The dual-listed company told the ASX and NZX this morning that it had invested $NZ16.7 million during the December half-year into its three major developments, the Tui Area oil and Kupe gas projects off the coast of Taranaki and the Pike River coal project on the West Coast of the South Island.
“By comparison, exploration expenditures were modest, mainly consisting of refinements of prospects yet to be drilled, such as Tieke and Taranui, both close to the Tui fields, Taitapa, south of Kupe, and Felix, north Taranaki,” said NZOG executive chairman Tony Radford.
“Exploration drilling is likely to recommence later this year, with a well drilled in the Hector prospect.”
Radford said the PEP 38483 partners, headed by operator Australian Worldwide Exploration, intended using an option from the Tui Area (PMP 38158) joint venture to drill Hector-1 ahead of the four Tui Area development wells and two likely exploration wells, Taranui-1 and Tieke-1.
Hector-1 would be drilled into a structural Eocene-aged Kapuni C sands closure, which had the potential to hold about 50 million barrels of recoverable oil, and signficant upside, if the structure was filled to spill point.
The Tui partners have already contacted the Diamond Offshore Drilling semi-submersible Ocean Patriot to drill the Tui development wells, plus the probable Tieke and Taranui.
But Radford said drilling of the four Tui wells was now scheduled to start in the last quarter of this year “to synchronise with the arrival of the FPSO (from Singapore) in the March 2007 quarter”. Oil production, of up to 50,000 barrels per day, was expected to start in the June 2007 quarter.
NZOG was still trying to secure a drilling rig to drill Taitapa, west of Kupe in licence PEP 38484, which was “a major challenge in an overheated drilling market”, Radford said.
The onshore-offshore Felix-Opito structures, in PEP 38729, needed further seismic evaluation before any commitment to drill could be made.
Final investment decisions (FIDs) have already been made for Tui oil and Pike River coal, while an FID for Kupe is expected later during the first half of this year.
Radford said NZOG had started the financial year in a very sound financial position, having received $NZ43 million from investors who had converted their options into shares at the price of $NZ0.60 each. An additional $NZ12million was raised last December through a placement at $NZ0.90 each.
“The bulk of these new shares were placed with institutional investors, who now have a more significant presence in the company,” he said.
The Tui (PMP38158) partners are: operator AWE Group (42.5%), Mitsui E&P New Zealand (35%), New Zealand Oil & Gas (12.5%), and Pan Pacific Petroleum (10%).
The Kupe partners are: operator Origin Energy Resources (Kupe) (50%), Genesis Energy (31%), NZOG (via subsidiaries, 15%) and Mitsui E&P (New Zealand) (4%).
