Firm to give up prospective licence

 By Gedion Timothy Lapan   

KINA Petroleum Ltd, the licence holder of petroleum prospective licence 337 will surrender the exploration licence, citing insufficient prospectively at the wells where the licence covers.  

PPL 337 covers wells at Raintree-1 and Kwila-1 near Madang. 

Managing director Richard Schroder said last year’s drilling at PPL 337 was a milestone for the country and the company. 

But evaluation of the drilling results suggests that the prospect of a commercial discovery in the licence is, for the foreseeable future, low. 

“During 2015, Kina Petroleum Ltd were fully carried by Heritage Oil Ltd to drill two wells in PPL 337 – Raintree-1 and Kwila-1,” he said.

“While drilling activity was conducted safely and the wells achieved their objective of testing the existence of a miocene reef play and plio/pliostecene sandstone play, they failed to intersect commercial quantities of hydrocarbons and were plugged and abandoned. 

“Evaluation of drilling results was undertaken since the completion of well site operations and it has been concluded that there is insufficient remaining prospectively in the licence to warrant further exploration work, particularly given the current oil price climate. Accordingly, the licence will be surrendered.” 

Schroder said this active portfolio management and proactive preservation of capital were consistent with the company’s strategy of limiting expenditure on frontier exploration and focusing on developing discovered hydrocarbons and/or exploiting highly prospective exploration areas. 

“Our strategy and areas of focus remain clear,” he said. 

“And surrendering the licence allows us to optimise our asset portfolio during a period where low oil prices will continue to necessitate step changes throughout the broader industry.”