Palatine Energy Pty Ltd

Australian Business Number: 20 153 352 231

Geology and Resource Potential:

North Perth Basin (WA STP-EPA-0127)

Fig. 1

From: Western Australian Department of Mines & Petroleum letter of offer, 7 August, 2014
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Geology and Resource Potential: North Perth Basin

Introduction
Palatine Energy Pty Ltd is an unlisted Australian private company, with pending hydrocarbon
exploration permit applications in:
North Perth Basin (Western Australia specifically referred to as the Coolcalalaya SubBasin; Fig. 1);
Arauco Basin (Chile);
Amadeus Basin (Northern Territory); and
Western Officer Basin (Western Australia 50% interest).
Readers are referred to the standard disclaimer at appendix 1. This proposal seeks a farm-in
partner for STP-EPA-0127, upon which a conditional offer by the WA Department of Minerals
and Energy was made on 7 August, 2014 (see appendix 2). Offer of final grant is awaiting
appropriate Native Title agreements. For the right, qualified partner, making an attractive
offer, Palatine may be prepared to transfer operatorship.

Location
STP-EPA-0127 (Fig. 1) lies 420km to
600km north of Perth - the largest city in
Western Australia (population almost 2
million). The Permit straddles the
Northwest Shelf to Perth gas pipeline (PL
40). There is local and regional demand
for energy from domestic, mining and
industrial users. Perth is a major regional
economic, financial, distribution and
service centre. There is scope for export,
if sufficient reserves are discovered.

The Exploration Concession

The Exploration Area (Permit) expected
to be granted to Palatine Energy later this
year, covers about 10,000 square
kilometres onshore (Fig. 1). It extends
Coolcalalaya
from latitude 2635S to 2815S about
Sub-Basin
185kms, and is about 55kms wide. This
permit area lies at the northern limit of the Perth
generally prospective and partially
Basin
developed Perth Basin, which is the major
structural and depositional feature of SW
Australia. The permit covers a local
Fig. 2
structural element described as the
Coolcalalaya Sub-Basin which merges north into the southern Carnarvon Basin. The
central-northern part of the Perth Basin produces conventional oil and gas. Several tight gas
and shale gas fields have been discovered recently just south of the Coolcalalaya Sub-Basin.

The Geology
The larger Perth Basin is a 900km long north trending half-graben (Fig. 2 & Fig. 3) with a
relatively simple structure, as shown on the interpretive gravity basement depth map (Fig. 4)
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and cross section Fig. 5). About half

of the Perth Basin is onshore,
covering an area of approximately
70,000 km2. The onshore part of the
basin consists of three structural,
deep sedimentary sub-basins:
1. the Coolcalalaya Sub-Basin in the
far north (Fig. 3); separated from
2. the Dandaragan Trough (Fig. 3) to
the south in part by the Bookara
Shelf; with
3. the Bunbury Trough south of the
City of Perth.

The Coolcalalaya Sub-Basin,

which is almost entirely covered
by Palatines STP-EPA-0127, is
almost 200 kms long and about
60 kms wide, with up to 9,000m
of Neo-Proterozoic, Paleozoic
and Mesozoic sediments
(Devonian; possibly Silurian; to
late Permian to early Triassic /
Jurassic). The basin has
relatively little stratigraphic
control and only one seismic line.
This east-west seismic line (Fig.
6) illustrates the half graben and
shows the possible distribution of
Permian and deeper formations.
The deeper stratigraphy of the
Coolcalalaya Sub-Basin is not
confirmed by previous petroleum
drilling, but is identified in two
mineral boreholes, and may be
reasonably inferred from the solid
geological map (WA Geological
Survey; Fig. 7) and correlations
between the South Carnarvon
and the North Perth Basin, as
shown on the interpreted
stratigraphic diagram in Fig.8.

Fig. 3

Coolcalalaya
Sub-Basin
North Perth
Basin

STP-EPA-0127
Original SPA 9 AO

The Dandaragan Trough contains the

deepest and thickest sediments. The
area is already producing oil and gas
from conventional structures and is
identified by both the WA Geological
Survey and the US Energy
Information Agency as prospective for
shale gas.

Fig. 5

Fig. 4 SEEBASE simplified depth-to-basement

model (FROGTECH, 2006)

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STP-EPA-0127

Fig. 5
YURC-3

Fig. 6

Base Permian

Devonian/Silurian?

Basement

It is therefore considered likely that the

stratigraphy of the Coolcalalaya Sub-Basin has
elements in common with the Dandaragan
Trough, and the Byro / Merlinleigh Sub-Basins, to
the north. The main sedimentary sequences of
interest, though partially ill-defined, are considered
as comprising five successions:
a) Upper Devonian sediments of fluvial and
marginal marine origin (intersected - YURC-3)
b) Upper Carboniferous, of largely glacio-fluvial
origin (interpolated; Devonian & Carboniferous
sediments have been intersected in the
Byro
Coolcalalaya Sub-Basin in mineral boreholes);
Gp
c) Lower Permian argillaceous glacio-marine to
Early
deltaic rocks (including prospective Carynginia
Permian
Shale);
d) Upper Permian/base Triassic non-marine
siliciclastics to shelf carbonates; may also
include the Kockatea Shale; and
Devonian
e) Possible Lower Triassic, of more continental
depositional environment, may be present
near surface above the depocentre axis.
Fig. 7 showing shallow YURC boreholes
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Fig. 8

from Mory
et al., 1998

The geological map of interpreted solid geology (Geological Survey of WA; Fig. 7) shows that
beneath the main Cenozoic cover across the permit area there are small outcrops of Upper,
and some Lower Permian up against the Darling Fault on the east and fault controlled in the
southwest. The single seismic line and the gravity model (Figs. 5 & 6) suggest that the depth
to the base of the Permian is probably up to 2 kms. The area of Carynginia Formation that is
at least 800m deep is therefore about 15kms east-west and about 180kms north south.
The spatial transition of the geology of the North Perth Basin to that of the South Carnarvon
Basin (Fig. 8) can be illustrated by comparing a typical cross section of the Dandaragan
Trough (North Perth) with one through the Merlinleigh Sub-Basin (South Carnarvon). Fig. 9
shows a section through
the Woodada Deep-1 well.
In this case, the basal
Permian sediments sit
directly on undifferentiated
Precambrian basement.
This can be compared with
Fig. 10 a typical section
across the Merlinleigh SubBasin, in the South
Carnarvon Basin. Here,
Permian sits on
Carboniferous sediments,
that overlie Precambrian
basement in the southeast,
Silurian and Devonian
sediments to the
Fig. 9
northwest. It is generally
accepted that in the
Coolcalalaya Sub-Basin
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(northern-most Perth Basin) that early Permian, Carboniferous and late Devonian sediments
will be present.
NW

SE

Fig. 10
Focussing on target source rocks, discussed below, It is expected that depths to the top of
the Carynginia Shale in the Coolcalalaya Sub-Basin might range from near outcrop to 1000m
in and on the near flanks of the main graben. Depths to the top of the Gneudna Formation,
where present, might range from near outcrop to greater than 3000m (Fig. 6).

Secondary Structures
Superimposed on the main graben
structure defined by the Darling Fault, are
a series of fault blocks on the western
graben flank. These are shown in both
figures 5 and 6. This pattern is terminated
against the Northampton Complex in the
area of the Coolcalalaya Sub-Basin. The
detailed gravity anomaly data, in part
collected during the Special Prospecting
Authority phase preceding STP-EPA-0127,
and compiled by FrogTech for Palatine, is
shown in Fig. 11. In addition to the primary
graben, a series of tilted, elongated fault
blocks can be seen along the western side
of the main graben.

Fig. 11

STP
-EPA
-0127

Source Rocks
Fig. 8 identifies two probable source rocks
in the Coolcalalaya Sub-Basin:
Early Permian Carynginia Formation
(Shale), originally defined in the
Dangaragan Trough (Fig. 9) North
Perth Basin) and also refered to as the Byro and Wooramel Groups in STP-EPA-0127
and to the north.
Late Devonian Gneudna Formation, originally defined in the South Carnarvon Basin. It is
present in the Coolcalalaya Sub-Basin, based on a ~250m intersection in boreholes
YURC-1 & 3, and the interpreted presence of 3 to 5 kms of pre-Permian sediments (Figs.
5 & 6), but is not identified in the Byro Sub-Basin, or south of STP-EPA-0127.
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The Carynginia Shale is a shallow marine deposit present over much of the
northern Perth Basin (including the
Coolcalalaya Sub-Basin). AWE Limited
recently reported encouraging organicshale characteristics in the Dandaragan
Trough for this 240 to 330 m thick unit. A
deeper-water shale member occurs near
the base of the Carynginia Shale,
including thin interbeds of siltstone,
sandstone, and limestone. Paleogeographic mapping by the WA Geological
Survey (GSWA; Fig.12) suggests this
marine unit is widespread from south to
north, through the Coolcalalaya SubBasin, to the Byro Sub-Basin.
Total organic carbon (TOC) in the
Carynginia Shale averages 4%, with
values of up to 11.4%. The kerogen is
Type III, dominated by inertinite derived
from land plants. The Carynginia Shale is
largely gas prone, in the dry gas window,

Fig. 12

Table 1. TOC and Rock-Eval pyrolysis data of outcrop samples of Carynginia Shale (Pc)
and Holmwood Shale (Ph) from the Coolcalalaya Sub-basin (from Mory et al, 1998).
over most of the Perth Basin. It is considered an excellent source rock. It is about 200 to 300
metres thick, and may cover 2,000 to 3,000 km2 in the graben and on its western flank. The
key unknown is the brittleness of the shales (frackability; dependent on clay content) in this
part of the basin.
The Gneudna Formation is the only probable source within the Devonian sequence. It is a
marginal or shallow marine deposit, locally rich in organic debris, although most of the
limestones appear to be poor in organic carbon in the south of STP-EPA-0127 (the YURC
mineral boreholes; see Table 2). There is,
however, ample evidence of algal structures,
and limited drilling suggests that basinal
equivalents and possibly reefal sediments are
present to the north of the Permit. Analysis of
near-surface Gneudna Formation samples
from GSWA and mineral boreholes some
250kms to the north of STP-EPA-0127 are
shown in Fig. 13, and reveals good to very
Table 2. TOCs of Devonian core samples
good source rock potential. The two CDH-8
from the southern Coolcalalaya Sub-basin.
samples have TOCs and S1+S2 values as
Locations are in Fig. 7. (Mory et al., 1998)
shown in Table 3.
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Rock-Eval pyrolysis and pyrolysis-gas

chromatography shown in Fig.13 indicate that
the three samples contain type II kerogen.
Geochemical analyses from GSWA Gneudna1, further indicate that the shaly interval around
300m has good oil- and gas-generating

Fig. 13. Gneudna source rock sample analyses based on pyrolysis GC and RockEval
with potential yield of +2.0kg/t; from mineral borehole CDH-8 and GSWA Gneudna-1.
potential. Vitrinite reflectance and Tmax
analyses indicate that the section is
marginally mature and approaching the
oil-generation window.
Quail-1 is the only well to penetrate a
deeply buried section of the Gneudna
Formation, and lies west of Gneudna-1
and CDH-8, in the northern part of the
basin. A burial history for that well,
suggests that the maximum depth of
burial, rate of maturation, and petroleum
generation occurred during the
Permian. The Gneudna Formation lies
at about 2700m to 3100m, has vitrinite
reflectance of over 2.5%, indicating that
it is over-mature for oil generation in
that setting. The oil window (R0 = 0.7%
to 1.3%) in the main trough between
Gneudna-1 and Quail-1 is estimated to
Fig. 14
lie at 1,000m to 2,000m depth.
The transition in depositional environment is shown in the interpreted paleogeography (Fig,
14) and embraced by the depositional model for the Gneuda Formation (Fig. 15). It is
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reasonable to assume adequate to good source rock potential from the centre of STP-EPA0127 to the north of the permit, and into the southern-most Carnarvon Basin.
Northnorthwest

Southsoutheast

Fig. 15

The Hydrocarbon Potential

Western Australian Department of
Mines & Energy has summarised
exploration results in the larger
Perth Basin to June 2014:
314 onshore and 52 offshore
wells
8 producing fields: Beharra
Springs, Dongara, Corybas,
Gingin West, Red Gully, Hovea,
Tarantula and Redback.
Cliff Head (offshore North Perth
Basin) started production in
2006.
Dongara Field had the largest
initial conventional reserves:
0.51 Tcf gas and 104 MMbbls
oil
These conventional hydrocarbon
fields, shown in Fig. 16, are all
located within the Dandaragan
Trough. Proved reserves to date
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are within the Upper Permian Dongara Sandstone and

Beekeeper Formation. Natural gas recovered from the deeper
Permo-Triassic reservoirs (in Dongara, Mondarra, Yardarino,
Woodada and Whicher Range) tends to be dry, reflecting
higher thermal maturity and higher proportions of gas-prone
organic matter. CO2 is generally low.
The primary exploration target selected in STP-EPA-0127 is
the shale gas potential of the Permian Carynginia Shale. The
thickness of the Carynginia is shown in Fig. 17. Within the
permit, the interpreted thickness (Jafary Dargahi, 2014) ranges
from 50m in the north to 150m in the south.

Norwest Energy / AWEs Arrowsmith-2 well in 2011, also

about 180 km south of STP-EPA-0127, was also fracked
and flowed shale gas from the Carynginia at an initial
maximum constrained gas flow rate of 3.5 million standard
cubic feet per day (Mscf/d). Fig. 17 shows five fracture
stimulation treatments (five stages) were carried out over
four different reservoir formations: the High Cliff
Sandstone/lower Irwin River Coal Measures (Stage 1), the
Upper Irwin River Coal Measures (Stage 2), the Carynginia
Shale (Stage 3 and 4) and the Kockatea shale (stage 5).
Jafary Dargahi (2014) estimated the brittleness index of the
Carynginia Formation in Arrowsmith-2, ranging from 40% to
50%, and that is shown on Figure 19. He showed that
brittleness index, acquired from mineralogical and
geomechanical properties, and thus high Carynginia
Formation fracability, lies in the Barnett Shale range and
occurs in the north-east of the North Perth Basin.

Fig. 17. Carynginia

Formation thickness

Upper and middle fracture interval in the Carynginia Formation

The Woodada Gas Field was discovered in 1980 with first

production in 1982. The Woodada Gas Field has produced
some 52.9 Bscf of gas from the Beekeeper Formation and is
currently shut-in on care and maintenance. The Woodada
Deep-1 shale gas projects targets the Carynginia Shales which
lies beneath the Beekeeper Formation. In 2010, AWE Limited
cut five cores in the Carynginia Shale in its Woodada Deep-1
exploration well (a deepening of the Woodada-4 well) in
northern Perth Basin (Fig. 9). The company found the upper
and lower zones to have high clay content. However, the
middle zone (2,370m to 2,425m and 2,283m to 2,330 m) had
lower clay content (value not reported). Jafary Dargahi
(2014) estimated a value of brittleness index for the
Carynginia, in the Dongara Field area, at 47% - using
Youngs modulus (E) and Poissons ration (), TOCs of 1.7
to 3.7%, and estimated porosities from 3% to 6%. Zones in
the Upper and Middle Carynginia were successfully
hydraulically fractured in August 2012, with gas being
produced during well flow-back and clean-up. AWE
estimated a total 13 to 20 Tcf of gas in-place on its permit for
the middle zone of the Carynginia Shale.

Fig. 18. Electrofacies in

the Carynginia Formation
(Jafary Dargahi, 2014)

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Fig. 19

Brittleness Index %

Jafary Dargahi, 2014

Geothermal gradients in the Perth Basin can be elevated, ranging from 20C/km to 55C/km,
but the thermal gradient in the Dandaragan Trough is less extreme (20C/km to 25C/km).
Vitrinite reflectance data show poor relationship with depth, with extreme data scatter
probably caused by subertinite and bitumen suppression. There is little actual control on
maturation depths in STP-EPA-0127, but the Carynginia Formation is likely to be in the oil
generation window (R0 = 0.7% to 1.3%).
The WA Department of Mines and Petroleum have estimated that the Carynginia and
Kockatea shales in the Perth Basin have approximately 59 Tcf of gas resources. The US
Energy Information Agency carried out an independent resource assessment of shale gas in
the Perth Basin in 2013. For the Carynginia, EIA estimated 1 Bm3/km2 gas in place:
The Permian Carynginia Shale has a resource concentration of 94 Bcf/mi 2
(1Bm3/km2) within its 2,200 mi2 (~6000 km2) dry gas prospective area. It holds a
risked gas in-place of 124 Tcf, with a risked, technically recoverable shale gas.
resource of 25 Tcf.
Translated to STP-EPA-0127, this gives a possible 2,000Bm3 (70Tcf) in place & 400Bm3
(14Tcf) recoverable gas. Assuming a commercial discovery, Palatine projects sales into the
existing NW Shelf to Perth pipeline, with domestic, mining and even export customers.
The secondary target, also unconventional, is the Devonian Gneudna Formation. No
hydrocarbon occurrences older than Permian are known from the larger Perth Basin. In the
northwestern Merlinleigh Sub-Basin (South Carnarvon Basin), the Devonian Gneudna was
intersected in Pendock-1 (offshore) and showed direct indications of hydrocarbons from a
carbonate sequence. Permian Moogooloo Sandstone samples from five wells in the
Merlinleigh Sub-Basin have also been reported as containing small inclusions of oil, falling in
the gas and oil / gas zones (using GC kerogen typing) as well as interpreted hydrocarbon
plumes from soil samples. Hydrocarbon occurrences from the Gneudna Formation are more
common in the North Carnarvon Basin eg, Mardie-1; Peedamullah-1; Quobba-1. The
Devonian is early to mid-mature in these wells. It is not possible to estimate an undiscovered
resource assessment on the Gneudna play of any reliability, given the current paucity of data
from within the Permit. However, assuming a thickness of 250m (borehole YURC-3); an area
of about 4,000km2 (Fig. 14); and a generative capacity of about 4 mg/g (Table 3), a liquid
resource in place may be calculated at about 4Bm3 (or 25 Bbbls) of oil.
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Palatine also identifies a potential tertiary target conventional tilted fault blocks, involving
Permo-Carboniferous sandstones reservoirs along the western edge of the main trough, and
sourced from the Gneudna Formation. This play concept is totally untested in this area.

The Exploration Approach

Palatine Energy proposes the following initial six year program:
1. Full review of existing well data held in storage: geochemistry and physical properties;
seismic reprocessing
2. Comprehensive stratigraphic drilling to recover fresh shale samples and test hydrocarbon
presence;
3. New 2D seismic acquisition;
4. Two exploration wells and fracks; and
5. Evaluation studies and resource assessment.
The Permit holders recommended exploration budget (A$) for the first six year permit cycle
will be the subject of farm-in negotiations.
If warranted, an Appraisal (renewal) phase of a further five years will follow the above
exploration and assessment program. 50% of the Permit must be relinquished on this
renewal; and one further renewal period is allowed. A work program indicated for the first
renewal period, but not commitment is likely to involve:
6. A further one or two test boreholes, with hydraulic fracturing;
7. New 3D seismic acquisition; and
8. If successful, further drilling and trial production tests, as the agreed budget will allow.
Any farm-in proposal must include up-front repayment of US$200,000, being previous
exploration costs for Special Prospecting Authority (SPA 9 AO) and the application deriving
from it, namely STP-EPA-0127.

Palatine Energy Pty Ltd

15 December, 2014

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Appendix 1 - Disclaimer
This presentation contains certain statements which may constitute "forwardlooking statements". Such statements are only predictions and are subject to
inherent risks and uncertainties which could cause actual values, results,
performance or achievements to differ materially from those expressed, implied or
projected in any forward-looking statements. No representation or warranty,
express or implied, is made by Palatine Energy Pty Ltd that the material contained
in this document will be achieved or prove to be correct. Specifically, references
to gas in place, or GIP, refer to estimates of unrisked, unproven resource
potential, based on parameters derived from existing well data and rock sample
descriptions, and general literature, and should be considered as speculative.
Except for statutory liability which cannot be excluded, each of Palatine Energy
Pty Ltd, its officers, employees and advisers expressly disclaims any responsibility
for the accuracy or completeness of the material contained in this document and
excludes all liability whatsoever (including in negligence) for any loss or damage
which may be suffered by any person as a consequence of any information in this
presentation or any error or omission there from.
Palatine Energy Pty Ltd accepts no responsibility to update any person regarding
any inaccuracy, omission or change in information in this presentation or any
other information made available to a person, nor any obligation to furnish the
person with any further information. Investment in Palatine Energy Pty Ltd, or any
of its projects, should be considered speculative.

Competent Persons Statement

Sections of information contained in this report that relate to Exploration Results
and Petroleum Resource Occurrence were compiled or supervised by David A
Falvey, BSc, PhD, DSc (hon), who is the Managing Director of Palatine Energy
Pty Ltd, and a direct stakeholder in the company. Dr Falvey is a former Associate
Director of BMR (now Geoscience Australia) and Executive Director of the British
Geological Survey. He has sufficient experience, which is relevant to the
exploration for and assessment of the style of gas resources under consideration
and to the activity which he is undertaking to qualify as a Competent Person. Dr
Falvey consents to the inclusion in this report of the matters based on his
information in the form and context in which it appears.

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Appendix 2 Application Acceptance STP-EPA-0127

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