(MENAFN - ProactiveInvestors - Australia) Key Petroleum (ASX: KEY) has cleared the way to spud the Cyrene-1 in the onshore Canning Basin after receiving key approvals from its joint venture partners and the Western Australian Government.
The Authority for Expenditure from Buru Energy (ASX: BRU), Mitsubishi Corporation and Indigo Oil as well as Cyrene-1 Application to Drill by the Department of Mines and Petroleum enable Key to mobilise the DCA Rig 7 to the well site, with drilling expected to start within three weeks.
"Although the wet season is on the horizon, Key, with the support of the EP 438 Joint Venture, has taken the necessary measures to ensure that the Cyrene-1 commitment well is drilled," managing director Kane Marshall said.
"Drilling the surface hole prior to Christmas and mobilising all operational personnel to site after Christmas ensures we not only drill the well in a cost effective manner but are appropriately resourced during the critical components of the well program.
"These steps are critical for maximising shareholder value and ensure that the venture retains the EP 438 permit in good standing."
He added that assuming operatorship from Buru) for the purpose of drilling Cyrene-1, securing a rig and obtaining the relevant approvals within three months was a significant achievement for the company,
Key had secured the drilling slot for the DCA Rig 7 several weeks ago and has formally executed the lump sum contract for drilling of Cyrene-1.
Once the Cyrene-1 well is spud, a surface hole will be drilled to about 175 metres with 9 5/8 inch casing run and cemented.
Operations will cease during the Christmas period and restart in early January where drilling will resume until total depth is reached.
This will lead to significant capital savings and ensures appropriate personnel are available during the critical coring and testing operations.
Cyrene-1 will core the unconventional Goldwyer Shale that is the focus of exploration by fellow Canning Basin explorer New Standard Energy (ASX: NSE) and supermajor ConocoPhillips (NYSE: COP).
It will then drill into the conventional Willara Formation that is estimated to host 5 million barrels of oil.
Key is acting as operator for the well, which is located close to the Ungani oil field where Buru is carrying out an ongoing extended production test that continues to return encouraging results.
Buru and its partner Mitsubishi Corporation are farming into EP 438 by contributing A3 million to seismic and exploration drilling within the permit to increase their stake to 75% from 5%.
Buru will also remain the operator of EP 438 after drilling of Cyrene-1 is completed.
Key will retain a 20% stake in the permit while the remaining 5% is held by Indigo Oil.