WHL Energy quarterly activities report

Australian energy company WHL Energy Limited has reported on its activities and operations for the quarter ended 31 December 2014.


Seychelles (WHN: 25% Non-Operator)

Seychelles seismic

During the previous quarter acquisition of the 1528km2 Junon 3D seismic survey was completed and processing of the data commenced. The Junon 3D seismic survey was designed to mature a number of prospects for drilling on the Junon trend in the east of Ophir Energy plc’s (“Ophir”)/ WHL Energy Seychelles acreage (Junon South, Junon East and Junon Central), an area high graded by WHL Energy’s previous geological studies.

WHL Energy received an interim Pre-Stack Time Migration (PreSTM) data set for the Junon 3D seismic survey and commenced interpretation of this data in mid-November. The initial interpretation indicates that potentially large structures are present at Junon East, Junon Central and Junon South.

Importantly, the scale of these structures appears to be similar to that previously mapped on the earlier 2D seismic data which was used to plan the latest 3D seismic acquisition. Junon Central is mapped to be a relatively simple tilted fault block closure covering approximately 20 km2. The most recent interpretation of the Junon South structure indicates that a potentially very large closure is present at the primary objective Base Toarcian level. Additional new leads have also been mapped on the Junon South trend and in the central graben area.

In December the Joint Venture decided to progress the processing of the Junon 3D data directly to a more sophisticated Pre-Stack Depth Migration (PreSDM) to optimise the quality of the data. It was determined that proceeding directly to a PreSDM data set from the interim PreSTM volume, as opposed to completing the final PreSTM processing as originally planned, would provide the quickest path to an optimal data set. The PreSDM data set is expected to be delivered in Q2 2015. Interpretation will continue on the interim PreSTM dataset in the interim.

Mr David Rowbottam, WHL Energy’s Managing Director, commented: “The emergence of the very high upside potential of the Junon South structure from the Junon 3D data set, along with the large and robust Junon Central structure is very exciting and this asset continues to meet the aspirations that the company has for our Seychelles project. The Company is looking forward to a further update on the Best Estimate Prospective Resource as part of a campaign to secure further funding against this asset.”


Australia

Victoria - VIC/P67 (La Bella) Permit (WHN: 100% Operator)

During the quarter the company has focussed its efforts for VIC/P67 on a farmout campaign to seek a carry through the exploration drilling phase, while retaining meaningful exposure to the permit. Strong interest was received from a number of pre-qualified companies. However, at the end of the quarter a firm proposal had not been received, although discussions continued with a number of parties.

David Rowbottam said: “The current market conditions and oil price environment, and the significant financial pressure that this is placing on key participants in the farmout process, has meant that achieving a farmout at this time is proving to be a challenge. In this context the Operators of the two adjoining infrastructure facilities have been reported in the financial press to be under pressure to curtail capital expenditure and this has had a direct impact on the farmout campaign. The company continues to believe that the prospects on the Ferrier Terrace and the Lowlander feature are valuable opportunities that are uniquely positioned to benefit from the falling costs for exploration drilling and development in the current oil price environment, while the commodity price achieved in the eastern Australia domestic gas market is expected to increase.”

Regarding Peedamullah Petroleum’s farm-in option, the Company received notification in December that AWE had elected not to proceed as part of the VIC/P67 Joint Venture. AWE formally withdrew from the VIC/P67 JV in late December and assigned its interest to WHL Energy.

The Company also granted an extension to Tap Oil Ltd for the election date of the seismic option to acquire a 10% interest in exploration permit VIC/P67, until the close of business on 13 February 2015.

During the quarter the VIC/P67 Joint Venture undertook additional Simultaneous Inversion processing of the La Bella 3D to quantitatively evaluate the presence of gas indicated by the amplitude anomalies and also to characterise the reservoir potential. This data was received in mid-November and an interpretation to update the evaluation of the prospect inventory has commenced.

To date an inventory of 14 prosects with total best estimate Prospective Resources of 1044 Bcf of gas and 31.2 MMbbls of condensate and LPGs have been mapped on the PreSTM of the La Bella 3D Casino (Santos) Henry Geographe (Origin) Thylacine Minerva (BHPB) La Bella Ferrier Terrace Prospects La Bella 3Dseismic data set. The prospect inventory for the VIC/P67 will be further updated following the interpretation of the inversion volume.


Western Australia – WA-460-P Permit (WHN: 33.3% Non-Operator)

The Company holds 33.33% equity in exploration permit WA-460-P, in the offshore Southern Carnarvon Basin, which contains an extension of the very large Palta Prospect. A Shell led Joint Venture drilled the Palta-1 well in the adjacent block in late 2013, which was subsequently relinquished in February 2014.

An application to surrender WA-460-P was made to the National Offshore Petroleum Titles Administrator (NOPTA). NOPTA has notified the company of its intention to cancel the permit. WHL Energy has applied for a Good Standing Arrangement in relation to its share of the WA-460-P committed work program.


Corporate

As announced on 22 September 2014, the Company undertook a non-renounceable pro-rata entitlement offer on the basis of 3 Shares for every 10 Shares held, together with 2 free attaching New Listed Options (WHNO) for every 3 Shares subscribed for, at an issue price of US0.01 per Share. The Entitlement Offer was undertaken through a prospectus and was not underwritten.

The Entitlement Offer was available to all WHL Energy shareholders registered on the Record Date of 5.00pm on 1 October 2014, whose registered address was in Australia or New Zealand.

The funds raised from the Entitlement Offer will be utilised by the Company to pursue new potential oil and gas investment and/or project acquisition opportunities; to prepare for its potential dual listing and to maintain ongoing operations on current projects along with general working capital expenses. All three members of the Board participated in the Entitlement Offer with the Managing Director being the equal third highest participant.

Also during the quarter, on 26 November, the Company held the Annual General Meeting which included an Update Presentation delivered by Managing Director, David Rowbottam. At the meeting, all resolutions were passed by shareholders. Directly following the passing of Resolution 7, the Company commenced with the consolidation in accordance with the ASX approved timetable. The process was completed on schedule and normal trading re-commenced on 10 December 2014. During this period, at 5pm (WST) on 30 November, the listed options (WHNOA) expired and in accordance with ASX listing rules were removed from the register.


Company Cash Position

The Company had AUS1.797 million cash in hand at the end of the quarter, which includes restricted funds of AUS0.717 million. Initiatives to conserve cash to date have included substantial reductions in the fees and salaries for director and staff and the suspension of all contract staff. These reductions are expected to remain in place until fresh debt funding or a farmout has been concluded on the VIC/P67 and/or Seychelles assets. The Company is also pursuing an overpayment claim against the provider of debt funding paid out in May 2014.

The Company remains committed to repaying the outstanding balance of the Argonaut facility subject to the receipt of the payment for the seismic option agreement due from Tap Oil Ltd on 31 March 2015. This will also provide the Company an opportunity to seek fresh debt-based funding as an interim measure until the Company completes a farmout on either the VIC/P67 or Seychelles asset.

Published on 02/02/2015


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