New Zealand Exchange Limited
P.O. Box 2959
26 November 2011
Akura advises oil exploration results
Fiji based Akura Limited is one of Widespread’s oil sector investments. We hold 7.2% of the company.
Akura recently made the announcement below which signals promising hydrocarbon indications.
For and on behalf of the Board,
Chris D Castle
Takaka, 26 November 2011
This is a special information release to shareholders of Akura Limited (Akura) relating to exploration work carried out in OEL 3/2009, Nadi in September, 2011 and is dated 19 November, 2011.
EVIDENCE OF SIGNIFICANT OIL RESERVOIRS IN OEL 3/2009, NADI, FIJI.
BASED ON HYDROCARBON SOIL GAS (HSG) SAMPLING
The area of interest lies within the eastern-central portion of OEL 3/2009 in the Nadi Bay area, both offshore and onshore and comprising ~ 250 km2 (see attached plan). Akura holds a 100% interest in OEL 3/2009, which was granted on 21 August, 2009 for a period of five years and covers the western portion of the Nadi Sedimentary Basin (NSB). Akura lodged an additional application for an oil exploration licence on 18 November, 2011 with Mineral Resources Department (MRD) to cover the eastern portion of the NSB, which was previously within the former OEL 2/2008, to the east of OEL 3/2009 and contiguous with it. OEL 2/2008 was held by Southern Cross Management System Limited (SCM) and was recently cancelled by MRD because of a failure by SCM to comply with work conditions and, an objection to its cancelation, could be expected from SCM. The new application by Akura covers ~2,000km2 and extends northward to Lautoka and Ba in order to cover two HSG anomalies located in a reconnaissance sampling program in 1998.
Reprocessing of the offshore Nadi seismic data by Akura in 2010 and a review of the previous petroleum exploration wells, gravity data and analytical hydrocarbon data showed that the plus 5km thick NSB was a fault-controlled, half-graben structure with an active petroleum generating system. One prospect and four leads were identified from the reprocessed seismic data in shallow (~20m) water depths in Nadi Bay with a total recoverable resource of 10.9
MMBO at P10 plus 3.7 MMBO at P90 confidence levels (see attached plan). These results led Akura to select Nadi as the most likely onshore location in the Fiji Islands, in which to find oil, and Geochemical Exploration Services Inc. (GES) of Plano, Texas was engaged to undertake a HSG sampling program in the Nadi area in September, 2011. GES is an experienced operator in this field with years of service to many clients in many parts of the planet. A total of 447 samples was collected in an area of ~50km2 with samples being collected along roads, tracks and streets with a sample spacing of 200m and were analysed for methane, ethane, propane, butanes, pentane and hexane. The survey was conducted as a government approved project in consultation with the District Administration of the Western Division and the Special Administrator of the Nadi Town Council and with the co-operation of all stakeholders (landowners and service providers).
The concept of HSG sampling is based on the fact that all petroleum reservoirs leak and that the leaking gases and volatiles can be detected in the soils and, with adequate data, various tests can be applied to determine the type of petroleum reservoir, if any, underlying a HSG anomaly.
NADI HSG SAMPLING PROGRAM
Samples were collected by an experienced operator from GES using a handheld, motorised drill, with 15cc of soil gas being collected from a depth of ~60cm near the bottom of the hole and being extracted from the centre of the drill rod via an external nipple into a syringe and stored in steel savers for transport to the U.S. for analysis. Normally the analytical process does not include pentane and hexane, which are liquids at 20°C, but, because of the strong presence of these two compounds, the technique was expanded to include them.
The sampled area consists mainly of the Meingunyah Formation, a ~100m deep fluviatile and marine deposition system in an old Nadi Bay and now, in part, covered by sediments from a recent marine incursion and also by sediments from the Nadi River flood plain. The Meingunyah Formation un-conformably overlies the potentially hydrocarbon-bearing Pliocene and Miocene sediments in the NSB. The cost of the HSG program, including reporting, was ~FD100,000.
OBSERVATIONS & INTERPRETATION OF RESULTS
Based on the HSG results obtained in September, GES concluded that , “The Nadi area appears to contain significant reservoirs of oil…..,” and they also concluded that further sampling was necessary prior to interpretation of the data; since then, the pentane and hexane results have become available and the hexane distribution clearly provides a more meaningful indication of the patterns of oil leakage, which appear to be concentrated in outer halo structures, which enclose hydrocarbon anomalous areas, as shown on the attached plan. GES has endorsed the interpretations provided herein.
Five areas (H1 to H5) of anomalous hexane and other hydrocarbons have been identified with the largest area, H3, of ~18km2 (8.5km by 2km) covering part of the Nadi International Airport, urban, business and farming areas. This area is defined by an outer halo of high values of hexane, pentane, butane and methane. Traverses across the halo are generally 0.5 to 1km apart, but may be as much as 2.5km apart. The H3 halo has a circumference of 23 km and is currently defined by 35 sample sites with values ranging from 8.4 to 200 PPM hexane and with maximum values of 157 PPM methane, 21.2 PPM butane and 5.2 PPM pentane. Ethane and propane (C2+C3) values have a maximum of 2.0 PPM and are generally <1 PPM. The hexane halo is viewed as indicating the presence, at depth, of a filled-to-spill oil reservoir with the trap being a fault-modified, four-way closure, which lies along strike from a mapped anticlinal structure in the outcropping Miocene rocks. Within the area bounded by the halo there are hexane highs, which tend to form straight or arcuate lines and are thought to represent leakage along fractures above the reservoir.
\The H1 area lies to the south of H3 and covers the area of Nadi Town and extends to the east and west, covering ~ 8km2. Like the H3 area, it is defined by an outer halo of high values and the halo has a circumference of 16 km and is defined by 15 sample sites with values ranging from 11 to 140.5 PPM hexane, with maximum values of 88 PPM methane, 12.6 PPM butane and 3.5 PPM pentane.
The H4 partial halo has been outlined over an arcuate distance of 5 km and is defined by seven sample sites with values ranging from 9 to 75.7 PPM hexane, with maximum values of 90 PPM methane, 7.1 PPM butane and 2.3 PPM pentane.
The H5 area is the northern-most and is close to the graben bounding fault along the Sabeto Range; it is open to the northwest and the partial halo has a circumference of 6.5 km and is defined by twelve sample sites with values ranging from 24 to 90 PPM hexane, with a maximum of 95 PPM methane, 8.2 PPM butane and 3.0 PPM pentane
The H2 area covers part of Denarau Island and the southern boundary of a possible halo has been outlined over a length of 4 km by five sample sites with values ranging from 44 to 74.3 PPM hexane, with maximum values of 90 PPM methane, 7.0 PPM butane and 2.0 PPM pentane. Much of the rest of the halo will lie in the marine domain and there is evidence to support this with known thermogenic methane and “oil indicative anomalies” offshore from Denaru Island, as recorded in the early 1980s. Curiously, the legendary burning island of Fiji folk law was one of the anomalous sample sites and lies on the halo to the east of Denarau Island. Buabua 1 and 2 wells were drilled and abandoned in 1981/82 at depths of ~300m due to bad ground, after intersecting shows of oil and gas. The following quotes are taken from the daily telex reports by the well site geologist: “a good blow of gas,” which lasted for 5 hours, was obtained after a perforation test at 208 to 210m; bubbles of condensate, which “evaporated in 10 seconds leaving a waxy residue, ” were first noted at 207.3m together with “shows of greenish brown, waxy oil,” and the drill pipe had, “a rainbow of oil coating” when racked in the derrick. Analytical work in the U.S. confirmed the presence of pentane, hexane and heptane as well as the lighter gases. It is unfortunate that one of these wells, drilled for stratigraphic purposes, did not reach its target depth of 700m. Clearly much more work is required at H2; however, because of the expense and difficulty of operating in the marine environment, preference will be given to the onshore areas.
The anomalous ethane and propane values do not correlate with the anomalous hexane, pentane, butane and methane values and form a larger (~25km2) area more or less coincident with the H3 and H4 areas. This is a separate population of values and is thought to emanate from a separate source, or reservoir. The C2+C3 values appear to be compatible with published data relating to the Loma de La Lata oil and gas field, Argentina. Within the C2+C3 anomalous area there is a possible ring structure with a diameter of 4km and marked by higher C2+C3 values up to 26.2 PPM as shown on the attached plan.
ONGOING FIELD WORK
GES has been contracted to conduct an infill HSG sampling program in December, which will be designed to define the H3, H1 and H4 haloes together with the C2+C3 anomalous zone. Additional specialist sampling may be undertaken to define the liquid hydrocarbons occurring in the soils together with identification of biomarkers. A review of results will be undertaken in Q1 of 2012 and discussions will be held with the providers of appropriate seismic technology. Hopefully, onshore drill targets will be defined within seven months.
Clearly, the HSG anomalies will require a re-assessment of the hydrocarbon potential and resources of the Nadi Sedimentary Basin and this will be undertaken after results are available from the December HSG sampling.
Private capital raising at F$1.50 a share is in progress in order to raise the funds necessary for the follow-up HSG sampling in December. Shareholders will also be offered the opportunity to subscribe for additional shares at F$1.50. In early 2012 the hydrocarbon assets of Akura will be reviewed and a new corporate valuation established. Further capital raising will follow in order to fund a major HSG program in the Nausori-Tailevu area in OELs 1/2009 and 2/2009, including the Nasilai and Maumi Prospects. This will be followed by shallow, land seismic acquisition in both the Nadi and Nausori-Tailevu areas and use of the technology developed by the Curtin University (WA) is being examined. Subject to the availability of funds and suitable targets being defined, then drilling of four to six wells is proposed to commence in Q3 of 2012 or Q1 of 2013. Listing on the South Pacific Stock Exchange is viewed as an integral part of capital raising in Fiji.
Currently, Akura has 1,256,802 fully paid, ordinary shares on issue.
W. A. Brook, T. J. Casey,
Managing Director, Chairman,
Akura Limited. Akura Limited.
19 November, 2011.
Nadi, Fiji Islands.