TEE proving up multiple gas, helium and hydrogen targets

Published 15-JUL-2024 10:41 A.M.

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Top End Energy (ASX: TEE) just put out a prospectivity update on one of its NT oil and gas permits.

Today's news was for EP 144 - one of the permits that TEE picked up in its acquisition from the wholly owned subsidiary of Gina Rinehart’s Hancock Prospecting.

Our takeaways from the news

TEE’s update comes mostly off the back of work done in and around this part of the NT before.

TEE took existing seismic and old drilling data to come up with an interpretation of the prospectivity of EP 144.

At a very high level, most of the data is known… Today's news is just TEE putting it all together to work out prospectivity on the permit.

Here are our key takeaways from the announcement:

TEE is one of two companies with ground in this part of the NT - The only other company with a permit in the South Nicholson Basin is $26BN Santos .
Permit is next to infrastructure and end users - EP 144 is close to the Northern Gas Pipeline which is a way to get any gas from the permit to the east coast gas market and the miners operating in the area (South 32, Teck resources).
Helium/Hydrogen potential strengthened - TEE also confirmed helium/hydrogen potential on EP 144. The NDI Carrara-1 well (~3.5km away from TEE’s permit) had traces of both Helium and Hydrogen, with Hydrogen sampled at up to 27%.
TEE has identified two conventional and unconventional gas plays - . The Carrara Sub-basin Extension: ~600km2 and the Alexandria Sub-basin: ~1,100km2.

For the Carrara sub-basin play TEE references the data from the NDI Carrara-1 well (~3.5km East of EP 144) which hit “multiple active petroleum systems” AND 2D seismic data shot around the project area.

TEE’s theory is that whatever is happening at that well could be happening on its ground.

For the Alexandria Sub-Basin TEE’s references are from old 2D seismic data shot around the permit.

Again, TEE’s working theory is that the source rocks in the area could be extending into its ground.

Below is the seismic interpretation TEE put out in its announcement today showing that well ~3.5km to the east of TEE’s permit:

How today’s news relates to our TEE Investment Memo:

Today’s news relates directly to “exploration risk” which we listed as part of our TEE Investment Memo.

The next phase of works outlined in todays announcement involve more early stage exploration where TEE will be looking to identify drill targets.

There is no guarantee TEE find anything that warrants a big drilling program, as a result exploration risk is the main risk for the company in the short term.

Exploration Risk
After the permitting issues are resolved, TEE still has to explore and eventually drill the projects. As with any exploration company, there is always a risk that nothing is found or that what is found is deemed uneconomic. Capital will be required along the journey to deliver on exploration goals.

Source: “What Could Go Wrong” Section - TEE Investment Memo 06 May 2022