Listed New Zealand Oil and Gas has acquired the 40% permit share of Australian company Tap Oil in the Canterbury Basin, but results from a seaborne hydrographic survey early next year will determine whether the consortium will ramp up exploration and bring in a rig.
The Canterbury Basin permit contains the Barque gas and light oil/condensate prospect, in a general area which has attracted the most interest from oil explorers during the past three decades with a total four offshore test holes drilled.
NZOG, following years of exploration work, is now reaping the benefits from its 12.5% share of oil production from the offshore Tui Taranaki field, which began flowing in July last year.
NZOG chief executive David Salisbury said evaluations of basins around New Zealand during the past year had concluded the Canterbury Basin had proven effective petroleum systems present and the potential to produce commercial quantities of oil and gas. NZOG estimates from the evaluation of the Barque Prospect had potentially recoverable resources of 600 billion cubic feet of gas and 58 million barrels of light oil/condensate.
"However, a lot of work remains to be done to assess the prospect, beginning with further seismic studies. There is no certainty that an exploration well will be drilled or that a commercial development will be the end result," Mr Salisbury cautioned in a statement yesterday.
In June, broker ABN Amro Craigs speculated NZOG would be in a good position to expand its exploration interests around the country, based on income from the Tui flows, increased estimates on Tui's capacity and also the Kupe field, of which it holds a 15% share.
ABN broker Peter McIntyre said yesterday welcomed NZOG's decision to stay in New Zealand, as opposed to seeking new investment opportunities overseas.
"The big question was always where they were going to go, being in such a strong cash position," Mr McIntyre said.
Mr Salisbury said AWE, as the exploration operator, is planning a marine seismic survey in early-2009 and under the permit conditions a decision on whether or not to drill an exploration well had to be made by August 2010.
In a separate Canterbury Basin venture, Australian listed Origin Energy, which has completed a hydrographic survey of the of the Carrack and Caravel prospects about 65km off the coast of Dunedin, have until August next year to decide on bringing a rig to New Zealand to test drill.
Tap Oil and Australian Worldwide Exploration were in the same waters in late-2006 with their rig Ocean Patriot, but it capped and abandoned the 3000m test well, 21km off the North Otago coast, as commercially unviable.
It was the first South Island drilling programme since the early 1980s.
Results are still pending from hydrographic surveys in the Great South Basin last year by separate consortiums OMV New Zealand Ltd and Exxon Mobil, which could become the foundation for a total $1.2 billion spent over five years in exploration.
Exxon said in June the hydrographic results might not be available until mid-2009 and a decision to drill could be as far off as late 2009 or 2010.
• Canterbury Basin - Permit shareholders
New Zealand Oil and Gas - 40%
AWE New Zealand - 25%
Beach Petroleum (NZ) - 20%
Anzon New Zealand - 15%
