Horizon Oil has acquired a 25% interest in Petroleum Exploration Permit 38494 in the southern Taranaki Basin, offshore New Zealand, by way of a farm-in agreement with Todd Energy, who is the Operator for the permit.
Under the terms of the farm-in, Horizon Oil will earn a 25% interest in the block by funding 37.5% of the first well to be drilled in the current permit term, probably on the Matariki prospect which is ready for drilling. The carry commitment will be capped at an agreed amount. It is intended that the well will be drilled after the completion of the Maari development drilling program and the Manaia appraisal well, around mid 2009, utilising the Ensco 107 jackup rig, for which Todd Energy has acquired an option for a drilling slot. The drilling operation itself will benefit from the prior campaigns that will have been completed by the rig at Kupe, Momoho, Maari and Manaia.
PEP 38494 is situated 50 km from the New Zealand coast, is 5,341 sq km in area and lies in 70-100 m of water. The prospective structures are generally similar to Maari with the same shallow reservoir targets and with anticipated drilling depths of around 2,000 m. Seismic coverage comprises 7,390 km of multi-vintage 2D seismic which has been reprocessed and 815 km of newly acquired 2D seismic.
The prospect and leads inventory includes the Matariki prospect, the Paua lead and the Pike lead. The structures exhibit some of the hydrocarbon indication characteristics observed on the seismic over Maari, although these should not be considered as being definitive. Pike and Paua are covered by the same 3D seismic survey that defines Maari and Manaia and the intention is to reprocess this data cube with the objective of maturing the Pike and Paua leads for possible drilling.
Development drilling of the Maari field, initially of the primary Moki formation reservoir, is about to begin. During the program the shallower M2A sands that were proved to be oil-bearing during the earlier appraisal drilling of Maari will be intersected and their add-on upside potential assessed. At the end of the drilling program, the rig will be moved to drill an appraisal well on the crest of the adjacent Manaia structure which was also found to be oil-bearing with the Maui-4 well and which, if successful, can readily be tied back to the Maari WHP as further upside.
Horizon Oil believes PEP 38494 offers the opportunity to further pursue the Maari upside potential. The northsouth trending Tasman Ridge within PEP 38494 is seen as being a logical southern extension of the Maari and Manaia structures, on-trend and up-dip and thereby well positioned on the hydrocarbon migration pathway that has charged Maari.
Acquisition of PEP 38494 is consistent with Horizon Oil’s strategic intent. The block is sizeable, the interest to be earned material and there will be clear technical, commercial and operational synergies to be had by way of the Company’s involvement in Maari field. There is further potential to explore the south Taranaki Basin oil play. The opportunity exists to build a significant acreage position around the Maari field, in a jurisdiction where the fiscal terms are widely considered to be very favorable for petroleum exploration and development.
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