August 30, 2011
Q2 2011 Financial Statements
August 30, 2011
Q2 2011 MD&A;
July 25, 2011
Longreach Investor Presentation July 2011

Zag Licence

Background

Longreach has a gross 30% interest in the Zag Exploration Licence. Located in Southern Morocco it covers an area of 21,807 square kilometres (5.39 million acres). It lies within the onshore Zag-Tindouf Basin and is the westernmost part of the prolific hydrocarbon producing Palaeozoic Basins of northern Africa stretching across Algeria, Libya and Tunisia to the east.

Directly east of the Zag basin, is the Algerian Reggane basin, where during 2009 Repsol announced an 800 BCF discovery. During 2008, San Leon as operator completed a 15,000 kilometre Aeromagnetic Survey.  This survey has confirmed the potential for large structures over extensive areas of the Licence.  This encouraged the group partners to seek conversion of the Licence to a full Exploration Licence, which subsequently was awarded by ONYHM and the Ministry of Energy in mid 2009.

Also, during 2008 a Fracturation Study was completed in order to develop the theory of the presence of fracture patterns and fracture porosity.  And lastly, the partners commissioned an economic feasibility report from Fugro Robertson in order to ascertain the commercial reserve threshold of a natural gas discovery in this remote region of Morocco.  The outcome indicated that a recoverable volume of just 110BCF of gas was a viable target due to the regional domestic demand for energy in this part of the nation.

Zag Basic Data

Licence   Exploration Licence, Onshore
Exploration to date   15,000 km Aeromagnetic survey, Geochemical & Field Studies
Work Programme   2D Seismic acquisitionn (500 km)
Prospective Reservoirs   Paleozoic
Reservoir Depth   1500 - 5000 Metres
Hydrocarbon Source Rocks   Lower Silurian (primary source), Middle Devonian Frasnian
Area   21,807 km2
Trap Style   Structural traps in fault blocks and folded anticlines
Longreach Interest   22.5% post ONHYM back in
San Leon (52.5% operator)

Exploration History

A combined Algerian-Moroccan inititative during the 60’s led to approximately 40 wells being drilled on the Zag-Tindouf basin. The drilling pre dated seismic work and drill locations were based on surface shows. Nevertheless 3 gas discoveries were made and several gas and oil shows were registered.

During 2008 San Leon as operators of the Zag licence conducted a 15,000 line kilometre aeromagnetic survey. Multiple anomalies were noted along the southern boundary of the licence and to the north west a double plounging anticline of some 60km in length was recorded – a possible trap on enormous scale. We have collaborated with Petro Canada who has licence acreage directly to the north of us to identify prospects on a regional scale.

Resource Potential

  • Longreach participated in commissioning an economic and feasibility study by Fugro Robertson, a geological and petroleum reservoir consultancy
  • 3 scenario's were considered: 0.5tcf, 2tcf and 5tcf
  • Conclusion: A profitable development could be achieved with a minimum resourc
    of 110 bcf
Gas Monetisation Analysis
    Net Post Tax NPV10
Reserve Forecast
 
Scenario Min. Reserve
Requirement
0.5 TCF 2 TCF 5 TCF IRR on 2 TCF
  BCF $MM $MM $MM %
Pipeline to LNG n(a 1424.0 329 458 26%
Tie in to maghreb pipeline 875 -78 197 355 15%
Domestic Market 110 46 206 877 18%
Notes:
1) Financials calculated on 100% of the Zag Licence
2) Source: Fugro Robertson economic study

Geological Location of Zag



Zag-Tindouf Basin is the westernmost Paleozoic basin of North Africa, where 47 bn BBOE have been discovered to date.

 

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