Widespread Portfolios advises Kotuku oil exploration initiative
/New Zealand Exchange Limited
P.O. Box 2959
Wellington
18 May 2012
Dear Sir,
Widespread Portfolios advises Kotuku oil exploration initiative
PEP 38526 - Kotuku
PEP 38526 is located north of Lake Brunner, on the West Coast, South Island. The permit covers the northern half of the Kotuku Structure and a significant portion of the associated Grey Valley Trough.
As part of the work programme previous holder Widespread Energy drilled a stratigraphic exploration bore in mid March 2010. The aims of the bore were to confirm the shape of the Kotuku anticline, recover samples of the rock strata and determine the nature of any fluids contained within it.
While the target depth of 250 metres was not reached, the persistent oil shows that occurred between 21 metres and 90 metres were of considerable interest.
Widespread Portfolios became the new permit holder on 31 March 2011 and subsequently undertook a detailed analysis of the permit data.
It has now been determined and finally agreed with NZ Petroleum & Minerals that the next logical steps in an exploration programme are:
· An ERT (resistivity) survey
· Reprocessing of existing seismic data
Electrical Resistivity Tomography (ERT) survey
Measuring the resistivity of hydrocarbon bearing rocks is well documented and is one of the most common and sensitive geophysical methods applied when exploring for hydrocarbons.
Relative to water saturated rocks, hydrocarbon rocks show an increase in resistivity and as such a zone of high resistivity may indicate the presence of hydrocarbons.
Resistivity surveys are used when exploring for oil and gas and have been applied in both on and offshore environments for oil and gas.
A resistivity survey will complement existing well and seismic data and provide an indication of the extent and persistence of any shallow oil accumulation at Kotuku.
Compared with drilling a well, a 2D resistivity survey will explore a larger area.
WorleyParsons Canada has today been contracted to undertake the ERT survey. The company has extensive experience in land based ERT methods and has worked in various locations around the world acquiring resistivity data for the oil and gas industry.
Proposed Survey
Survey extents are based on the minimum and maximum areas over which the cold oil play at Kotuku is expected to extend.
WorleyParsons has recommended the acquisition of approximately 12.8km to cover
the minimum area while an additional 6.8km is proposed if the results from the initial
survey suggest an extension of the resource into the maximum expected area.
The survey is expected to commence before the end of June.
Output of the programme & the way forward
A successful outcome of the survey and the seismic re-processing would be the identification of drilling targets that could offer a much greater certainty of success than has been the case in the past. With these potential targets in hand, Widespread would seek to extend the exploration licence and undertake an active drilling programme early in the new term.
Financing of the exploration programme
The exploration programme can be financed from existing cash resources and the sale of existing investments. However, depending on the level of interest displayed by our shareholders, some consideration is being given to a share purchase plan or other forms of equity finance.
For and on behalf of the Board,
Chris D Castle
Wellington
18 May 2012
