NZOG to drill Kakapo prospect, still needs rig, seeks farm-in partner

Wednesday 26th September 2012

New Zealand Oil & Gas has confirmed it will drill the inshore Taranaki oil and gas prospect, Kakapo, but is still looking for at least one more farm-in partner and a suitable drilling rig.

NZOG holds a 90 percent interest in the Kakapo prospect, with the remainder held by ASX-listed Raisama, and faced a "drill or drop decision" this month.

The company reported in May it was looking for partners and a rig to run a three to four well campaign in 2013 and 2014, to include exploration in two other Taranaki prospects: Kaheru and Kanaka.

It has since dropped its option also to drill the deep-water Barque prospect, off the Canterbury coast.

NZOG shares 50/50 in the Kanuka prospect with Todd Energy, and a 60 percent interest in Kaheru, in partnership with TAG Oil. Raisama will pay 20 percent of first well costs at Kakapo, estimated at between US$25 million and US$30 million.

"We have made this commitment in the confident expectation that additional partners will join the venture ahead of drilling," chief executive Andrew Knight said in a statement to the NZX.

The NZOG share price has fallen from a high point in the last month of 92 cents to 80 cents on Sept. 21 before rebounding slightly. It was trading down 0.6 percent at 82 cents immediately after today's announcement.

"The prospect looks attractive as part of a portfolio of opportunities for new entrants to New Zealand," Knight said. It expects to confirm rig arrangements in the next six months.

Work to date on Kakapo suggests "most likely" (P50) reserves of 41 million barrels of oil, and less certain reserves at the P10 level could run to several hundred million barrels.

"NZOG has assessed the potential for Kakapo to be several times the size of the Tui or Maari fields," said Knight. "This has the potential to make a considerable contribution to our community and the New Zealand economy.

BusinessDesk.co.nz

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