Comet Ridge’s ATP 337P Mahalo asset is located
in the Denison Trough area of Queensland’s Bowen
Basin near Rolleston, and covers an area of 989 sq km.
Comet Ridge has a 35% interest in ATP 337P Mahalo.
In July 2012, Comet Ridge commenced a 12-well drilling
programme at ATP 337P Mahalo, including two pilot projects.
The first four wells of this programme have been completed,
with positive results. Progress is being made to have
these wells production tested with the commissioning
of the first production pilot expected towards the end
of 2012. The intention of this programme is to achieve
an initial reserves certification in early 2013. Comet
Ridge’s expenditure commitments under this programme
are to be carried by Stanwell up to A$8 million.
The 2012 programme has targeted the Permian Bandanna
coals, which are encountered in a depth range between
200m and 400m in the north of the ATP 337P Mahalo area.
These coals have been shown to have a moderate to high
gas content, consistent coal thickness of approximately
7 – 9 metres and high saturation levels.
ATP 337P Mahalo is well placed with respect to existing
infrastructure, with the gas pipeline linking the Northern
Denison Trough gas fields to the existing Wallumbilla
to Gladstone (Jemena) pipeline located along the western
boundary of the permit. The gas pipeline linking the
GLNG project’s Fairview CSG field to the LNG precinct
in Gladstone is also expected to follow a similar route
to the Jemena pipeline in this area.
Initial Pilot Production Project at Mahalo:
On 1 August 2012, Comet Ridge announced that a successful
four well drilling programme had been concluded at its
Mahalo pilot project in ATP 337P. All four pilot wells
exhibited good continuity and thickness of coal across
the main reservoir section. Formation flow testing has
shown very good to excellent permeability in most of
The first four wells of the 2012 programme included
the Mahalo 3, Mahalo 4, Mahalo 5 and Mahalo 6 pilot
The ATP 337P Mahalo Joint Venture is extremely pleased
with the drilling results, particularly the coal permeability.
Facilities will be constructed to develop the first
production pilot in the Mahalo area, with commissioning
expected by late 2012.
Pilot well drilling in the Joint Venture’s second
pilot, Mira, will be conducted later in 2012, followed
by a further four core holes to extend the delineation
of gas in the block.
The objective of both these pilot production projects
is to demonstrate commercial gas flows in ATP 337P Mahalo,
with the intention of achieving an early initial reserves
certification in early 2013.
Under the terms of the Sale and Purchase Option Agreement
with Stanwell, Comet Ridge could realise $1 million
in cash for every 1 PJ of 2P Reserves it has booked
at the end of 2013, in the event Stanwell elects to
acquire the remaining 35% interest in this asset.
Sale of interest in ATP 337P Mahalo to Stanwell:
On 28 December 2011, Comet Ridge announced that it
had completed a binding Sale and Purchase Option Agreement
(SPOA) with Stanwell Corporation for its 40% interest
in the ATP 337P Mahalo asset.
The key highlights of this transaction are as follows:
- The sale of an initial 5% interest in ATP 337P Mahalo
for A$7 million;
- The grant of an option to acquire either an additional
15% (Option A) or 35% (Option B) interest in ATP 337P
- In exchange for these Options, Stanwell will fund
up to A$8 million of expenditure commitments associated
with the Comet Ridge 40% interest in the upcoming
ATP 337P Mahalo pilot programmes;
- In order to exercise the Option, Stanwell will be
required to pay Comet Ridge consideration based on
the ATP 337P Mahalo certified 2P reserves as at 31
December 2013, but this reserves date may be extended
to as late as 31 December 2014;
- In order to exercise Option A, Stanwell will pay
A$0.80 per GJ multiplied by 15% of the 2P Reserves;
- In order to exercise purchase Option B, Stanwell
will pay A$0.80 per GJ multiplied by 15% of the 2P
Reserves plus A$1.15 per GJ multiplied by 20% of the
2P Reserves (a weighted average of A$1.00 per GJ for
the 35% interest);
- The minimum payments for exercise of the options
are A$5 million for Option A and A$10 million for
If Stanwell elects to exercise Option A, Comet Ridge
will retain a 20% interest in ATP 337P Mahalo and continue
to be exposed to further upside re-rating potential.
The exercising of either option is subject to Stanwell’s
Comet Ridge’s focus will be on maximising 2P Reserves
certification by the end of 2013, and we are pleased
that the Joint Venture is also focussed on proving gas
reserves in this block.
Contingent Resource Certification:
On 25 October 2010, Comet Ridge announced a Contingent
Resource Certification by NSAI, the first certification
for Comet Ridge in any of its Australian or New Zealand
acreage. The following table represents Comet Ridge’s
35% interset of Joint Venture Contingent Resources:
Eleven wells had been drilled in the ATP 337P Mahalo
area prior to the 2012 drilling programme, with six
of these drilled since Comet Ridge was assigned its
interest in 2004.
The ATP 337P Mahalo Joint Venture drilled the Scrubber
Gully 1 corehole in July 2009, which successfully demonstrated
coal continuity from adjacent permits into the central-eastern
portion of the joint venture area.
Mahalo 1 and Somerby 1 were drilled in 2004 as part
of the Comet Ridge farm-in, followed by Mahalo 2, Humbolt
1 and Mira 1 in 2006.
Outside the ATP 337P Mahalo area, coal seam gas activities
exploration activities have increased in the northern
Denison area in recent years with the drilling of Katrina
1 in 2007, Luka 1 in 2009 and Bungawarra 1 and 2 in
mid 2010. These wells were drilled outside the ATP 337P
Mahalo area, but both Katrina 1 and Luka 1 were drilled
near the permit boundary by Comet Ridge’s ATP
337P Mahalo Joint Venture Partners.
Prior to the drilling of Mahalo 1 there had been very
few wells drilled within this part of ATP 337P since
the Sunlight 1 conventional well was drilled in 1966
and Humboldt Creek 1 in 1970. Lowesby 1 was drilled
in 1991 in the area excised from the centre of the ATP
337P farm-in area.
ATP 337P was awarded on 1 October 1983 for a period
of 4 years to CSR Ltd (60%) and OCA (40%), and included
181 blocks. The ATP 337P permit is now in its seventh
4-year renewal period, covers 58 graticular blocks,
and was due for renewal on 1 October 2011.
ATP 337P Mahalo is a subset of ATP 337P, and covers
approximately 12.5 graticular blocks.
Comet Ridge farmed-in to a 40% interest in ATP 337P
Mahalo in 2004, with Santos and APLNG retaining a 30%
interest each. Santos and APLNG each hold a 50% interest
in the remainder of ATP 337P. Comet Ridge reduced its
interest to 35% in late 2011 through the divestment
of a 5% interest in ATP 337P to Stanwell Corporation.