Operator NZOG said from Sydney today that the 3000m target depth exploration well was 2541m down and drilling ahead in an 8 1/2 -inch hole.

Elevated gas readings, associated with a significant increase in drilling rate and drilling mud losses to the formation, had been recorded over an 11m interval. NZOG said the significance of this was uncertain at this stage, beyond indicating the presence of permeable rock.

The first exploration well in permit PEP 38729, Opito-1 is located some 75km northeast of New Plymouth and is targeting the Kapuni C sands, from which the commercial Maui and Pohokura fields further south flow.

NZOG exploration manager Eric Matthews has said the Kapuni C sands, found at a depth of approximately 2850m within a 44 square kilometre closure beneath the Opito well site, had potential recoverable oil reserves of over 200 million barrels.

Over 400m of Kapuni C sands, with good oil shows throughout, were encountered in the 1993 Waihi-1 well, drilled some 20km to the southwest.

The Opito prospect is structurally high to Waihi-1, in a regional culmination against the overthrust, which forms the eastern margin of the Taranaki Basin.

The Pohokura reservoir contains gas and condensate at around the 3500m level and NZOG is hoping that Opito, being significantly shallower, is more likely to contain oil.

PEP38729 participants are Petroleum Resources Limited (NZOG) 75% and Origin Energy Resources NZ Limited 25%.