Basking in what it calls the “outstanding” performance of the offshore Tui area oilfields, listed NZ Oil and Gas with $174.8m in the bank has spent $10m to buy into the exploration of the untested Hoki prospect 150km off New Plymouth in the hope of tapping into a large oilfield. CEO David Salisbury says the prospect has the potential to be a large oil-filled structure, rather than gas.

The Hoki-1 well to be drilled by semi-submersible rig Kan Tan 1V around October will test the primary Island Sandstone reservoir and a secondary target in the North Cape formation. NZOG has a 10% stake in the permit which is operated by Sydney-based Australian Worldwide Exploration (AWE).

Meanwhile in its quarterly report NZOG says Tui produced 9.12mmbbls of oil in the year to June 2009, ahead of the production forecast of 9mmbbls. NZOG’s revenue from Tui was $13.9m for the quarter and $138.7m for the year. It says Tui’s production is, as expected, slowly declining as more water and less oil is recovered from the wells However the forecast for production in the current year is still a significant 5.1mmbbls.

Over the year NZOG sale returns on shipments of Tui oil fluctuated between $65 a barrel and $190 a barrel. NZOG is also looking forward to Tui exploration towards the end of calendar 2009 with two of the near-field prospects being drilled by the Kan Tan 1V.

NZOG says considerable focus is going into completing the various commercial and legal arrangements needed to support production from the $1.2bn Kupe project off south Taranaki. “Frustratingly, the final pre-Commissioning testing and certification process at the Kupe production station is taking longer than anticipated. Initial production during Commission ing is now expected in the last quarter of the calendar year, with full production from early 2010. With three revenue streams, sales gas, LPG and light oil/condensate, Kupe will provide a solid revenue base for NZOG for the next 15 years.”

NZOG’s share of Kupe output is expected to be 3PJ of gas a year, 15,000 tonnes of LPG, and 300,000 barrels of condensate. Gas sells for about $7 a gigjoule. During the quarter cash outgoings included $11m on the Kupe development and $3m on exploration prospects.

 Copyright © Media Information Ltd
NZ Energy & Environment Business Week