Bengal Energy Ltd. (TSX:BNG) ("Bengal" or the "Company") is pleased to announce the closing of the previously announced purchase of an additional 5.357% working interest in the Cuisinier Oil Field and Petroleum Lease 303 ('PL303') (the "Acquisition") in the Cooper-Eromanga Basin in Queensland, Australia and to provide an operational update.
Closing of Acquisition
In addition to the incremental working interest acquired in Cuisinier, the Acquisition also includes a further 8.08% interest in the Wompi Block (ATP 752), resulting in working interests in those two projects of 30.357% and 38.08%, respectively. With the increased working interest in Cuisinier, going forward the Company will realize a greater proportion of production and a corresponding impact on cash flows for periods subsequent to December 18, 2013. As a result, Bengal estimates it will exit calendar 2013 with corporate net production volumes between 500-550 boe/d, weighted over 90% to ultra-light crude oil which commands a premium to Brent pricing and contributes to strong netbacks. This exit production estimate reflects the increased working interest gained through the Acquisition, production contributions from all 14 wells currently tied-in, and incorporates production declines inherent with new production.
The effective date of the Acquisition is March 15, 2013, and the purchase price of AUD $7.5 million / CAD $7.2 million remains subject to final closing adjustments which are anticipated to be nominal. Bengal funded the acquisition with proceeds from the CAD$8 million (gross) debt financing which closed July 5, 2013.
In Bengal's Tookoonooka permit (ATP 732), which is located in the emerging East Flank oil fairway of the Cooper Basin, the Company's joint venture partner, Beach Energy Ltd., commenced activity in December 2013. Under the terms of the joint venture agreement, Beach will drill two wells and fund the acquisition of an additional 300 km2 of 3D seismic up to a maximum commitment of AUD$11.5 million, in order to earn a 50% interest in the permit and assume operatorship.
On or about December 25, 2013, Beach intends to spud 'Tangalooma-1', the first of its two fully funded wells in Tookoonooka. Tangalooma-1 is situated in close proximity (2.1 km northeast) of Bengal's Caracal-1 well, a 52 degrees API light oil discovery. The target for Tangalooma-1 is a deeper Hutton zone, which has proven highly prolific in other regions within the East Flank of the Cooper Basin, and is within 20 km of the Tangalooma-1 location. Based on this spud date, and incorporating the impact of the holiday break, Bengal anticipates having results from the well before the end of January 2014. Timing for drilling of the second well in Tookoonooka will be dependent on the results from Tangalooma-1, and Bengal will continue to provide updates as information comes available.
On December 10, 2013, Beach commenced its seismic acquisition program ("The Nassarius Survey") in the north portion of the permit, which is expected to continue through the end of January, 2014. Following the acquisition and processing of the Nassarius Survey, a comprehensive interpretation process will be undertaken which is designed to identify future drilling locations.
"Bengal is very pleased to be working with one of the Cooper Basin's premier operators, Beach Energy Ltd.," said Chayan Chakrabarty, President & CEO of Bengal. "We believe that Beach's interest in funding the first two wells and seismic acquisition demonstrates the great potential of our Tookoonooka asset."
Reg Nelson, President & CEO of Beach Energy Ltd. said, "Following our success in the Western Flank of the Basin, Beach has been seeking an equivalent to that region and believe we have found that opportunity with Tookoonooka in the Eastern Flank. Our joint venture with Bengal enables Beach to apply its highly successful Cooper Basin oil exploration and operational experience to further unlock the potential of this underexplored area of the Basin."
