NZOG establishing core areas overseas

NZPA

Friday 29th July 2011

New Zealand Oil and Gas reported $33.7 million of operating revenue for the June quarter from its two offshore Taranaki developments, while for the year to June the figure was $106.5 million.

Tui oil sales were worth $15.1m in the quarter and $40.2m for the year, while from the Kupe operation the figures were $18.6m and $66.3m.

At Kupe production levels had been slightly below expectations, after a motor shaft on a gas compressor unit failed in early March, limiting daily gas production. Full plant capacity was restored in mid-July, NZOG said in its quarterly activities report today.

Recently it told the market it had been advised that preliminary work at Tui indicated gross initial developed reserves recoverable from the existing four well development on the fields would be reduced from 50.5m previously reported to between 40m and 42m barrels.

"While the Tui area oil fields development has been spectacularly successful, the change in reserves estimate reflects the challenges and risks of the oil exploration and production business," chief executive David Salisbury said in the report.

Finding further opportunities in this country limited, NZOG is working to establish two new core areas in Tunisia and Indonesia.

Salisbury said the company was setting up an office in Tunis to manage its exploration acreage off the coast of Tunisia, and to pursue further opportunities.

"We have established good relationships with the Tunisian authorities and firmly believe that the country’s move towards more open democracy enhances its attractiveness as a place to do business," he said.

During the past six months NZOG had also built a strategic alliance with Indonesian-focused company Bukit Energy, with which it was pursing opportunities, mainly in onshore Sumatra.

"As with Tunisia, this is a proven oil and gas region with promising, low cost entry points for a mid-sized company like NZOG," Salisbury said.

In this country, NZOG continued to investigate drilling options for an exploration prospect off the South Taranaki coast, and hoped a suitable rig could be secured to allow an exploration well to be drilled this coming summer.

Salisbury said that by the time he left NZOG at the end of the year he would have been chief executive for almost five years, "through a turbulent period that has had both successes and disappointments; achievements to celebrate and one significant tragedy".

"Our family has decided that in 2012 it will be time for a change of direction for us personally."

NZOG had a long association with the Pike River Mine on the West Coast where 29 men lost their lives.

The mining licence was held by an NZOG subsidiary through the consent process and up until the early stages of development. Following a public float in 2007, the mine was developed and operated by a separate listed company, in which NZOG retained a stake of about 30 percent, and to which it was a secured and unsecured debt holder.

In today's quarterly report NZOG said it had provided a comprehensive paper on the conception and development of the mine project, with the Royal Commission of Inquiry starting hearings in July.

It had also provided several witness statements, but had not been asked to appear in the first phase of the inquiry. If requested, the company was fully prepared to appear at future phases of the inquiry.

NZOG shares were up 2c to 69c shortly after the market opened today, having ranged between 65c and $1.35 in the past year.

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