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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 1
Rule 5.3
A Company registered in Papua New Guinea
Company Number: 1-63551
ARBN: 151 201 704
31st July 2012
QUARTERLY ACTIVITIES REPORT FOR THE PERIOD
1ST March 2012 to 30th June 2012 _____________________________________________________________________________________
Kina Petroleum Limited (ASX: “KPL”) currently maintains working interests in 5 exploration licences in
PNG. The quarter ended 30 June 2012 was an encouraging period for the company with a significant
upgrade to the contingent resource numbers for Ketu Field as a result of the very successful appraisal
well Ketu 2.
Highlights
Resource upgrade Ketu 2
Updated mapping of PPL 338 delivers a number of promising leads and prospects in PPL338
Oil Search and KPL commit to Nipa seismic program in PPL 338
Oil Search and KPL to follow up InterOil’s Triceratops 2 success with aerogravity/aeromagnetics in PPL 338
A highlight for the June 2012 quarter for KPL was the significant resource upgrade for Ketu Gas field. The
unexpected intersection of a full gas column at Ketu 2 some 9km east of Ketu 1 caused the upwards
readjustment.
Figure 1: Elevala Reservoir Structural Profile
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 2
Figure
2: PRL 21 Well locations
Table 1 below outlines the revised contingent resource range for Ketu Field
Probability Gas Oil
BCF MMBBLS
P90 213 12.3
P50 362 21.1
Pmean 375 21.8
P10 558 32.6
Table 1: Ketu Field Contingent Resource Estimate
1 The assessment of the Ketu 2 Contingent Resources has been based on the Elevala Sandstone depth Map supplied by PRL 21 Horizon Oil (Papua) Limited.
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 3
Petroleum Prospecting License (“PPL”) 337 (Kina Interest 100%)
The Banam Anticline remains the main prospect. KPL has located additional data to the northwest of
Banam anticline and has computed the location data from old base maps such that the SEGY data can be
loaded into its data base. These data will be used to tie well control at Tsumba 1 into the Banam grid to
improve KPL’s understanding of the prospect and to assist in farmout efforts.
Because the Banam structure is covered with hundreds of gas seeps that are composed of predominantly
methane and because of its very large size the structure remains an attractive LNGF candidate. The in
place prospective resource estimate for the full trap volume of Banam Anticline is 36 to 37.5 TCF.
Figure 3: Banam Anticline Prospect & Proposed Seismic Program
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 4
Petroleum Prospecting License (“PPL”) 338 (Kina Interest 100% - subject to Farm In Arrangements with
Oil Search (PNG) Limited (“OSPNG”))
The OSPNG acquired Iviri Seismic Survey has confirmed Nipa Prospect (formerly known as Iviri South
Lead) as a potential candidate for drilling. A follow up seismic program is scheduled for Nipa Prospect in
Nov/Dec 2012. Reference to the Top Darai Time Structure Map shows Nipa Prospect developing on an up
thrown block which forms part of the Uramu Trend extending into PPL 338 from the south. Based on
current mapping the P10 Prospective Resource Estimate of gas in place is 4.5TCF and 3 TCF recoverable
using 25% porosity and a N/G of 80%.
Remapping of the seismic data has identified eight further leads or prospects north of Nipa Prospect.
Figure 4: Nipa Prospect
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 5
Oil search has a right to move to 70% in the licence by carrying KPL through a well to a capped cost. Oil
Search has extended its option to drill by nominating the Nipa Seismic Survey to confirm the height of
independent closure on the Nipa Structure. PPL 338 is also included in OSPNG’s Gulf farm out effort to
confirm enough gas to form a fourth LNG train in Port Moresby. Subject to Nipa demonstrating 1TCF or
more of recoverable gas potential it should form an attractive part of this exploration effort.
Figure
5: InterOil’s Triceratops discovery & possible extension into PPL 338
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 6
Triceratops 2 is a successful appraisal well on the Bwata Triceratops structure north and west of the giant
Elk Antelope Gas Field drilled by NYSE listed InterOil Corporation. Mapping by InterOil suggests the
structure climbs to the west and north into PPL 338 an area with 2 identified gas seeps. Oil Search intends
flying an aerogravity/aeromagnetic survey over this part of PPL 338 (red polygon shown in Fig 5) to
confirm fault orientation and assess the need for follow up seismic acquisition in this area.
Petroleum Prospecting License (“PPL”) 339 (Kina Interest 100% - subject to Farm In Arrangements with
Oil Search (PNG) Limited (“OSPNG”))
Interpretation of Wulai Seismic Survey has been difficult due to complex geology and complicated
structure. A number of potential closures, possibly reefs have been identified and reprocessing of line
Wu 11 2 has improved imaging to the point that analogy can be drawn to the Wahoo/Mako reef
prospects seen by Interoil in PPL 236 and PPL 339 Cassowary Prospect
Oil Search has high graded an area in the east of the licence for Eocene reef development. Oil Search
intends undertaking an aeromag/aerogravity survey in this area to identify if the area warrants seismic
follow up.
Figure 6: Cassowary Prospect potential look a like to Mako Wahoo Prospect PPL 236
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 7
OSPNG has a right to move to 70% in the licence by carrying Kina through a well to a capped cost.
Petroleum Prospecting License (“PPL”) 340 (Kina Interest 100%)
Kina is encouraged by the interpretation of nearby seismic data and believes there is potential to develop
Miocene and Cretaceous prospective trends in PPL 340. Oroi 1 drilled in 1950 intersected gas in the Chiria
Conglomerates. The anticlinal tend may extend into southern PPL 340.
Figure
7: PPL 340 Structural Grain & Proposed Aerogravity Survey
InterOil has conducted an airborne gravity survey adjacent to PPL 340. Kina is assessing acquisition of an
aerogravity and aeromagnetic survey to merge into the InterOil data set.
= == == == ==
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 8
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.
Name of entity
KINA PETROLEUM LIMITED
ARBN Quarter ended (“current quarter”)
151 201 704
30 June 2012
COMPANY NO.
1-63551
Consolidated statement of cash flows
Cash flows related to operating activities
Current quarter USD $’000
Year to date ( 3 months) USD $’000
1.1 Receipts from product sales and related debtors
- -
1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration
(2,766) - -
(141)
(6,657) - -
(357) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature
received 30 82
1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other (provide details if material) - -
Net Operating Cash Flows
(2,877)
(6,932)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets
- - -
- - -
1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets
- - -
- - -
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 9
1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other (provide details if material) - -
Net investing cash flows
- -
1.13 Total operating and investing cash flows (carried forward)
(2,877) (6,932)
1.13 Total operating and investing cash flows (brought forward)
(2,877) (6,932)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (provide details if material) - -
Net financing cash flows
- -
Net increase (decrease) in cash held
(2,877)
(6,932)
1.20 Cash at beginning of quarter/year to date 8,075 11,734 1.21 Exchange rate adjustments to item 1.20 (146) 250
1.22 Cash at end of quarter 5,052 5,052
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities
Current quarter
USD $'000
1.23
Aggregate amount of payments to the parties included in item 1.2
117
1.24
Aggregate amount of loans to the parties included in item 1.10
1.25
Explanation necessary for an understanding of the transactions
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 10
These payments include costs of the Managing Director and Non-Executive Directors Fees (including two
PNG based Directors that were paid in the quarter).
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest
Financing facilities available Add notes as necessary for an understanding of the position.
Amount available USD $’000
Amount used USD $’000
3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outflows for next quarter
USD $’000
4.1 Exploration and evaluation
2,655
4.2 Development
4.3 Production
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 11
4.4 Administration
304
Total
2,959
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Current quarter USD $’000
Previous quarter USD $’000
5.1 Cash on hand and at bank 4,858 8,075
5.2 Deposits at call
194
-
5.3 Bank overdraft
-
-
5.4 Other (provide details)
-
-
Total: cash at end of quarter (item 1.22)
5,052 8,075
Changes in interests in mining tenements
Tenement reference
Nature of interest (note (2))
Interest at beginning of quarter
Interest at end of quarter
6.1 Interests in mining tenements relinquished, reduced or lapsed
6.2 Interests in mining tenements acquired or increased
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Appendix 5B Mining exploration entity quarterly report
_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 12
Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number quoted Issue price per security (see note 3) (cents)
Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description)
Nil
7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3 +Ordinary securities
173,196,376
75,778,475
$0.20
$0.20
7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs (c) Release from escrow
Nil
7.5 +Convertible debt securities (description)
Nil
7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description and conversion factor)
20,510,155 9,750,000 5,500,000
20,510,155
Exercise price $0.20 $0.20 $0.20
Expiry date 30 November 2012 31 October 2013 31 December 2013
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7.8 Issued during quarter
7.9 Exercised during quarter
7.10 Expired during quarter
7.11 Performance Shares (totals only)
Nil Nil
7.12 Unsecured notes (totals only)
Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: Richard Schroder.............. Date: .....31/07/12.....
(Managing director)
Print name: RICHARD SCHRODER
Notes 1 The quarterly report provides a basis for informing the market how the entity’s activities have
been financed for the past quarter and the effect on its cash position. An entity wanting to disclose
additional information is encouraged to do so, in a note or notes attached to this report.
2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining
tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint
venture agreement and there are conditions precedent which will change its percentage interest in a
mining tenement, it should disclose the change of percentage interest and conditions precedent in the list
required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and
7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB
1026: Statement of Cash Flows apply to this report. For
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Appendix 5B Mining exploration entity quarterly report
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5 Accounting Standards ASX will accept, for example, the use of International Accounting
Standards for foreign entities. If the standards used do not address a topic, the Australian standard on
that topic (if any) must be complied with.
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