Aussie partners Bligh Oil and Minerals and Springfield Oil and Gas have agreed for Indo-Pacific subsidiary PEP38716 Ltd to take a 100% interest in, and become operator of, PEP 38738, in return for a 25% net profits interest (NPI) in the permit.
BOM chief executive Brent Emmett says Indo Pacific is a proven low-cost operator with specialist skills and knowledge of the Taranaki basin.
"This transaction exemplifies Bligh's willingness to rationalise its portfolio and to cede operatorship in favour of highly qualified partners. Simultaneously we have retained a significant exposure to any upside on this permit through the 25% NPI. The work program to which Indo Pacific has committed will help define that upside while conserving our financial liquidity," said Emmett from Sydney.
Indo-Pacific chief executive Dave Bennett told EnergyReview.Net from Wellington that his company was re-evaluating data obtained from both the Cheal-1 and 2 wells, which were originally drilled by a New Zealand Oil and Gas-led consortium in 1995.
Once it had been decided which was the better risk, the Cheal-1 or 2 well would be re-entered and production tested from early next year.
Oil and gas were produced from both Cheal wells, but development was not considered viable at the time. Indo-Pacific now believed that cheaper drilling technologies, and the ever-improving New Zealand gas market, would facilitate field development during the early 2000s.
PEP 38738 is situated adjacent to the formerly prolific Waihapa oil field and several potential Eocene-aged Mt Messenger targets, similar to those found in the more northern Goldie oil discovery, have been recognized within the permit.
Bennett declined to give possible reserves figures for the Cheal prospect, but it is known the structure has the potential to contain up to one million barrels of oil.
He added that the Kahili-1A sidetrack well was now over 293m down, along hole, and just about to penetrate the targeted Tikorangi limestones. Oil and gas shows in the well had been at a generally higher level than in the original Kahili-1 well, from which Kahili-1A was being deviated in a southeasterly direction.
