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NZ O&G Industry Wrap - December 2017

By Neil Ritchie

The New Zealand oil and gas industry continued consolidating during 2017, with most transactions completed or about to be completed, regarding the ownership of various fields and associated activities – both onshore and offshore.

Top of that list is still the imminent announcement by Royal Dutch Shell of its remaining New Zealand exploration, production and infrastructure assets. Shell’s main remaining New Zealand assets – after the already completed sale of its half stake in and operatorship of the onshore Taranaki Kapuni gas field to Todd Energy -- are its controlling stake in and operatorship of the near-shore Pohokura gas field and its majority  stake in the offshore Maui gas field.

Canadian listed companies Jadestone Energy and Vermilion Energy, Austrian giant OMV and Aussie listed companies Woodside Energy and Beach Energy are all believed to be interested in Shell’s remaining New Zealand assets, as are Sydney’s private equity firm Questus Energy and Kiwi company Greymouth Petroleum, in conjunction with global investment company KKR.

Further, Todd Energy is selling its stake in the offshore Taranaki Maari-Manaia oil field to fellow partner and ASX-listed Horizon Oil. As well, Todd is believed to be wanting to sell its small stake in the Maui field, though keeping its significant stake in Pohokura.

“Todd is now focused on gas, which onshore means McKee, Mangahewa and Kapuni, which Todd now owns outright, or near-shore, which means Pohokura.

"Pohokura is still a prized possession, with a number of years of life left in the field before the partners even need to consider decommissioning,” according to one industry commentator.

“Already the partners -- Shell New Zealand, Todd Energy and OMV -- are planning some more well interventions, from both onshore and offshore, at Pohokura,” he added.

And Texan giant Anadarko Petroleum is leaving New Zealand by exiting its sole remaining exploration permit after entering the then buoyant Kiwi exploration scene about eight years ago and subsequently spending about NZ$300 million on several deepwater exploration wells, none of which discovered commercial quantities of hydrocarbons.

The Houston-headquartered company has told its partners in the offshore Canterbury licence, Beach Energy and London-based Discover Exploration, that it wants to resign as the operator of the permit and is planning to leave New Zealand.

Anadarko’s initial step into New Zealand was participating in the first well ever drilled in the Deepwater Taranaki Basin northwest of New Zealand and then in a well in the offshore Canterbury Basin. It was also involved in two Pegasus Basin exploration licences off the East Coast of the North Island, as well as a New Caledonia Basin prospecting licence but subsequently withdrew from all of these, with no wells yet being drilled.

And industry sources say Anadarko’s exit could lead to other major international companies, such as US Chevron and Norwegian giant Statoil, rethinking their long-term plans for committing to future exploration drilling in Kiwi frontier basins where few wells have been drilled and no commercial discoveries have yet been made.

But other players are still active in New Zealand waters include Austrian giant OMV, Woodside, Beach and New Zealand Oil & Gas and their respective partners in several offshore exploration permits. 

In terms of takeovers, Monaco-based Ofer Global Group subsidiary OG Oil Gas is bidding for a controlling stake in NZOG and has again extended its offer period to early January. Ofer has already gained more than 50 percent acceptance of its NZ$0.74 per share offer, which may be increased to 67 percent given Australian company Zeta Resources has also indicated it will sell its 17 percent stake in NZOG after its own takeover bid failed.

As well, former NZOG director Duncan Saville resigned just before Christmas and has also stepped down from the NZOG-controlled Aussie listed company Cue Energy. Industry commentators are not surprised by Saville’s resignations, given that he is known primarily as an investor and not interested in any further “risky” exploration. This contrasts with OG Oil and Gas, which says it believes strongly in the potential of NZOG’s assets and is excited to have the opportunity to invest in New Zealand.

Also, Schlumberger’s Amazon Warrior seismic acquisition ship has arrived again in New Zealand waters to conduct several “spec seismic surveys”, where Schlumberger will have non-exclusive proprietary rights over all data acquired and can then sell those rights to multiple explorers.

Schlumberger​has applied to survey up to 5000 square kilometres of the Taranaki Basin as part of a larger area encompassing about 18,840 square kilometres. The Taranaki Basin work will cover Maari-Manaia and the Maui and Tui gas-condensate (light oil) fields operated and majority owned by OMV, Shell New Zealand, and Australasian oil and gas business Tamarind Management respectively.

And this latest seismic acquisition may lead to some new exploration drilling during the 2019-20 summer.

Onshore activity remains moderately busy with Canadian listed juniors TAG Oil and East West Petroleum opting for some new exploration and development drilling, as well as relatively low-cost options such as well workovers and water flood programmes in their onshore Taranaki licences. A third Canadian junior New Zealand Energy Corp and Kiwi partner L&M Group, are also carrying out similar production projects, as is Queensland’s Westside Corporation.

Finally, Far North power company Top Energy has let contracts for the expansion of its Ngawha geothermal power plant. The project, worth about NZ$176 million, will almost double the capacity of the 28-megawatt station near Kaikohe.

The contract for the earthworks has gone to NZ-owned company United Civil, though Top Energy has also looked overseas for geothermal expertise, awarding the drilling contract to Iceland Drilling, which drilled the Mercury Energy Ngatamariki power station near Taupo earlier this decade. Iceland Drilling will base a specialist team in Northland for a year from next April.

And the contract for construction of the geothermal plant expansion has gone to the Israeli company ORMAT, which built the original Ngawha station in 1998 and carried out the first expansion in 2008.