OTWAY EXPLORATION STRATEGY  

Since Somerton’s 2010 restructure, the broadening of the company’s Otway Basin portfolio has been driven by Somerton’s view that the Casterton Formation in the western Otway Basin has the potential to host significant unconventional gas and oil resources.  This view has been developed utilising a combination of open file data and proprietary geochemical analyses.

The Casterton Formation contains shales that are the source rocks of the commercial gas accumulations in the Penola Trough and has also generated oil, as evidenced by the widespread oil flows/recoveries and shows, particularly on the flanks of the basin.  The formation is widespread but has only been penetrated in about ten wells on the northern and eastern flanks of the basin, where the Casterton is not sufficiently thermally mature to present a viable shale gas play. 

The existing well control indicates an average prospective shale sequence in the Casterton of about 85 metres.  However, the formation is interpreted to reach thicknesses in excess of 300 metres in the undrilled troughs, where it is thermally mature to overmature and is probably overpressured at depths below approximately 2,600 metres. (The deepest Casterton penetration to date is at approximately 2,500 metres).

On a regional basis, the Casterton is generally a moderately rich, gas prone source rock, with total organic carbon (“TOC”) averaging approximately 2%.  However the source richness of the formation can vary widely over relatively short distances and in some portions of the basin it has excellent oil source capacity, with TOCs of up to 20% observed. Although these intervals are thin and not widespread, where they are present and thermally mature they are capable of generating significant volumes of oil.

The Casterton Formation was deposited in a cold climate, lacustrine environment and contains predominately siliceous shales containing minor amounts of siderite.  As such they have similar mineralogy to the REM shales in the Nappamerri Trough of the Cooper Basin and some producing shales in North America.

Somerton has identified a play fairway, covering approximately 2,000 square kilometres, where the Casterton Formation is prospective for shale gas, with associated gas-liquids probable in the lower maturity zones.  Somerton assesses the potential gas in place within the Casterton Formation within its licences to be more than 25 Trillion Cubic Feet (“TCF”). This view has been supported by an assessment by RISC Operations Pty Ltd who carried out a high level assessment of the shale gas potential of the Casterton Formation in the Otway Basin.  Utilising a combination of open file data and proprietary geochemical analyses carried out by Beach Energy Limited (which is available to Somerton through its alliance with that company) RISC concluded that within Somerton’s licences there is an area of more than 1,800 sq. km which is prospective for Casterton Formation shale gas, with a most likely potential gross gas in place in place in the range 14-48 TCF. 

In addition, Somerton has identified several areas in the basin where the Casterton has the potential to source and host large unconventional oil accumulations.