AWE said its drilling campaign was not only the largest in the company’s history, but also believed it to be the largest continuous offshore drilling program ever undertaken in New Zealand.

During the campaign, AWE will participate in nine offshore exploration and development wells and will be the operator of eight of these wells. The exception is Cutter-1 in PEP 38259, which is being operated by Tap Oil.

Aside from AWE and Tap, which have a 25% and 40% stake, respectively, the two other joint venture partners are Beach Petroleum (25%) and Anzon (15%).

Managing director Bruce Phillips said the program involved a “broad spectrum” of development and exploration wells, from low risk-moderate reward to high risk-high reward.

“The first well in the program, Cutter-1, falls into the latter category,” he said.

“However, because AWE has farmed-out most of its cost exposure to the well, our shareholders are in the enviable position of participating in this high-upside exploration project without the normal attendant cost risk.”

Cutter-1, which is located about 200km south-southwest of Christchurch in 63m of water, is the first well to be drilled in the basin in about 20 years.

Expected to take about 30 days to reach a planned total depth of 3000m, the well is designed to explore for hydrocarbons within the Shag Point Formation and the prospect has a potential recoverable volume of about 70-80 million barrels (MMbbl) of oil.

AWE said PEP 38259 was lightly explored, but already had a non-commercial gas-condensate discovery, Galleon-1, 45km south of Cutter-1.

On test, the reservoir section in Galleon-1 produced 10.4 million cubic feet per day (MMcfd) of gas with associated condensate at a rate of about 2200 barrels per day (bpd).

The PEP 38259 permit area is lightly explored but already has a non-commercial gas-condensate discovery (Galleon-1) 45km to the south of Cutter-1. On test, the reservoir section in Galleon-1 produced 10.4MMcfd of gas with associated condensate at a rate of approximately 2200bpd.