Woodside scores drilling success with gas find off Myanmar

Woodside Petroleum looks well placed to capitalise on its early entry into the exploration hotspot of Myanmar, reporting what chief executive Peter Coleman called an “encouraging” gas discovery at its first well.

The find at the Shwe Yee Htun-1 exploration well appears of relatively modest size, at 15 metres of “net gas pay”, but it upgrades the chances of success at a number of other similar prospects Woodside has in its extensive acreage in the Rakhine Basin off the Myanmar coast.

“Further analysis will be undertaken to understand the full potential of the play, but this de-risks a number of leads which will now be matured,” Mr Coleman said.

“This discovery is an encouraging outcome for future exploration and appraisal activity in the area.”

The collapse in global oil and gas prices and the long-term nature of the news kept market reaction to the news muted, with the 3 per cent jump in Woodside’s share price put down primarily to the rise in crude oil prices over the escalation of tensions between Saudi Arabia and Iran. The broader energy index also rose 3 per cent.

“Myanmar is an area that has got a few of the international oil and gas companies excited, but life is tough for any new resource with oil at $US38 a barrel,” said Credit Suisse energy analyst Mark Samter.

He said the discovery represented “an improvement on the recent track record” in exploration by Woodside, which has seen limited success with the drill-bit in recent years.
World-class discoveries

Myanmar is one of the major new exploration entries made by Woodside in recent years as it seeks to position itself in emerging areas that could turn out to yield world-class discoveries. The find has been made in the A-6 venture with local player MPRL and French oil major Total, a venture that Woodside entered in December 2012.

Political reforms introduced in Myanmar in 2011 saw sanctions lifted by the European Union and the US, followed by the award of drilling rights by the government that attracted a number of international majors including Chevron, Shell and BG Group. The country is estimated to hold an estimated 3.2 billion barrels of oil resources and 18 trillion cubic feet of gas, with unproven resources potentially vastly greater.

Woodside is the largest holder of exploration acreage in Myanmar, with interests in six large offshore permits covering 46,000 square kilometres and making up about a fifth of its total global exploration portfolio.

Like all oil and gas producers worldwide feeling pressure from the slump in commodity prices, Woodside has pared spending but it is still scheduling a number of exploration wells in 2016, including a second well in Myanmar, Tha Lim-1, to be drilled this quarter. It earmarked about $US450 million ($616.5 million) for exploration in 2015 and has yet to disclose investment plans for 2016.

Globally, the worst downturn in oil prices for more than a decade has taken a toll on exploration, with Douglas-Westwood saying the number of offshore discoveries dived 45 per cent between 2014 and 2015. Only a few new projects got the green light for construction last year, including Statoil’s huge Johan Sverdrup venture in the North Sea and Shell’s Appomattox project in the Gulf of Mexico.

Source: SMH

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