France - Moselle Permit

Moselle Permit Map

Project Name: Moselle Permit
Location: North-eastern France
Ownership: 100% Working Interest

The Moselle Permit, acquired by Elixir in April 2010, is located in north-eastern France in the Saar-Lorraine Basin. The permit was originally awarded in January 2009 and a renewal application was lodged for a second five year term in September 2013 with the relevant French authorities. Elixir has committed to a second five year exploration period and with all obligations relating to the first exploration period previously being met, the Company awaits notification that the extension into a second exploration period has been granted.

Elixir continues to consider various opportunities to add value to the Moselle project including but not limited to seeking a partner to pursue the substantial conventional prospectivity identified within the permit. The Company does not intend to incur any significant expenditure on Moselle until the renewal is granted.

The unconventional potential within Moselle was assessed early in the permit’s initial term, and led to an independent assessment by Netherland, Sewell and Associated, Inc ("NSAI") of an unrisked gross unconventional undiscovered original oil in place best estimate (P50) of 164.7 billion barrels and original gas in-place best estimate (P50) of 649.7 trillion cubic feet.

Subsequent to this potential reserve assessment, in mid-July 2011, legislation was enacted by the French Parliament prohibiting the use of hydraulic fracture stimulation ("fraccing") as a well completion technique in France. This has meant that the significant value associated with unconventional prospectivity identified in the Moselle Permit cannot be pursued for the time being, and the Company has therefore redirected its focus to the substantial conventional prospectivity within the permit.

Conventional Prospectivity

As a result of technical work undertaken in the 2013 financial year, Elixir has identified new examples of established conventional play types for the area, as well as an exciting new play comprising previously untested reservoir objectives associated with large structures located in the central part of the permit. The three key play types are:

  • The Paris Basin Play – Lower Triassic sandstones (existing play type)
  • The Westphalian Play – Fractured Westphalian sandstones (existing play type)
  • The Stephanian Play – Upper Carboniferous Stephanian sandstones (new play type)

In order to verify the technical studies undertaken by Elixir, RPS Energy Services Pty Ltd ("RPS") was engaged in April 2013 to provide an Independent Resources Report in relation to three of the conventional prospects identified within the Moselle Permit. The RPS Independent Resources Report was completed in June 2013 and largely confirmed Elixir’s technical work, verifying the potential for significant conventional prospective resources in each of the three prospects analysed. RPS determined the following prospective recoverable resource estimates with respect to the three prospects.

Table 1: Prospective Recoverable Gas Resources (Bcf) – Mean Estimate

Prospect

Unrisked Total (if all

sequences are successful) 1

Probabilistic Total (given at

least one success) 2

Nancy East

(4 sequences)

626 Bcf

235 Bcf

(GPoS3 37%)

Bullseye4

(6 sequences)

208 Bcf

55 Bcf

(GPoS 50%)

West Chaumont4

(1 sequence)

25 Bcf

25 Bcf

(GPoS 25%)

     

Total: Nancy East, Bullseye

and West Chaumont

861 Bcf 5

157 Bcf 6

(GPoS 80%)

 

  1. Statistical aggregation assuming that all sequences are successful. The probability of this occurring is the product of all risks and is likely to be extremely small.
  2. Statistical aggregation assuming that at least one sequence is successful. The total takes into account all possible successful outcomes and the mean value of this distribution represents the true expectation of success.
  3. GPoS means Geological Probability of Success.
  4. An alternate realisation for the Lower Triassic sequence in Bullseye and West Chaumont is oil rather than gas – please see oil case table below.
  5. Summation is subject to rounding differences.
  6. This is a probabilistic total rather than an arithmetic addition.

An alternate realisation for the Lower Triassic sequence in both the Bullseye and West Chaumont prospects is that the sequence is oil charged rather than gas charged. This is similar to the classic ‘Paris Basin’ play, as evidenced by the small Forcelles oil field located in (but excised from) the southern part of the Moselle Permit.

RPS has determined the following in place and prospective resource estimates with respect to the oil potential in these two prospects.

Table 2: Undiscovered Oil Initially-in-Place (mmbbl) and Prospective Recoverable Oil Resources – Mean Estimate

Prospect

Undiscovered Oil Initially in

Place (MMbbls)1

Prospective Oil Resources

(MMbbls)1

Bullseye

(1 sequences oil only)

116 mmbbls2

(GPoS 24%)

40 mmbbls2

(GPoS 24%)

West Chaumont

(1 sequence)

104 mmbbls3

(GPoS 25%)

36 mmbbls3

(GPoS 25%)

  1. The GPoS is the chance of discovering hydrocarbons within the prospect and not specifically oil.
  2. This alternate realisation for the Lower Triassic sequence in the Bullseye prospect displaces 31 Bcf of prospective gas resources from the 208 Bcf probabilistic total shown in Table 1 and from the 861 Bcf total combined for all prospects in Table 1.
  3. This alternate realisation for the Lower Triassic sequence in the West Chaumont prospect displaces the entire 25 Bcf of prospective gas resources shown in Table 1 and from the 861 Bcf total combined for all prospects in Table 1.

It is estimated that the Nancy East, Bullseye and West Chaumont prospects on a combined basis contain collective mean unrisked prospective recoverable resources of 861 Bcf if entirely gas filled, or 805 Bcf of gas and 76 mmbbls of oil if the Lower Triassic ‘Paris Basin’ reservoirs (targeted in the Bullseye and West Chaumont prospects) are oil filled.

The results of the RPS independent resource report confirms the significant conventional resource potential in the Moselle area (incorporating both shallow oil and deeper gas potential), and the attractive risk profile of each of the prospects assessed. In particular, the oil cases generated for the shallow Lower Triassic reservoir objectives in the Bullseye and West Chaumont prospects provide a very attractive alternative target to the significant gas potential defined for the deeper Stephanian and Westphalian reservoirs in the Bullseye and Nancy East prospects.

Figure 2 below shows a schematic NW-SE cross-section for the Moselle Permit. The shallow Lorraine Anticline, which contains older Westphalian sequences and has been a focus of past exploration efforts, is illustrated on the northern end of the section. Towards the south, the Nancy Anticline trend contains several thousand meters of untested younger Stephanian sediments associated with a series of large thrust structures. Historic wells have hydrocarbon shows throughout the sequences as shown.


 

Figure 2 – Schematic cross-section oriented NW-SE across the Moselle Permit

Strong Gas Market Fundamentals, Good Fiscal Terms and Existing Infrastructure

The French gas market has strong fundamentals, with a robust gas price and a major disparity between domestic gas production and consumption. A tax and royalty regime exists in France which offers attractive fiscal terms, with a 5% flat royalty rate on field gas production above 30 MMcf/d.

Existing pipeline infrastructure and relatively low population density in the Saar-Lorraine Basin region should allow for rapid commercialisation of any discovery. Regionally, gas pipeline and storage infrastructure is well established, with a number of existing intra-European pipelines crossing the Moselle Permit area. Storengy (a GdF company) also operates the Cerville-Velaine gas storage facility located approximately 20km from the eastern boundary of the Nancy East prospect. In addition, the area is well serviced by roads, power, water and labour supply.

The Moselle Permit remains a significant opportunity for Elixir. With compelling conventional exploration potential having been identified, we look forward to continued progress being made at Moselle in the coming period.

338 Hay Street
Subiaco WA 6008

+61 8 9226 2111
info@elixirpetroleum.com

 

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