barrels of P50 ( most likely ) technically recoverable reserves and resources, with a P10 or upside estimate of 4 million barrels of oil. 3

4 Quarterly Report for the quarter ending 31 March Shepard s Channel Prospect Lafourche Parish (Target 15.3% working interest) 2. Corporate Target is earning a 15.3% working interest (WI) in the Shepard s Channel Prospect in La Fourche Parish, Louisiana by paying its share of acreage costs and the costs of re entering an existing (cased) borehole to complete the well in a hitherto untested sand. The channel sand was not considered to be prospective at the time the well was originally drilled and the well was later abandoned. Detailed analysis of the well data strongly suggested that indications of the hydrocarbon potential of this sand were suppressed on the wireline logs and that if tested, they could have flowed at potentially commercial rates. The re entry program was completed on 24 May 2012, when the well was cased to 4,017m. Throughout the re entry operations, the well continued to exhibit gas shows. A completion rig was then mobilized to the site on 30 May 2012 to undertake the testing program. To date three zones have been tested. The partners have discussed plans to clean out a bore hole obstruction and resume testing in 2013, but with no firm timing arrived at. This will be the last report until such time as a formal timetable for the work program is defined Management On 21 April 2013, the Company was pleased to appoint Mr Ross Dinsdale CFA as Target Energy s Business Development Manager. A graduate of the University of Western Australia (B.Comm) with extensive experience in the corporate sector, Mr Dinsdale will be primarily responsible for the Company s Australian investor and corporate relations OTC QX The Company is in the process of providing access for US investors to Target Energy stock via American Depositary Receipt s (ADR s) which will be tradable on the New York based OTC QX platform. This platform is specifically designed for non US companies that are listed on recognised international exchanges such as Australia s ASX. The Company expects the ADR s to be available and trading on the OTCQX in May

5 Quarterly Report for the quarter ending 31 March Current Indicative Drilling Schedule Estimated Timing Prospect Location Target Working Interest Potential Recoverable Volumes* On Production Sydney #1 (Fairway) Glasscock Co, Tx 60% 200 mbo (Fuss) + Wolfberry April/May 2013 PP#3 (East Chalkley) Cameron Parish, La 35% mbo Q Darwin #3 (Fairway) Howard Co, Tx 60% mbo (WB/Fuss) Q Sydney #2 (Fairway) Glasscock Co, Tx 60% mbo (WB/Fuss) Q Darwin #4(Fairway) Howard Co, Tx 60% mbo (WB/Fuss) Q Sydney #3 (Fairway) Glasscock Co, Tx 60% mbo (WB/Fuss) 2014 Additional Fairway drilling Howard / Glasscock Co 60% 4. Production (1 January 31 March) Project TEX WI Gross Gas Prodn in Period (mmcf) Cumulative Gross Gas Prodn (mmcf) Net Gas Prodn in Period (mmcf) Cumulative Net Gas Prodn (mmcf) Gross Oil Prodn in period (BO) Cumulative Gross Oil Prodn (BO) Net Oil Prodn in Period (BO) Cumulative Net Oil Prodn (BO) Section 28 25% , ,689 86, East Chalkley+ 35% , , Merta 25% , Fairway 60% ,312 15,451 6,787 9,271 Total , , ,652 8,296 67,820 Net Production is scaled to Target s Working Interest; mmcf = million of cubic feet; mmcfgd = million cubic feet of gas per day; BO = barrels of oil, BOPD = barrels of oil per day, BOEPD = barrels of oil equivalent per day (Target reports a thermal equivalent when combining gas and oil production, where 1BOE = 6 mcf). + East Chalkley shut in late Jan early Feb due to local flooding. For further information, please contact the company at admin@targetenergy.com.au. Yours sincerely, Laurence Roe Managing Director NOTE: In accordance with ASX Listing Rules, any hydrocarbon reserves and/or drilling update information in this report has been reviewed and signed off by Mr Laurence Roe, B Sc, Managing Director of Target Energy Limited, who is a member of the Society of Exploration Geophysicists and has over 30 years experience in the sector. He consents to the reporting of that information in the form and context in which it appears. 5

6 Appendix 5B Appendix 5B Rule 5.3 Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10 Name of entity TARGET ENERGY LIMITED ABN Quarter ended ( current quarter ) March 2013 Consolidated statement of cash flows Cash flows related to operating activities Current quarter Year to date (.9.. months) 1.1 Receipts from product sales and related debtors Payments for (a) exploration & evaluation (b) development (c) production (d) administration (2,359) (17) (137) (399) (4,769) (18) (379) (1,363) 1.3 Dividends received 1.4 Interest and other items of a similar nature received Interest and other costs of finance paid (66) (134) 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows (2,765) (6,009) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets - (18) 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows - (18) 1.13 Total operating and investing cash flows (carried forward) (2,765) (6,027) + See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 1

7 Appendix 5B 1.13 Total operating and investing cash flows (brought forward) (2,765) (6,027) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc , Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings - 2, Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Costs associated with financing activities (9) (283) Net financing cash flows 555 8,071 Net increase (decrease) in cash held (2,210) 2, Cash at beginning of quarter/year to date 4, Exchange rate adjustments to item 1.20 (23) (37) 1.22 Cash at end of quarter 2,690 2,690 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current quarter $A' Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item Explanation necessary for an understanding of the transactions Directors fees, consulting fees, salaries and superannuation ($119,000) Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows Nil 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Not Applicable + See chapter 19 for defined terms. Appendix 5B Page 2 17/12/2010

8 Appendix 5B Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used 3.1 Loan facilities Credit standby arrangements - - Estimated cash outflows for next quarter 4.1 Exploration and evaluation 1, Development Production Administration 375 Total 1,810 Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current quarter Previous quarter 5.1 Cash on hand and at bank 2,290 4, Deposits at call Bank overdraft 5.4 Other (provide details) - - Total: cash at end of quarter (item 1.22) 2,690 4,923 Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference Nature of interest (note (2)) Not Applicable Interest at beginning of quarter Interest at end of quarter 6.2 Interests in mining tenements acquired or increased Not Applicable + See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 3

9 Appendix 5B Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates. 7.1 Preference + securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions Ordinary securities 7.4 Changes during quarter (a) Increases through issues Total number Number quoted 452,063, ,063,255 8,053,413 8,053,413 Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) (b) Decreases through returns of capital, buybacks Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options (description and conversion factor) Options 40,468,491 1:1 750,000 1:1 Nil Nil Exercise price 10 cents 12 cents Expiry date 31/3/ /10/ Issued during quarter 7.9 Exercised during quarter 8,053,413 1:1 Nil 7 cents 31/3/ Expired during quarter 8,530,342 1:1 Nil 7 cents 31/3/ Debentures (totals only) 7.12 Unsecured notes (totals only) + See chapter 19 for defined terms. Appendix 5B Page 4 17/12/2010

10 Appendix 5B Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5). 2 This statement does give a true and fair view of the matters disclosed. Sign here: Date: 30 April 2013 (Company secretary) Print name: ROWAN CAREN Notes 1 The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2 The Nature of interest (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. == == == == == + See chapter 19 for defined terms. 17/12/2010 Appendix 5B Page 5