November23, 2010
Coastal Energy Keeps Busy With The Drillbit As ProductionOffshore Thailand Mounts
https://www.oilbarrel.com/nc/news/display_news/article/coastal-energy-keeps-busy-with-the-drillbit-as-production-offshore-thailand-mounts/860.html
The third quarter of 2010 was something of a milestone for TSX-Ventureand AIM-quoted Coastal Energy, which now has two producing oilfieldsin the shallow waters of the Gulf of Thailand and one onshore gasfield. Q3 saw further progress being made offshore, which counts forover 10,000 boepd of the company’s 12,500 boepd of production, withCoastal completing the first development phase of the Bua Ban field,which is now pumping 4,000 barrels per day, and sinking a number ofpromising exploration and appraisal wells on acreage formerly held byPremier Oil.
Premier made a number of discoveries on this acreage inthe 1980s, among them Songkhla, which tested 1,500 barrels of oil perday from an 80 feet net oil column in the Lower Oligocene formation. Atthe time, back in 1988, this was considered sub-economic but high oilprices and Coastal’s low-cost approach to development have transformedthe project economics. Getting the field onstream wasn’t easy, withthe company struggling to secure rig time to undertake the necessarymulti-well development drilling, and there have been some productionwobbles along the way since first oil in Q4 2008. Overall, however,this is quality acreage, with Songkhla and Bua Ban now generating somesolid cash flows for the company – operating netbacks for its offshorefields are now north of US$50 a barrel - and plenty of upside residingin the surrounding acreage.
Indeed, CEO Randy Bartley callsthe nearby prospects a “chain of pearls”, a series of Songkhlalook-alikes that run in a string across the block. Next month shouldsee the spudding of a high impact exploration well on the Bua Ban Northprospect. This is another Eocene target but is expected to haveshallower and higher quality sands, with porosity almost double some ofthe recent tight Eocene exploration wells at another pearl, Benjarong.The Benjarong wells encountered a significant oil column in a tightEocene reservoir and will be fracced next month to see if they can flowat a commercially productive rate.
Two other recentexploration wells found productive sands in the Miocene, a first in theSongkhla basin. This is significant because there are nine identifiedMiocene prospects in the basin, with potential recoverable resourcesof 50 million barrels. And recent appraisal work at Songkhla has alsoimpressed, with the first well encountering thicker than expected payzones in both the Lower Oligocene and the Eocene. Two more appraisalwells are planned in the coming weeks and the company is upgrading theprocessing abilities of the platform to handle increased output of30,000 bpd.
Coastal is certainly showing no signs of slowingthe pace offshore Thailand, where it has a rig contracted until June2011 and plans to make good use of that unit. About 50 per cent of therig time will be spent drilling development wells and 50 per cent onexploration. Next year’s projected capex spend is put at US$150million, again split evenly between exploration and production. Thiswill include a high impact test of the unconventional Lacustrine Shaleplay at Bua Ban, scheduled for mid-2011 and which has the potential tohold 50-100 million barrels. It’s an exciting programme, with plentyof drillbit activity to drive the share price, currently 310 pence ashare on London’s AIM.