Kina Petroleum Limited released its third quarter report as of September 30, where KPL at the end of the period, has participating interests in Petroleum Retention Licences (“PRLs”) 21 and 38 and in ten exploration licences (PPLs) across PNG.Kina’s application for APPL 611 was not successful but Kina is in discussion with the PNG government about how best to capture the Aiambak and Alligator Prospects, and any extensions of Alligator.
Prevailing strong oil prices only serve to emphasise the importance of accelerating work to commercialisation of liquids in Elevala and Ketu Fields (PRL 21) in advance of gas.
KPL stated over the last quarter the Brent oil price has risen to as high as US$86/bbl with an average price of around US$76/bbl.
“This means that the 48.3 million barrels of liquids in Elevala Ketu had a nominal gross average value of 3.67 billion dollars.
“Kina has assessed that the liquids alone could be developed for a cost of less than 20 per cent of their nominal value at current prices and we remain steadfast in our commitment to bring a liquids project on stream as soon as possible.
“To that end, we are encouraged by expressions of interest from other joint venturers with regard to a liquids project in the upper Fly River area of Western Province, an approach which is consistent with the PRL21 Development Plan submitted to the government in March 2014.
“Also, we continue to monitor the progress of the sale of Repsol’s PNG licence interests, and the implications of that sale.
Elevala/Ketu is the largest wet gas discovery in the Western Province foreland and is the obvious candidate to be developed first in the area.
As a prelude to FEED, Kina’s assessment of a liquids project has included review of detailed independent costings and on the basis of this assessment Kina believes development should be accelerated.
Accordingly, Kina has been assessing the merits of potential funding options. Kina maintains that near term development of PRL 21 will maximise value for shareholders and other stakeholders.
Kina’s interest in PPL 437, which lies immediately north of Elevala/Ketu and in the shadow of the giant P’nyang gas discovery, is considered a key exploration and growth asset. A development decision on PRL 21 will enhance exploration and potential development options in the area.
The Malisa Prospect is an attractive, but at present uneconomic drilling option but an early and proximal liquids development at Elevala/Ketu will elevate Malisa in our rankings because of its large liquids potential.
The remaining exploration inventory in the company’s portfolio is attractive but less mature than PRL 21 and PPL 437.
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