NZOG seeks partners for 2017 drilling at 'high-potential' Barque prospect

New Zealand Oil & Gas [NZX: NZO] says exploration drilling of the Barque prospect in the Canterbury basin, which has the potential to be the nation's biggest-ever hydrocarbon discovery, is expected to start in 2017, subject to securing suitable partners and a drilling rig.

The Wellington-based oil and gas company has a 50-50 joint venture partner in the prospect with Beach Energy. Analysis of seismic data acquired in 2013 suggest an estimated prospective resource of 530 million barrels of oil equivalent (mmboe). It says the chances of success for a discovery and subsequent development are yet to be fully assessed, but typically fall within the range of 10 percent to 20 percent.

Seismic data has "resolved three prospective formations, one previously unidentified, which combined have the potential to be the largest hydrocarbon discovery in New Zealand to date," it said. NZOG's share would be 265 mmboe, based on its half share.

The Barque prospect, a large Cretaceous structural trap of approximately 150 square kilometres, lies in about 800 metres of water and is about 60 kilometres offshore, NZOG said. The target formations are between 2,500 and 3,000 metres below mean sea level.

BP drilled the nearby Galleon structure in 1985 "and demonstrated the presence of a rich gas condensate through multiple well tests."

Drilling in the adjacent Caraval prospect in early 2014 by US oil and gas company Anadarko found oil and gas shows, but not in commercial quantities. Anadarko is considering further seismic work.

Prior to that drilling, there had been six test wells drilled since the 1970s in the Caraval, Carrack, Endeavour, Resolution and Barque prospects, all off the Otago/Canterbury coastline, without success, the NZ Resources website reported last year.

NZOG said it is in talks with potential farm-in partners with experience in operating exploration and development activities in such environments.

The company has been building its portfolio of potential reserves to add to productive fields such as Tui and Kupe. Earlier this year, NZOG secured control of the board of Cue Energy Resources after securing 48 percent of the ASX-listed energy company and has subsequently appointed three directors and requisitioned a shareholders' meeting to remove two former Cue directors.

NZOG's cash flow statement for the quarter ended June 30 shows cash at the end of the quarter of $83.5 million, up from $43 million three months earlier. That mainly reflected Cue being consolidated into the group as at April 1.

NZOG's shares rose 2 percent to 50 cents on the NZX today.

(BusinessDesk)