WoodMac: Santos Makes Significant Gas Discovery At Corvus-2 Appraisal Well

(WoodMac, 16.Apr.2019) — Following Santos’ announcement on the confirmation of a significant gas resource at Corvus-2 appraisal well, Wood Mackenzie senior analyst Daniel Toleman commented on the results:

Based on limited information, our initial estimate is a 2.5 tcf gas and 25 mmbbl condensate resource. This will be the largest gas discovery in the Carnarvon basin since the Satyr-4 exploration well drilled by Chevron in 2009.

Santos’ stated 254m net pay is indicative of a very large gas resource in place, but recoverable volumes will be dependant on the size of the structure, area extent and sand thickness.

Santos suggested that Corvus will supply the domestic market. The field is near to Santos’ Reindeer development and if the resource comes in over 2 tcf, we believe Santos will explore opportunities to export the gas as LNG. This is due to Corvus’ proximity to the Burrup Peninsula, and a well-supplied domestic market in the short-to-medium term.

The North West Shelf has LNG production capacity available from 2021. The Corvus discovery could fill this ullage. If an LNG backfill development is to progress, we expect Santos will look to sell down, as it currently holds 100% in the find. One of the North West Shelf partners would be a logical entrant.

Quadrant’s exploration portfolio is shaping up to be a good buy for Santos. Dorado was the third largest oil discovery in Western Australia’s history and Corvus is likely to be Santos’ largest offshore gas discovery ever.

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