CALGARY (Yosefardi) – Niko Resources Ltd. expensed exploration and evaluation costs of $60 million in related to unsuccessful wells drilled in Indonesia for the year ended March 31, 2013, including three wells in the Lhokseumawe block.
It recognized an asset impairment of $16 million related to the Lhokseumawe block as the Company had given notice to surrender its interest to the operator of the block.
In addition, exploration and evaluation costs expensed directly to income in the current year included $17 million for seismic and other exploration projects, $8 million for branch office costs, $4 million for share-based compensation costs, and $3 million for new ventures costs.
Niko’s people launched the largest exploration program in the Company’s history, achieving and exceeding many performance metrics and resulting in three potential discoveries in Indonesia; Lebah-1, Ajek-1 and Cikar-1 wells.
The Lebah-1 well, drilled by the operator, ENI, in the North Ganal block, located offshore Kalimantan in the Makassar Strait of Indonesia, penetrated 12 feet of net pay at the top of a 41 foot gross sand Upper Miocene sand interval, a secondary target zone of the well. The joint venture partners have evaluated the potential of this zone and are finalizing plans to drill the Lebah-2 appraisal well in an area of the structure where the zone is believed to be thicker.
The Ajek-1 well, drilled in the Kofiau block, located offshore Papua province in eastern Indonesia, encountered 23 feet of pay over two target Pliocene clastic intervals, with additional thin bedded pay potential. Drilling confirmed the presence of reservoir and hydrocarbon charge, the primary pre-drill concerns in this previously undrilled sub-basin. All sands encountered were hydrocarbon filled with no water leg and C5+ gas composition indicated liquid hydrocarbons. The well has been assessed as a sub-commercial oil and gas discovery. The Company is evaluating the potential of drilling of an appraisal well or one of the other prospects on the block that it believes could contain thicker Pliocene clastic sands.
The Cikar-1 well, drilled in the West Papua IV block, located offshore Papua province in eastern Indonesia, encountered a 700 foot thick section of the targeted New Guinea Limestone primary objective and was still in the porous zone when well conditions forced suspension of drilling operations. The well encountered gas in the drilling of the deeper section and the temporary suspension of the well will allow Niko to return to the well for future deepening and testing. The Company is also evaluating the potential of drilling of an appraisal well or one of the other prospects on the block that it believes could also contain thick sections of New Guinea Limestone.
As at March 31, 2013, the Company held interests in 22 offshore exploration blocks in Indonesia, covering 117,925 square kilometers. The Company has successfully farmed out interests in several of its blocks and is working with various parties on additional farm-outs to reduce its share of future drilling costs.