Despite slumping global oil prices, New Zealand Oil & Gas (NZOG) is maintaining an interest in its three deepwater prospects in the Canterbury and Great South Basins, north and south of Dunedin.
In its quarterly activities report, NZOG said it was still in negotiations with several potential joint-venture partners to further its Clipper and Galleon prospects, offshore from Oamaru, and Toroa, south of Dunedin.
Separately, Houston giant Anadarko, which must notify a ‘‘drill or drop'' decision on its southern permit by April, is unlikely to be test-drilling within a year, while all of Shell's New Zealand assets remain under review, including an option to quit the country entirely.
Of NZOG's three southern prospects, Clipper and Galleon remain under ‘‘further evaluation'' status, with a permit extension being sought on Clipper, while at Toroa, earlier 3-D seismic surveying data is still being processed and results are expected by mid-year.
NZOG said discussions with potential partners for the Clipper prospect continued.‘‘An application has been lodged with the regulator [New Zealand Petroleum and Minerals] to extend the permit terms and subsequently the conditions requiring a drill-or-drop decision by April,'' NZOG said.
Eight test holes have been drilled in the surrounding area since 1985 but none were commercially viable.
Of the Galleon prospect, NZOG said during the reporting period discussions had advanced with potential partners, linked to interest in the neighbouring Clipper permit.
NZOG's major Taranaki assets, Kupe, Tui and Maari, collectively averaged 22,008 barrels of oil per day for its quarter to December, producing just over $20million revenue.
NZOG's total revenue was $30.8million.
NZOG has production interests in the US and Indonesia and further exploration permits across Indonesia and Australia.
While oil and gas exploration is being curtailed around the world and smaller companies are folding, others with strong cashflow see opportunities to pick up exploration or production assets.
NZOG said in its report permit activity reported for the quarter showed ‘‘considerable reductions in exploration activity in response to changed economics''.
‘‘By the end of 2015 the environment for sharing risk by farming out interests in our portfolio had become very quiet,'' the report said.‘‘The focus for growth in our business is on producing assets.''
NZOG was able to continue with exploration because the prices and returns from its gas and LPG assets had not been impacted as much as oil, so cashflow from those assets would support the business, the report said.
‘‘We have been actively screening opportunities, with more assets coming to market as the downturn in oil prices drives asset owners to restructure their portfolios,'' NZOG said.
Several opportunities ‘‘which may be sufficiently rewarding'' were under consideration at the time the quarterly report was being produced.
NZOG said it was not possible to forecast when supply and demand effects weighing on oil prices during 2015 will turn for the better.‘‘At current spot prices, some oil production around the world is unsustainable over the full-cost cycle,'' the report said.
NZOG's southern interests
Clipper - further evaluation
50% New Zealand Oil & Gas (operator)
50% Beach Energy Galleon - further evaluation
100% New Zealand Oil & Gas Toroa - seismic survey done
30% New Zealand Oil & Gas
70% Woodside Energy (operator)
Source: NZOG
