Last month, facing a cash crunch, under-pressure Kea Petroleum sought to raise £3 million through an equity fundraise via PrimaryBid.com in order to progress the Shannon prospect for drilling. The New Zealand focused company received aggregated bids of more than £1 million and extended the deadline on the open book offer to try to close the £3 million but this week confirmed it had not raised sufficient funds.
The AIM-quoted micro-cap confirmed that working capital remains tight and it is reliant on raising further funds to stave off insolvency. It has now requested a suspension of its shares to trading on AIM pending clarification of its financial position.
The recently identified Shannon prospect, which lies beneath Kea’s shut-in Puka oilfield, is a drill-ready prospect with existing production infrastructure on the surface. Over the past five years the company has spent more than £22 million on the PEP51153 licence area, which includes Puka and Shannon.
This includes 2D and 3D seismic studies, drilling the Douglas well down to the Tikorangi limestone, drilling three wells at Puka and the Wingrove-2 well to the Mount Messenger reservoir, as well as extensive the reprocessing and re-mapping of data to build an increasingly sophisticated understanding of the permit area.
This work has highlighted the potential of Shannon, a Tikorangi limestone formation, some 1,000 metres below the Puka Mount Messenger sand reservoir. It’s a formation that is known to be productive in the area: the operator of an adjacent licence pumped 24 million barrels from this reservoir in the Waihapa oilfield.
Kea reckons that a well on the Shannon prospect would be high impact, with a gross unrisked mean prospective resource of 9.62 million barrels. These fractured limestone reservoirs often have very high initial flow rates: production wells at Waihapa, for example, yielded IP rates of between 1,000 bpd to 10,000 bpd.
It is keen to drill this as early as Q3 – pending funding. Kea has a 70 per cent interest in the permit, with joint venture partner MEO New Zealand holding 30 per cent.
Kea is now seeking farm-in partners to help finance drilling of this prospect. The company continues to negotiate with parties on the potential farm-in of its assets as part of its previously announced strategic review.