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					                             QUARTERLY REPORT
                  FOR THE QUARTER ENDING 31 DECEMBER 2009


  The extensive Sugarloaf AMI farmin program by Hilcorp Energy commenced in earnest
  during the quarter. Importantly, Adelphi is substantially free-carried during this program
  which comprises three stimulations of existing horizontal wells and three new completed
  and tied-in horizontal wells in return for farming out half of Adelphi’s 20% interest.
  Fracture stimulation operations on the Kowalik #1H well commenced in late December
  2009. Whilst the majority of the Kowalik main frac was pumped according to plan, the
  program was required to be stopped prematurely due to a suspected leak in the casing of
  the vertical section of the well. Subsequent operations to isolate this leak resulted in
  further problems with this well and operations are currently suspended to evaluate the
  forward plan required to prepare the well for testing.
  The Kennedy #1H fracture stimulation program commenced on 18 January 2010 and as at
  26 January over 2,200 ft of the horizontal liner in the Kennedy #1H well had been fracture
  stimulated in 8 separate stages. Due to a suspected rupture in the shallower part of the
  horizontal liner within the same reservoir section, the remaining stages could not be
  completed. The well is currently being prepared to be flowed back and is expected to
  provide a reasonable test of the reservoir’s production performance.
  The fracture stimulation program for the Weston #1H well which is similar to the
  Kennedy #1H program, is scheduled to commence in early February 2010 as previously
  The first of the three new horizontal wells to be drilled by Hilcorp (Easley #1H)
  commenced drilling in mid January 2010. The well has been designed with a 4,000 ft
  horizontal section and will access both the Austin Chalk horizon, which is locally
  prevalent within the Sugarkane Field and the Eagle Ford Shale when it is subsequently
  In Yemen Block 74, existing seismic data has been reprocessed and interpreted and a new
  prospective trend identified. Approximately 250km of new 2D seismic is expected to be
  acquired during the second quarter of 2010 with drilling expected to commence in late
  Adelphi’s current cash position is $4.75 million with all receipts and payments in relation
  to the Yemen Block 7 sale to Mitsui now having been concluded.

                                     Adelphi Energy Limited
                Level 4, 679 Murray Street, West Perth, Perth Western Australia 6005
                          PO Box 574, West Perth, Western Australia 6872
                             Tel: 61-8 9480 1300 Fax: 61-8 9480 1388
                               Email: info@adelphienergy.com.au

                                                                                        Page 1
Sugarloaf Project – Onshore Texas, USA (Adelphi 20% - after farmout 10%)
Field Operations
During the quarter operations as part of the extensive farm-in program by Hilcorp Energy
Company (Hilcorp) as announced on 21 September 2009 were commenced. This program is
managed by the operator of the Sugarloaf AMI joint venture, Texas Crude Energy Inc.

The work program involves the recompletion and fracture stimulation of the three existing
Sugarloaf AMI wells; Kowalik #1H, Kennedy #1H, and the Weston #1H. In addition, Hilcorp
is also drilling up to three new horizontal exploration wells within the Sugarloaf AMI.

The map below illustrates the location of these wells within the broader Sugarloaf/Sugarkane
area (including the Easley #1H well which is the first of the three new farm-in wells).

Kowalik #1H Fracture Stimulation Program
The horizontal section in the well has approximately 3,800 ft of slotted liner and then a
further 850 ft of conventional solid liner in place. The plan was to stimulate the slotted
section with a single large treatment (in four phases), followed by the conventional solid
section of the liner to be treated in four stages with an isolation plug between each one.

                                                                                       Page 2
Fracture stimulations operations commenced on 28 December 2009 with the first stage
comprising of four phases targeting the horizontal 3,800 ft of slotted liner.
After 22 hours of continuous pumping and during the fourth phase of the stimulation program
an anomalous pressure drop was noted and operations were suspended to allow further
investigation. At this point the first three phases had been successfully completed with over
80% of the planned fluids for this stage having been pumped with encouraging real time
indicators of the stimulation.

Following the investigation the Operator elected to run a tie back string of 4 ½ inch casing to
isolate a suspected leak in the existing 7 inch casing of the well. Consequently, the fracture
equipment was demobilised from the well site and a workover rig was mobilised to the
location to carry out the necessary work.

During the final stages of this work, when cement had been circulated into the annulus of the
tie back string, a section of slim drill pipe being used as a running string for the tie back string
parted some 700ft below surface.
The initial fishing activities recovered tubing down to a depth of 8,150ft but in light of the
other activities within the Sugarloaf AMI, it was decided to suspend operations on Kowalik
#1H so that further evaluation and planning can take place before re-entering the well in an
attempt to complete the fishing operations and to prepare the well for flow testing.

Kennedy #1H Fracture Stimulation Program
The stimulation program for this well was designed to frac the 4,000ft of the solid cemented
horizontal liner in 14 separate stages with an isolation plug set between each stage.

The program commenced on 18 January 2010 and as at 27 January over 2,200 ft of the
horizontal liner in the Kennedy #1H well had been fracture stimulated in 8 separate stages.

It appears that when pumping the 8th stimulation stage a shallower portion of the horizontal
liner within the same reservoir section may have ruptured and it has not been possible to run
further isolation plugs past this point to continue with the remaining stages. However Coiled
Tubing has easily moved past this point and it was therefore decided to proceed with drilling
out the existing plugs and to flow test the well. This operation is ongoing as at the date of this
This is expected to provide a reasonable test of production performance that can be scaled
up for a longer well.

Weston #1H Fracture Stimulation Program
Similar to the Kennedy #1H well, the stimulation program for the Weston #1H involves
fraccing the solid cemented horizontal liner totaling approximately 3,000 feet in 13 separate
stages with an isolation plug set between each stage. Upon completion of this operation the
isolating plugs will be drilled out and the well cleaned up and then flowed to sales.
The fracture stimulation program is scheduled to commence in early February 2010 as
previously advised.

                                                                                               Page 3
Easley #1H Well
The Easley #1H well is the first new well to be drilled under the farmin agreement with
Hilcorp within the Sugarloaf AMI and is located approximately 2km to the north east of the
Weston #1H well (refer map above).
The well is scheduled to take approximately 40 days to drill, which includes a vertical pilot
hole from which additional data on the Eagle Ford Shale will be gathered. The well has been
designed with a 4,000 ft horizontal section and will access both the Austin Chalk horizon,
which is locally prevalent within the Sugarkane Field and the Eagle Ford Shale when it is
subsequently stimulated.
The well was spudded on 21 January 2010 with the Patterson #150 drilling rig and as at 28
January 2010 had reached a depth of 6,160 feet at which point casing is being run and
cemented prior to continuing to drill the well down to the scheduled depth of the vertical pilot

Production and Revenue
As a result of the recompletion and fracture stimulation program production from the Kowalik
and Kennedy wells ceased during early and late October 2010, respectively. Consequently,
total quarterly oil and gas sales net to Adelphi from these wells were significantly reduced as
shown in the attached cash flow statement.

Block 74 – Yemen (Adelphi 8.5%)
Block 74
During the quarter the reprocessing of all available existing 2D seismic data was completed.
Interpretation of the data confirms the presence of a prospective new trend, located adjacent to
mature Mabdi source rock, and which has the potential to contain large Qishn and Basement
The 2010 work program will comprise at least 250km of 2D seismic which will be recorded
in the early part of the year, and which is expected to be followed by drilling late in 2010.
In keeping with its previously advised corporate strategy, Adelphi is seeking to sell its interest
in Block 74.

Cash Position
As at 31 December 2009, Adelphi’s cash reserves totaled some $4.75 million following the
final tax payment of approx. A$470,000 made to the Yemen Government in relation to the
sale of Adelphi’s Block 7 interest to Mitsui. This concluded all receipts and payments in
relation to this transaction.
Following the settlement with Mitsui, the existing letter of credit arrangement with AWE
Limited (who had provided relevant security and guarantees in relation to Adelphi’s Block 7
and 74 letter of credit requirements) was terminated. As such, approximately USD1.1 million
of Adelphi’s total cash reserves are now escrowed for the purpose of the remaining letter of
credit requirements pursuant to the Block 74 Production Sharing Agreement.

                                                                                             Page 4
Change of Adelphi’s Registered Address
During the quarter Adelphi and AWE Limited entered into a new 6 months service
arrangement whereby AWE is continuing to provide office and administrative support to
Adelphi for an agreed fee akin to the previous arrangement entered into with ARC Energy
Limited in 2005. Adelphi has also moved into AWE’s main Perth offices and is now located
at Level 4, 679 Murray Street, West Perth.

Please direct any queries to Chris Hodge, Managing Director or Alex Forcke, Chairman:
Telephone:    (08) 9480-1300
Facsimile:    (08) 9480-1388

The geological information contained in this report was provided by C.C. Hodge, M.Sc, who
has over 25 years experience in petroleum geology.

                                                                                        Page 5
STATEMENT OF CASH FLOWS                                                           Quarter ended
                                                                                31 December 2009

                                                                  Current quarter          Year to date
 Cash flows related to operating activities                            $A                      $A

 1.1     Receipts from product sales and related debtors                 3,512               46,852

 1.2     Payments for       (a) exploration and evaluation                  -               (242,694)
                            (b) development
                            (c) production
                            (d) administration                          (210,417)           (486,205)
 1.3     Dividends received
 1.4     Interest and other items of a similar nature received            3,847               6,003
 1.5     Interest and other costs of finance paid                           -                   -
 1.6     Income taxes paid                                                  -                   -
 1.7     Other (provide details if material)                                -                   -
                                                                        (203,058)           (676,044)
         Net Operating Cash Flows

         Cash flows related to investing activities
 1.8     Payment for purchases of: (a)joint venture interests               -                   -
                                     (b)equity investments
                                     (c) other fixed assets
 1.9     Proceeds from sale of:      (a)joint venture interests             -               4,533,362
                                     (b)equity investments
                                     (c)other fixed assets
 1.10    Loans to other entities                                            -                   -
 1.11    Loans repaid by other entities                                     -                   -
 1.12    Other                                                          (465,093)           (465,093)
         Net investing cash flows                                       (465,093)           4,068,269
 1.13    Total operating and investing cash flows                       (668,151)           3,392,225
         Cash flows related to financing activities
 1.14    Proceeds from issues of shares, options, etc.                      -                   -
 1.15    Proceeds from sale of forfeited shares                             -                   -
 1.16    Proceeds from borrowings                                           -                   -
 1.17    Repayment of borrowings                                            -                   -
 1.18    Dividends paid                                                     -                   -
 1.19    Other (transaction costs of share issue)                           -                   -

         Net financing cash flows                                           -                   -
         Net increase (decrease) in cash held                           (668,151)           3,392,225

 1.20    Cash at beginning of quarter/year to date                  5,505,077*             1,520,858*
 1.21    Exchange rate adjustments to item 1.20                      (87,438)               (163,595)

 1.22    Cash at end of quarter                                         4,749,488           4,749,488

* Opening cash does not include Adelphi’s share of Joint Venture cash

                                                                                                          Page 6

                                                                                         Current Quarter

1.23    Aggregate amount of payments to the parties included in item 1.2                        108,600

1.24    Aggregate amount of loans to the parties included in item 1.10                             -

1.25    Explanation necessary for an understanding of the transactions

Non-cash financing and investing activities
2.1     Details of financing and investing transactions which have had a material effect on consolidated assets
        and liabilities but did not involve cash flows

2.2     Details of outlays made by other entities to establish or increase their share in projects in which the
        reporting entity has an interest
            Not applicable

Financing facilities available

                                                              Amount available              Amount used
                                                                 $A’000                       $A’000
3.1    Loan facilities                                               -                          -

3.2    Credit standby arrangements                                       -                         -

Estimated cash outflows for next quarter

4.1    Exploration and evaluation                                                         250

4.2    Development                                                                         -

       Total                                                                              250

                                                                                                          Page 7
Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown       Current quarter      Previous quarter
in the consolidated statement of cash flows) to the related           $A                    $A
items in the accounts is as follows.

5.1    Cash on hand and at bank                                    4,190,376              4,850,972

5.2    Deposits at call                                             559,112                654,105

5.3    Bank overdraft                                                   -                        -

5.4    Other                                                            -                        -

       Total: cash at end of quarter (item 1.22)                   4,749,488              5,505,077

Changes in interests in mining tenements

                                 Tenement reference           Nature of interest   Interest at       Interest at
                                                                                   beginning           end of
                                                                                   of quarter         quarter
6.1   Interests in mining        Yemen Block 7           Production Sharing          8.5%                 -
      tenements relinquished,                            Agreement
      reduced or lapsed
6.2   Interests in mining
      tenements acquired or

                                                                                                          Page 8
Issued and quoted securities at end of current quarter

                                   Number           Number             Issue Price    Paid-up amount
                                    issued          quoted
7.1    Preference +securities          -                 -                  -               -

7.2    Issued during quarter           -                 -                  -               -

7.3    +Ordinary securities      147,271,380     147,271,380                -               -

7.4    Issued during quarter           -                 -                  -               -

       Issued pursuant to
       conversion of Employee
       share option plan
7.5    +Convertible       debt
       securities                      -                 -                  -               -

7.6    Issued during quarter           -                 -                  -               -

7.7    Options                                                     Exercise Price      Expiry Date
       Unlisted options
                                  6,000,000              -               $0.23       25 November 2012

7.8    Issued during quarter      6,000,000              -               $0.23       25 November 2012

7.9    Exercised during                -                 -                  -               -

7.10   Expired during quarter     (1,500,000)            -               $0.95          28/11/2009
                                  (200,000)*                             $0.75          05/04/2010

7.11   Debentures                      -                 -                  -               -

7.12   Unsecured notes                 -                 -                  -               -

*options expired following resignation of previous Company Secretary

                                                                                                     Page 9
1      This statement has been prepared under accounting policies, which comply with
       accounting standards as defined in the Corporations Act or other standards acceptable
       to ASX (see note 4).

2      This statement does give a true and fair view of the matters disclosed.

Sign here:                                           Date: 29 January 2010

Print name:      ALEX FORCKE
                 (Company Secretary)

                                                                                      Page 10

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