Lucas continually seeks investment opportunities in its chosen industry sectors where the company's industry knowledge, technology and expertise can potentially increase shareholder value and deliver significant returns.
Coal seam gas
This is most evident in the coal seam gas sector where Lucas has built a significant portfolio. As a provider of drilling and other services to the coal and coal seam gas industries Lucas has built a detailed knowledge of coal structures and developed a range of gas extraction techniques tailored to the unique geology of each prospect.
Gloucester Basin, NSW (PEL 285)
Drawing on this knowledge, Lucas made its first coal seam gas investment in 2002 when it bought petroleum exploration licence 285 (PEL285) in the Gloucester Basin, approximately 100km north of Newcastle, from Pacific Power. The investment, made in a 70%/30% joint venture with Molopo Australia Limited, was based on results from drilling done by Pacific Power, before the potential for coal seam gas was understood by the broader market. Lucas believed this asset was significantly undervalued.
By applying the right technology and focusing on the fundamentals, Lucas have taken this project through initial exploration to appraisal and are now focused on commercialising its gas.
This progress is reflected in the initial reserves certification for coal bed methane (CBM) recovery from the PEL announced in February 2008 (Gross 100% of the PEL, Lucas 70%):
| Reserve type |
Volume (billion standard cubic feet)* |
| 1P (proved) |
14.9 |
| 2P (proved and probable) |
170.2 |
| 3P (proved, probable and possible) |
359.2 |
| Contingent resources |
166.2 |
* one billion standard cubic feet equals approximately 1.035 PJ
These estimates are based on independent certification completed by
Netherland, Sewell and Associates Inc (NSAI), a Dallas based company which conducts reserves certification exercises for both conventional hydrocarbons and unconventional gas such as CBM. The certification identifies a potential 525.4 BSCF of recoverable gas (3P plus contingent resources) from a mapped volume of approximately 1600 BSCF (1.6 TSCF) of gas in place.
Significantly, the current exploration data on which NSAI has based its assessment, covers only part of the basin. As the exploration programme is expanded, this should lead to additional areas being included in future reserves certifications. The overall gas-in-place potential for the basin is estimated at 2.5-3.0 TSCF. We expect to announce further reserves in late 2008 or early 2009 once exploration results are available and the production performance from the recently expanded pilot (five new production test wells) are known.
Bowen Basin (ATP651)
Lucas has a 15% interest in ATP651 in Walloons on the Undulla Nose with the balance owned by British Gas and Queensland Gas Company, which is also the operator. The prospect is located close by Berwyndale South where substantial coal seam gas reserves have been located. ATP651 is also considered to be highly prospective and a major drilling programme is due to commence in March 2008.
Arawn Project , British Columbia, Canada
Lucas has a 55% interest in Arawn Energy. Our partners in this are Canadian CSG and unconventional gas experts Dr Chris Cornelius and Professor Marc Bustin. Arawn is an investment vehicle for Lucas in North America, and provides access to Marc's and Chris's expertise on this and other projects.
Arawn's current focus is the Grizzly and Red Deer Prospect, 43,000 acres in the foothills of the Rocky Mountains in Eastern British Columbia.
The first of two core holes was drilled in early 2008 identifying 40 metres of coal with gas content of 7–12 m3/t, confirming early results.
Sydney Gas
In February 2008, the Company acquired a 15% shareholding in
Sydney Gas Limited (SGL), thereby becoming its largest shareholder. The investment in SGL, whose coal seam gas interests cover the entire Sydney Basin, is another strategic step in the establishment of the Lucas Group as the premier coal seam gas producer in New South Wales.
Lucas is very familiar with the coals to the south of the Basin as it has been responsible for much of the exploration and production drilling at SGL’s Camden Project since this commenced in 1991. Similarly, AJ Lucas is familiar with many of the coals to the north of the Sydney Basin having drilled extensively for many coal mines in the Hunter Valley. Lucas is confident that a revised drilling plan has the potential to prove up significant additional reserves within the Sydney Basin and proposes to enter into both a Technical Services Agreement and a Drilling Services Agreement with Sydney Gas to expedite this plan.