NZOG chief executive David Salisbury told the mid-cap's annual meeting in Wellington on Friday that the Tui Area - the Tui, Amokura and Pateke oil pools - had now produced over 2.5 million barrels of sweet light crude since production started in late July.
There had been nine export shipments of the Tapis-benchmarked crude - with a tenth due at the weekend - mostly to east coast Australian refineries but also to South-East Asia.
Present daily oil production was averaging about 40,000 bpd. But this should rise next month following technical modifications to the floating production storage and offtake vessel Umuroa that would boost maximum processing capacity to 50,000bpd.
Salisbury said each barrel of Tui crude earned about $NZ100, less production costs of about $US10 per barrel, and that NZOG's 12.5% share of production this financial year was expected to be around 1.2 million barrels.
"We expect NZOG revenue from the Tui Area to comfortably exceed $NZ100 million," he said.
Operator Australian Worldwide Exploration has identified possible further Tui Area reserves and study results on developing that oil were expected by the end of the year, according to Salisbury.
NZOG's other major petroleum investment is a 15% interest in the $NZ1 billion ($A900 million) offshore Taranaki Kupe gas-condensate field development, where first production is due in mid-2009.
Salisbury said NZOG's share of Kupe development costs to the beginning of October was about $NZ50 million ($A41.8 million), which was met from general funding sources. Remaining Kupe development costs were being funded through a $NZ125 million ($A104.5 million) debt facility with Westpac Bank.
NZOG's current exploration portfolio was "not as strong as we would like", Salisbury said. But the company is seeking further exploration opportunities within its existing offshore Taranaki acreage and elsewhere.
He declined to specify where any new acreage might come from, but said NZOG could fund "a reasonably significant exploration program" of about $NZ20-25 million ($A16.7-20.8 million) in the current financial year.
However, it had already spent about $NZ10 million ($A8.4 million) this financial year, funding its share of the unsuccessful Hector-1 and Taranui-1 wells.
It had also paid for the CGG Duke seismic vessel to acquire about 440km of full-fold 2D data in its offshore Taranaki licence PEP 39439 last July. The seismic shot covered most of the permit area, but focused on the Toke and Matuku prospects, Salisbury told PetroleumNews.net.
Another portion of that planned exploration expenditure would be funding NZOG's 15% share of drilling the Momoho-1 near-field exploration well in the Kupe mining licence next year, after the jack-up Ensco Rig 107 had completed drilling the three Kupe development wells.
While NZOG would love to be involved in an "elephant find" of several trillion cubic feet, it was more likely further onshore and near-shore discoveries would be several hundred Bcf or so in size, he said.
"It is unlikely our growth targets will be met solely through the drill-bit,†Salisbury said.
“We are looking at all opportunities: exploration, asset purchase, and corporate acquisition."
NZOG intended participating in the 2008 onshore Taranaki permit allocation round.
"We have been approached by parties interested in joining with us in bids and we are reviewing prospects being sold down by other companies," Salisbury said.
Salisbury said the Government's recently announced New Zealand Energy Strategy - which bans new baseload gas-fired power stations for the next 10 years and mentions a likely carbon charge on all fossil fuels from 2010 - had been interpreted by some as bad news for the exploration sector, but NZOG believed New Zealand would still be a seller’s market for gas.
"We think there will be plenty of demand for new gas and prices are likely to remain strong,†he said. “And worldwide, demand for oil and oil prices remain very strong."
In addition, the government ban on new gas-fired power stations meant that any future liquefied natural gas imports were now less likely and NZOG had seen LNG as a big threat to domestic exploration.
"We believe that New Zealand has good remaining prospectivity for oil and gas . . . the economics for exploring in New Zealand remain very good," he added.
The Tui partners are operator AWE (42.5%), Mitsui E&P NZ (35%), NZOG (12.5%) and Pan Pacific Petroleum (10%).
The Kupe partners are operator Origin Energy (50%), Genesis Energy (31%), NZOG (15%), and Mitsui E&P NZ (4%).
