PEP38767 contains the Totara-1 well which was drilled in 1987. According to a recent review of mud log data, the well may contain 25 meters of previously unrecognized net gas pay in a structure which is believed to have the potential to contain up to 50 to 100 billion cubic feet of recoverable gas. The onshore Taranaki Basin is a significant and well established petroleum province with well developed infrastructure. Its technical merits are self-evident by virtue of the presence of excellent source rock, good reservoirs, a high degree of structuring and a number of producing fields. The commercial potential of the basin has been accentuated in recent years by New Zealand's anticipated energy shortfall which means that even modest-sized gas discoveries are expected to be commercially viable.
ROC is the designated Operator and the only publicly-listed company in the relevant Application Group, the other two members of which are privately owned oil companies; one based in the United States and one based in New Zealand. Subject to receipt and acceptance of the formal offer, the Joint Venture would intend to acquire a 20 sq km 3D seismic survey over the Totara structure during 2004 ahead of drilling a well on the structure during 2005. ROC's anticipated net share of the work program commitment for the two years is expected to total between US$1 million and US$2 million.
ROC's experience from developing and producing the Saltfleetby Gas Field, onshore England, will be directly relevant to its activities onshore Taranaki. Coincidentally, the significance of the Saltfleetby Field was only recognized as a result of a review of the mud log data from a well which was originally drilled in 1986 and initially dismissed as being of no commercial consequence.
PEP38767 will be offered to ROC and its co-venturers at a time when New Zealand is seeking to address an increasing divergence between forecast energy demand and forecast indigenous oil and gas production.
Commenting on the Government's offer of PEP 38767, ROC's Chief Executive Officer, Dr John Doran, stated: "For ROC, PEP38767 would seem to be a perfect first time entry point into New Zealand and fits well within ROC's medium term exploration strategy and plans.
It is almost exactly two years since ROC last entered a new exploration area: China, in February 2002. During the intervening 24 months, ROC has undertaken a dozen separate portfolio transactions, all of which have been designed to consolidate its interests in its existing core areas, particularly the offshore Perth Basin, Western Australia and offshore Mauritania. With this consolidation phase now nearing completion and with the Chinguetti and Cliff Head oil fields moving towards their final investment decisions, the time frame for ROC's activities in Taranaki fits in very nicely with the timing of the Company's other appraisal and development projects.
In a previous corporate life, some of ROC's current Board members enjoyed significant exploration success in the onshore Taranaki Basin in the mid-80s. These board members were then key executives with a US independent which organised a farmin group that drilled a multi-well exploration drilling programme which resulted in the discovery of the Aurora and Tariki gas-condensate fields and the Waihapa Oil Field. Ironically, the Totara-1 well operated by the then national oil company of New Zealand, Petrocorp, was also drilled as part of that same program. Therefore, although this is ROC's first corporate entry into New Zealand, for some of us it is a return to what was once a very happy hunting ground."
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