In its quarterly financial statements released yesterday, TAG said any value it had attached to licence PEP 38260, which contains the Kate prospect, had been written off as a result of the disputed cancellation of TAG’s agreement to earn an increased interest in the permit by drilling Kate-1.
“The company is preparing a claim for substantial damages to be made against Green Gate, arising out of its purported cancellation of the agreement,” TAG said.
Last month TAG’s South Island exploration plans were thrown into disarray by the dispute with Green Gate.
Green Gate cancelled its agreement with TAG and revoked the former’s authority to explore in the permit, claiming TAG was in default of its obligations – something TAG denied.
TAG had already earned a 30% interest by acquiring about 50km of 2D seismic data over the 15 square kilometre Kate anticlinal prospect and was to earn an additional 40% interest, and take over as operator, by drilling Kate-1.
TAG’s financial results for the three months to December 31, 2006 showed the company recording a $C771,498 loss ($C2.214 million for nine months).
The third quarter loss included production revenue of $C337,311 and $C1.31 million in oil and gas write-offs relating materially to the onshore-offshore PEP 38260, offshore Canterbury PEP 38258 and small onshore Taranaki licence PEP 38751.
“PEP 38260 has been written off as a result of the disputed cancellation,” TAG said.
TAG had now downgraded PEP 38258, containing the Corvette and Whaler prospects, primarily because of the unsuccessful offshore Cutter-1 well drilled by four Australian companies in neighbouring licence PEP 38259.
TAG said Cutter-1 had provided critical information relating to the charge and trapping mechanisms in this portion of the offshore Canterbury Basin.
Meanwhile, TAG said the second and third quarters were the first for production revenue from the onshore Taranaki Cheal oil field, with TAG’s share of revenue to December amounting to $C572,227 from the sale of 8686 barrels of oil.
Total production for the two quarters was 28,478 barrels, at an average of 150 barrels of oil per day (bopd).
TAG said it expected new permanent multi-well facilities to be completed during the next few months, with anticipated production rates rising to 1000bopd.
