LOCATION

The permit is located on the margin of the North Perth Basin adjacent to the Dongara Oil and Gas Field and south of Geraldton, located some 5 hours drive north of Perth.

EXPLORATION POTENTIAL

Gas encountered in the Wye-1 discovery well is dry, and compares well to the dry gas at the Dongara oil and gas field which is not in equilibrium with the Dongara oil. The gas is likely generated largely from the Irwin River Coal measures, and the oil is likely sourced from the Lower Triassic Kockatea Shale or Irwin River Coal Measures.

Wye-1 tested gas at commercial rates from two good quality reservoirs, with the Bookara and the Arranoo sandstone reservoirs flowing 4.4MMscf per day and 2.5MMscf per day, respectively. Neither of the reservoirs exhibited a water leg and both exhibited good, live oil shows during drilling. The presence of oil shows indicates that the reservoirs were originally oil-filled at the Wye location, with the oil being displaced to a down-dip rim by subsequent gas migration in to the crest of the structure.

In the Dongara Field, an oil leg was eventually found in the Dongara-8 well which flowed at 800 barrels of oil per day, some 3 years after the initial gas was flowed at 10 mmscf/d. The Dongara oil column was established with a height of 22 metres below a gas cap of 122 metres.

This and later exploration successes, including the Hovea field establish a dual charge model (oil charge first then later gas charge) for the North Perth Basin area. Similar (Kockatea sourced) oils have been found in wells with shows to the north (Connolly-1 and Condor-1) updip from the Wye-1 migration path.

The exploration well to test the Wye Knot Prospect is to be positioned at a step out distance sufficient to investigate the potential for an oil leg below the gas pay encountered in Wye-1 in the Triassic Bookara and Arranoo Sands and also test the potential of the deeper Permian sequence which was not fully intersected at Wye-1. This step out location is at a distance which suggests the gas cap does not extend outward from Wye-1 at a depth greater than 650 metres subsea.

PROSPECTIVE RESOURCES

Key confirms the base case prospective resources (in accordance with Clause 7.3 of ASX Guidance Note 32) for the Triassic interval at the Wye Knot prospect, incorporating Arranoo potential is 1.4 Mmbbls gross unrisked as per below.  Please note the below resources do not include any Permian reservoir section which is currently being assessed and to be disclosed to the market in due course.

Refer Key Petroleum Limited (ASX: KEY) EP437 Work Programme and Budget Approved Announcement released to the ASX on 19 December 2016.

FORWARD WORK PROGRAM

Key is currently finalising access agreements, carrying out rig tendering and seeking regulatory approvals to drill exploration well to meets its current year work commitment for EP437.