A major stake in a Timor Sea oil field discovered by BHP Petroleum has been acquired by Adelaide-based oil and gas explorer and producer, Stuart Petroleum Limited.

In an $85 million venture, Stuart will sole fund the drilling of an appraisal well on the Oliver oilfield, 700 kilometres west of Darwin and 30 kilometres north of the Jabiru production licences.

The Company will also undertake all engineering studies up to a Final Investment Decision (FID) authorising development, to earn its 50% interest in Oliver.

Drilling of the Oliver-2 appraisal well, and the associated engineering studies, is expected to cost around $60 million. The sale agreement also commits Stuart to then additionally sole fund the first $25 million of development expenditure for the field.

Stuart will examine a range of funding options including debt and equity to fund these initial project commitments, and is targeting maiden production from Oliver by the end of 2011.

The Oliver interest is being acquired from a proportional selldown by a range of companies controlled by well known and respected Melbourne-based petroleum entrepreneur, Mr Geoff Albers, whose Albers Group is one of the largest independent holders of offshore petroleum permits in Australia.

Stuart assumes Operatorship of the Oliver field in the Australian-administered section of AC/P33 in the Timor Sea Permit, from Auralandia NL.

BHPB discovered a 170-metre column of oil, gas and condensate from 2,927 metres depth in the Oliver-1 exploration well in 1988 - the field remaining undeveloped since due largely to then historic low oil prices.

Today’s announcement is the second offshore expansion by Stuart this year - with the Company to commence drilling next month, as Operator and 50% farminee, on the 100 million barrel five zone Bazzard-1 oil well in the Gippsland Basin, its first move offshore.

“What differentiates our new Timor Sea holding from our Gippsland activity is that Oliver is a new field ready for immediate development, not an exploration play,” Stuart Petroleum’s Managing Director, Mr Tino Guglielmo, said today.

“The acquisition is a very deliberate strategy to evolve and expand our maiden offshore portfolio in a manner best able to deliver near-term production balanced with exposure to significant exploration upside,” Mr Guglielmo said.

“Our own interpretation of Oliver, validated by subsequent independent review, of recently acquired 3D seismic over the Oliver acreage, has resulted in estimated recoverable liquids in the range of 9.9 million barrels to 33 million barrels of oil and condensate, with a mean volume of 19.3 million barrels. Stuart’s share totals 9.6 million barrels.

”On this basis and with this focus, Stuart should now be viewed as an exploration and production company transitioning to primarily an offshore Australia intent for future growth in our exploration and development activities.”

Tags: Stuart Petroleum Limited