Patek told the High Court in Auckland earlier this week that Petrocorp and Southern had split their onshore and offshore exploration interests and entitlements in Taranaki through a 1993 alignment agreement.

But in the 12 months before June 1995, when Petrocorp owned nearly 85% of Southern, the company's share price had fallen about 45%, reflecting rapidly declining production from the onshore Taranaki Waihapa and Ngaere fields, following unexpected water breakthrough, the Dominion Post newspaper quoted him as saying.

This came before Southern's February 1996 takeover by Petrocorp parent FCE.

Patek also said he was aware of the "dismal history" of exploration of the onshore Taranaki Mangahewa structure. Seven wells had been drilled into the Mangahewa structure between 1960 and 1995, with no commercial successes.

This impacted his perspective on deep gas prospects, particularly in the northern portion of the onshore Taranaki Basin.

Therefore he was unmoved by suggestions of potentially large but unproven deep gas reserves in the Mangahewa, given past drilling failures.

Patek added that he was confident the final NZ75c (A60c) per share price, up from the initial NZ63c, offered to Southern minority shareholders was fair.

However, he admitted the Government's awarding of new onshore Taranaki exploration permits about that time complicated the matter.

Petrocorp had acquired interests in five exploration permits, in which Southern had the option to acquire a 50% stake through the 1993 alignment agreement.

Patek is the lead defendant in New Zealand's longest-running insider trading case.

About 700 minority Southern shareholders are arguing that Petrocorp and FCE executives were aware of the results of an onshore Taranaki deep gas study - which included Southern's stake in Mangahewa and in the exploration licence PEP 38459 that later yielded the 1 trillion cubic feet-plus Pohokura gas discovery - but withheld information about the area's potential.

They are seeking about $NZ23 million in compensation from Shell Exploration New Zealand, which took over the New Zealand assets of FCE in 2001.

Shell denies any liability and, under a previous ruling, is paying the costs of the High Court case that may not finish until next week. Justice Hugh Williams is likely to reserve his decision.