Plunging global oil prices have dragged New Zealand Oil & Gas into a loss for the year, but its plans to rein in exploration costs are not affecting proposals to test drill off Oamaru.
The year long oil plunge, to as low as $US38 ($NZ58.80) a barrel earlier this week, have impacted on New Zealand Oil & Gas (NZO), paring back last year's $10.1 million after tax profit to a $6.2 million loss.
Also weighing on the result was a $36.3 million write down in the value of NZO's share in the Tui oil field, impaired because the low oil price brings forward the time when it will become uneconomic to operate.
NZO had increased sales volumes in the year to June, which offset lower oil prices, while revenue rose in the year with the acquisition of Cue Energy contributing to the increase, chief executive Andrew Knight said.
''NZO is weathering the global downturn in prices with good cash flows and increased production.
''I expect to see more value from our producing assets in the coming year. We will continue to keep tight control of costs in the current conditions and position to capture value for shareholders,'' Mr Knight said yesterday.
NZO ended the year with $83.7million and no debt, after having returned $63.2 million of capital to shareholders in February.
Exploration costs fell from $75million the previous year to $32 million.
In a teleconference yesterday, Mr Knight declined to disclose this year's exploration budget, other than to say it would be ''considerably below'' the $32million spent in the year to June.
NZO announced in July it intended to look for farm in (joint venture) partners for the deep water Barque oil and gas prospect off Oamaru, which could cost $US120million in a one hole drilling programme.
Yesterday, Mr Knight reiterated his belief Barque remained ''exciting, on a global scale'' and discussions about the prospect were ''about mid way''. It was ''attractive to a number of international players''.
He said NZO's technical seismic data was still being analysed. Prospective partners would also look at the data, and drilling development models would have to be agreed.
''We're reasonably well advanced ... we'll know their views later this year, and maybe pick [a joint venture partner] by Christmas,'' he said.
In July, he said Barque was potentially viable at $US50 $US55 per barrel.
On the question of exploration costs, with a barrel of oil at $US43 yesterday, Mr Knight said only Middle East producers ''could fly at that price''. Otherwise, cost and price modelling of all NZO's assets was ongoing.
Aside from reducing exploration costs, Mr Knight said NZO was actively seeking merger and acquisition opportunities, and was seeking more value from its Kupe asset and tighter cost control.
Revenue from oil sales at Tui was up by 54% on a sales volume increase of 124%, mainly because the new Pateke 4H well began production in April.
''The well is performing better than expected, which contributed to an increase in shipments,'' Mr Knight said.
The revenue of $116.2million was up $12.6million on a year ago, about $11.1million of that reflecting the consolidation into NZO's accounts of Cue Energy, the Australian oil and gas minor which the Wellington based company acquired in a hostile takeover bid during the year, BusinessDesk reported.
