NZOG (New Zealand Oil & Gas Ltd) on Friday announced it has entered into further conditional agreements that, upon completion, would result in NZOG taking on Operatorship and increasing its stake to 60 percent in the highly prospective offshore Taranaki permit, Kaheru.
An application has been submitted to the New Zealand regulator, NZ Petroleum and Minerals, to extend the permit drilling commitment to Sept. 18, 2012, with a well to be drilled by May 18, 2014. NZOG is commencing a global search for a farm-in partner to join the Joint Venture in a planned late 2013/early 2014 drilling programme.
In March of this year, NZOG signed a conditional agreement to purchase a 15 percent stake (plus any additional interest acquired) in the Kaheru permit from AGL Upstream Gas (MOS) Pty Ltd (AGL), a wholly owned subsidiary of AGL Energy Ltd.
The new agreements are with AGL and with Canadian company TAG Oil Offshore Ltd (TAG). The two companies increased their equity in the permit to 42.86 percent and 57.14 percent respectively through the recent withdrawal of ROC Oil and L&M Energy.
NZOG will be assigned 17.14 percent equity from TAG immediately (subject to relevant ministerial consent) and will assume Operatorship upon the official withdrawal of the previous Operator, Roc Oil, on June 18, 2012.
Conditional on the joint venture making the drilling commitment, NZOG will pay AGL the previously agreed US$3m but will now be assigned AGL's 42.86 percent equity in the permit, taking NZOG's total stake to 60 percent. TAG will retain the other 40 percent.
Ahead of the drilling commitment and increasing its total stake in the permit, NZOG intends to identify an additional party or parties who would agree to join the joint venture.
The permit lies to the east of NZOG's Kupe gas and oil field and is on trend with the onshore Rimu and Kauri fields. The Kaheru prospect lies in 82 feet (25 meters) of water, and is 4.9 miles (eight kilometers) from shore. Figures released from the joint venture previously have estimated the mean recoverable reserves (unrisked) at 45 million barrels (mmbbls) of oil in an oil case; or 200 billion cubic feet (Bcf) of gas and 7.5 mmbbls of condensate in a gas case.
Chief Executive Andrew Knight said the agreements provide NZOG with the opportunity to increase its equity position in the permit. "These arrangements have breathed new life into Kaheru with minimal cost exposure to NZOG."
Kaheru added an attractive opportunity to our existing portfolio of exploration assets. "We will immediately pick up work previously undertaken by the Joint Venture and begin working with regulatory agencies to enable a timely drilling decision to be made. In addition, we are commencing a farmout campaign immediately and are hopeful of attracting significant partners to the table."
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