Panax Geothermal will have to wait until December to get rig

Alexander Richter 15 Oct 2009

Panax Geothermal faces another 3 months until it will get the Weatherford Driling, which will delay the company's Penola project a bit further.

In a release by the company, Australian Panax Geothermal (ASX: PAX) “has provided an update in regards to its Penola geothermal project in the Limestone Coast region of South Australia.

Weatherford Drilling International advised Panax the well it is currently drilling continues to encounter difficult drilling conditions.

The company also informed Panax that Rig # 828 is unlikely to be released from that drilling site until at some stage between the middle of next month and first week of December 2009, about 3 months later than planned.

On this basis, Panax is unlikely to be able to commence the spudding of the Salamander 1 well until mid December 2009.

As previously explained, Panax shareholders should note that for the reasons set out below, such unexpected slow penetration rates and difficult drilling conditions are unlikely to affect the Salamander-1 drilling program.

Panax managing director Bertus de Graaf said the continued delays in the availability of the contract drilling rig were disappointing.

“However, Panax is ready to commence its drilling activities,” Mr de Graaf said.

”Records from previous wells in the target reservoir zone show we can be confident that the drilling of Salamander-1 is highly unlikely to take longer than planned.”

The Penola Geothermal Project is targeting, geologically speaking, relatively young rocks which are well known to the petroleum drilling industry, as these are the common host rocks for oil and/or gas.

The Penola Geothermal Project also greatly benefits from the existence of a large data base, including logs of 11 wells that have been drilled to deeper than 3000m.

The deepest well in the Penola Trough was drilled to a total depth of 3499m in 24 days, or 146m a day.Salamander-1 is planned to be drilled to a maximum depth of 4000m, but may be pulled short at 3,800 m following confirmation of the penetration of high porosity/permeability zones within the target reservoir.”

Source: Proactive Investors