NZOG managing director David Salisbury told PetroleumNews.net from Wellington that he already had board approval to take on six additional staff, and replace some who were leaving for associate company Pike River Coal company, and he was advertising for several senior exploration geophysicists and reservoir petroleum engineers.

“Previously this company was run with very lean staff numbers. Now, with the company poised for substantial growth, we can implement our growth-oriented strategy – the key to which is personnel. We need to staff up.”

Salisbury said NZOG has four strong pillars on which to base growth – Pike River Coal, Tui oil, Kupe gas, and a diversified petroleum exploration portfolio.

Imminent Tui oil production and the later Kupe gas-condensate flows would mean the two offshore Taranaki projects contributing substantially to NZOG’s cash flows.

Tui, with its strong initial oil flows, of up to 50,000 barrels per day, plus the longer-life Kupe project, would mean an exploration budget of tens of millions of dollars for NZOG, he said.

NZOG’s 12.5% stake in Tui is forecast to generate earnings before interest, taxation, depreciation and amortisation (EBITDA) in excess of $NZ70 million for the June 2008 financial year if Tapis crude (against which Tui oil will be sold) stays above $US60 per barrel.

EBITDA from Tui is forecast to drop to about $NZ34 million the following year, but climb to about $NZ50 million in 2009-10 when Kupe comes onstream.

“That sort of cash flow will significantly change the face of NZOG. We also have a significant tax shield, accumulated tax losses of about $NZ104 million, which we expect will mean that we do not pay any tax in the next financial year.”

Salisbury told PNN that the Tui partners – headed by operator Australian Worldwide Exploration – had sold the first three cargoes of oil from the field and that first oil was still scheduled by the end of the month.

He said he was looking forward to the exploration portion of the Ocean Patriot’s work for AWE, NZOG and the other partners. There were the near-field Tui appraisal well, Taranui-1, and the more southern Hector-1 wildcat.

There would also be the arrival from Vietnam in September of the jack-up Ensco Rig 107 to drill the three scheduled Kupe gas development wells, followed by the Momoho (formerly called Stent) wildcat well, and possibly Felix.

The Kupe partners, headed by Origin Energy, are scheduled to complete the Kupe project by mid-2009.

The field will provide New Zealand with about 254 petajoules of natural gas, 1.1 million tonnes of liquefied petroleum gas and 14.7 million barrels of condensate over 15 or so years.

The Tui partners are operator AWE NZ (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 (4%).

NZOG has nearly finished the NZX listing and associated $NZ65 million-plus initial public offering (IPO) of Pike River Coal which will reduce its stake in Pike River from 61% to about 34%.