Horizon: Maari Might Yield an Extra 10 Mln Barrels

New Zealand Crown Minerals

Horizon Oil, a 10% interest partner in the 49-million barrel Maari oil field soon to be developed, says that the offshore Taranaki project has the potential to yield an additional 10 million barrels of oil, according to the New Zealand Government's Crown Minerals Group.

In an investor presentation on the company's website, Horizon Oil describes the Maari field as "an important domestic resource with significant upside potential".

Maari, the largest undeveloped oil field in New Zealand, is due to come on stream in early 2008 at a capital expenditure of US$365 million including contingencies (NZ$570 million at current exchange rates).

Horizon lists as "pre-development" the potential 10 million barrels from the other zones located at Maari and from the separate Manaia structure nearby where oil was found in the 1970 Maui-4 well.

The Maari field, operated by the Austrian-based company OMV New Zealand Ltd, initially plans to produce oil only from the 49 million barrel Moki Formation.

The work program for the Maari field mining permit (PMP 38160) states that the Maari-2 appraisal well drilled by OMV in 2003 found the overlying M2A sands in the Maari structure to be better developed than in earlier wells. Some 25 meters of net oil-bearing sand was interpreted.

The work program also states that the Maari partners plan to further appraise the M2A sands when drilling the Moki Formation development wells.

"Where possible, Moki Formation development wells will be designed such that behind-pipe M2A reservoir intervals can be accessed via a simple through-tubing recompletion operations" the work program says.

The deeper Mangahewa Formation (Kapuni Group) where oil and gas was found, was currently considered sub-commercial on screening economics, the work program says.

Meanwhile development activity on the Maari field has gathered pace, Horizon says in its third quarter report to March 31st.

The Andaman Sea vessel which contractor Tanker Pacific proposes to convert as the Maari field FPSO (floating production storage offloading) ship, has been inspected. Detailed design is underway for the FPSO conversion and a letter of intent has been issued for the mooring system.

A detailed geotechnical investigation of the location for the wellhead platform was undertaken during December 2005 - January 2006 with the vessel ROV Supplier out of Singapore for input into detailed design of the platform. Multiple sea-bed core samples were taken and these were being analyzed in Perth.

A workover rig to be permanently installed on the platform has been identified, and detailed design of the platform is continuing by contractor Clough Ltd.

A letter of intent for downhole heating, to keep oil flowing, has been issued to ensure timely delivery. Submersible pump equipment has been ordered.

The partners in the Maari field are OMV New Zealand Ltd (69%), Horizon Oil International Ltd (10%), Todd Maari Ltd (16%), and Cue Taranaki Pty Ltd (5%).