Pan Pacific Petroleum has provided an quarterly NZ operations report for the period ended September 30, 2008.
Tui Area Oil Project (PMP 38158) Taranaki Basin (PPP interest 10%)
Production from the Tui oil fields totaled 3.2 million barrels (PPP 0.32 million barrels) for the September quarter, averaging 34,300 barrels a day. Production was down 16% compared with the previous quarter as a consequence of a combination of increasing water production, delayed offloading due to poor weather conditions and facilities operational issues. Production operations had returned to normal at the end September with production of approximately 35,000 barrels a day. Cumulative field production to the end of September 2008 was 17.4 million barrels (PPP share 1.74 million barrels). Field performance was generally as forecast and consequently there were no reserves revisions during the quarter.
Planning for the Tui-4H additional development well continues, while the Tui joint venture partners are also still considering additional exploration drilling. Timing of any activities will be subject rig availability, but could be as early as early 2009.
Toke permit (PEP38499) Taranaki Basin (PPP interest 10%)
The interpretation of the 2007 Toke seismic data failed to identify targets which would justify undertaking the work program required by May 2009 if continuing in the permit; 150 Km2 of 3D seismic, or drill one exploration well. Consequently the joint venture partners have agreed to surrender the permit.
Hector permit (PEP 38483) (PPP interest 14.091%)
The first 5 year term of PEP 38483 ends in December 2008. Following a review by the operator the joint venture partners have agreed to apply for the extension of PEP 38483 into a second term, and the area to be retained following the 50% compulsory relinquishment. It is proposed to acquire further seismic and undertake additional interpretation and studies to evaluate the remaining exploration potential.
Maitland WA-33R (PPP interest 10%)
The joint venture Operator, Apache, continues to investigate options to progress commercialization of the challenging Maitland gas/condensate field. Further appraisal drilling and flow testing remains a possibility, but there is no firm proposal for these activities at this time.
The Company has initiated a strategy review to determine goals and focus areas for growth. The strong cash flows from the Tui project place PPP in an excellent position to compete for new exploration and production opportunities, and to build a sustainable revenue position. Given these ambitions, PPP has elected to retain the cash in hand rather than disburse through dividend payments or share buyback, and to target increased total shareholder return through reinvestment, and subsequent share price growth.
It is anticipated that the global market volatility and credit restrictions will yield attractive opportunities for companies that have short term funds and can act relatively quickly, and PPP is well placed in this respect.
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