Copper Moki-1 Production Begins
New Zealand Energy is pleased to provide an update on production from its Copper Moki-1 well in New Zealand's Taranaki Basin. The well is free-flowing at an initial rate of approximately 580 barrels of oil per day through an 18/64th inch choke with a gas oil ratio of 970 standard cubic feet per barrel. NZEC has installed surface facilities to accommodate production of up to 1,000 barrels of oil per day.
The Company expects near-term operating netbacks in excess of US$90 per barrel. The oil is sweet and high quality and sells at a premium to the Brent reference price. NZEC anticipates establishing permanent facilities by mid-2012 that can be expanded to handle production from additional wells in the Copper Moki area.
Copper Moki-1 is NZEC's first well in the Taranaki Basin. Copper Moki-1 was completed in August 2011 and tested over a two-day period, during which the well flowed 1,100 barrels of 41.8 API oil per day and 855 thousand cubic feet ("mcf") per day of natural gas on a 28/64th inch choke. NZEC designed an extended production test at a restricted rate to evaluate the reservoir under constant operating conditions and flowed the well for 12 days with average production of 521 barrels of oil and 508 mcf of natural gas per day on a 20/64th inch choke.
Following pressure build up, the well commenced production on December 10, 2011. Field production rates are expected to level out at 550 barrels of oil and 535 mcf of natural gas per day. Produced oil is being trucked to the Shell-operated Omata Tank Farm, approximately 45 km north of the Copper Moki well site, and sold to Shell as per an off-take agreement. NZEC is also evaluating options to market its natural gas production, given the close proximity of open-access gas pipelines and significant in-country demand for natural gas.
NZEC is finalizing its multi-well drilling contract for Copper Moki-2 and Copper Moki-3, delineation wells for the Copper Moki pool, and expects to commence drilling of Copper Moki-2 by year-end. The Copper Moki-2 well will be drilled from the same pad as the Copper Moki-1 well to target both the Urenui and Mt. Messenger formations. NZEC will continue to produce Copper Moki-1 as drilling proceeds, and could very quickly bring Copper Moki-2 on-stream using the same production facilities should the well yield oil and natural gas production. The Copper Moki-3 well will be spudded upon completion of Copper Moki-2 and will target multi-zone potential in the Mt. Messenger, Urenui and Moki formations.