Overview

Block L is a 2,200 square kilometre (550,000 acre) exploration and development area covering onshore and offshore areas in the north-eastern portion of Brunei
The offshore component is in relatively shallow waters and includes a seven kilometre wide strip along the northwest coast, and essentially all of Brunei Bay to the east
The giant Seria oil field, which exceeded 1 billion barrels of cumulative oil production by 1991 (Source: Brunei Shell Petroleum Website), is located approximately 12 kilometres to the southwest of Block L adjacent to the western boundary of Block M
A significant gas discovery at Bubut, announced by Brunei Shell Petroleum, lies less than one kilometre from the edge of Block L in the shallow offshore region
A 350 square kilometre 3D seismic acquisition program, shot to evaluate the potential of the southwest portion of the block near the Seria field and immediately north of the Belait anticline, was completed in May, 2009.
In 2010, two wells, Lukut-1 and Lempuyang-1 were drilled and both encountered hydrocarbon shows in multiple horizons.
Two main zones of interest with an aggregate gross thickness of 56.4 metres were encountered during the drilling of the Lempuyang-1 well. During the first quarter of 2011, testing of two zones at Lempuyang-1 commenced. Despite gas flowing to surface, continued mechanical issues resulted in the testing programme being curtailed due to safety concerns associated with gas flow into the well.
The data which was obtained during the testing helps support the understanding of the joint venture partners as to the prospectivity of the Lempuyang prospect and surrounding acreage. Lempuyang-1 drilling and testing results will be integrated into the existing database and used for future assessment of the updip area within the eastern part of Block L where a 3D seismic programme is currently being considered.
The Lukut-1 well remains suspended pending agreement amongst the joint venture programs regarding testing the well.
In 2010, the joint venture partnership conducted an airborne gravity and aeromagnetic survey over Block L covering about 3,000 square kilometres and is continuing to interpret the results.
In August 2010, the Company and its joint venture partners elected to proceed with the Phase 2 exploration period. The minimum work obligations for Phase 2 include:
- acquire and process not less than 500 kilometres of onshore 2D seismic data and 500 kilometres of offshore 2D seismic data,
- acquire and process not less than 150 square kilometres of offshore 3D seismic data and
- drill at least two onshore exploration wells, each to a minimum depth of 2,000 metres.
The Block L joint venture parties are required to spend a minimum of $16 million during Phase 2 and the work commitments are required to be completed during the Phase 2 period. The Company expects to invest more expenditures than the minimum spend in order to meet the work commitments. Phase 2 expires on August 27, 2012.
The Company and its joint venture partners have agreed to replace the Phase 2 seismic obligations with a commitment to acquire and process 131 square kilometres of onshore 3D seismic; 13.5 square kilometres of onshore 3D swath data and 13 kilometres of onshore 2D seismic.
The contractor is planning seismic acquisition programs in the West Jerudong Field area and in the area around (and south) of the Lempuyang-1 well drilled in 2010. In total, 131 square kilometres of 3D seismic will be acquired over West Jerudong, and 13 square kilometres of 3D seismic swath and 13 kilometres of 2D seismic line will be acquired in the Tutong area. Both programs will provide direction for future drilling prospects and will meet the remaining Phase 2 seismic commitment. The minimum expenditure for Phase 2 remains unchanged at $16 million.