Newfoundland frontier draws hefty tract bids

A sizzling play in western Newfoundland has attracted more than $21 million (Canadian) in bids for acreage the province is offering for exploration.

Companies made bids representing work commitments worth a total $21,015,702 for 29 parcels covering about 2.17 million acres.

Bids opened last week by Newfoundland Minister of Mines and Energy Rex Gibbons showed all but three of 31 parcels offered in the sale received bids. Total acreage offered was 2.5 million acres.

The western Newfoundland frontier emerged as an exploration hotspot after reports of encouraging hydrocarbon shows in a wildcat Hunt Oil Co., Dallas, and PanCanadian Petroleum Ltd., (PCP), Calgary, drilled last year on the southwest tip of the Port au Port Peninsula (OGJ, June 26, 1995, p. 32).

The two companies followed that well with another wildcat, directionally drilled from shore on the northern tip of the peninsula to test offshore acreage under a farmout from Mobil Oil Canada (OGJ, Jan. 22, p. 24).

Sale results

Hunt and PCP dominated the sale last week by together bidding work commitment bids of $5,175,000 each for Parcels 20 and 23, east and southeast, respectively, of their northern peninsula wildcat. They were the top bids in the sale.

Mobil Oil Canada Properties acquired three parcels north and east of the Hunt-PCP acreage with work commitment bids of $3,312,875 for Parcel 19, $905,625 for Parcel 16, and $465,750 for Parcel 22.

Winning the most tracts at the sale was Sandhurst Roxana Exploration Ltd., a unit of Tulsa independent Canadian Roxana. It acquired 13 parcels with bids of $212,000-531,000.

Roxana last year formed a venture with Vancouver, B.C., independent Tucan Ventures to drill a 15,000 acre wildcat in western Newfoundland.

Tallying up

The latest Newfoundland request for bids was made Nov. 23, 1995.

The first such request garnered $1.7 million for three parcels covering about 437,367 acres in May 1992. A second bid round in February 1993 netted bids of $5.7 million for six parcels covering about 469,490 acres.

The work commitment bids are the amount of money the bidder must spend on exploration during the exploration permit's 5 year term. Once a security deposit of 20% of bid amount is received, the minister will issue an exploration permit.

Work expenditure commitments covering all 37 onshore permits issued or soon to be issued total $28.4 million.

In addition, three offshore exploration licenses are in effect.

The Canada-Newfoundland Offshore Petroleum Board issued a call for bids on eight offshore parcels, four of which are off West Newfoundland. Deadline for bids is Sept. 30.

Exploration update

Newfoundland Hunt Oil Co. and PCP plan to spud in May or June a wildcat on Hunt's offshore block 6 km southwest of Cape St. George.

This well is south of the 1 Port au Port wildcat, a tight hole that reportedly had encouraging shows of hydrocarbons. It was drilled to 13,779 ft.

The two companies recently were slated to abandon the Long Point M-16 wildcat off the northern tip of Port au Port Peninsula, about 50 km north of the 1 Port au Port well. Hunt and PCP are to pay 100% of drilling and testing costs on the wildcat to earn an interest in two Mobil offshore licenses. It was programed to 10,170 ft.

Meanwhile, Talisman Energy Inc., Calgary, is drilling ahead on the Long Range A-09 wildcat from an onshore site to test an Ordovician carbonate structure in St. George's Bay. It is programed to about 11,000 ft.

Canadian Occidental Petroleum Ltd. acquired an interest in the Long Range A-09 well by paying 37.5% of its projected $10 million cost and assigning Talisman an interest in a Saskatchewan property (OGJ, Mar. 18, p. 38).

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