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NZ O&G Industry Wrap - February 2018

By Neil Ritchie

This year’s first “well known” exploration well – Pukatea-1 – is proving positive so far for operator Canadian listed junior TAG Oil and its minority partner asx listed junior Melbana Energy.

In late February TAG reported that Pukatea-1, in licence PEP 51135 (TAG 70% and Melbana 30%) in onshore Taranaki had reached the 3100 metre target depth without intersecting the primary target, the Eocene-aged Tikorangi Limestone Formation. However, TAG says it is still encouraged by the potential oil play encountered in the well's secondary and shallower Miocene-aged Mount Messenger target at a depth of about 1618 metres.

There were also intermittent hydrocarbon shows between 2520 metres and 2680m. So now TAG plans to run detailed wireline logs to evaluate these shows and the entire lower interval to 3100 metres.

Furthermore, as a result of the previously reported potential oil pay in the Mt Messenger zone, following wireline logging, TAG is planning to initially focus on that oil zone and complete the well to enable a future production test to be done. This will allow TAG to evaluate the production potential of the Mt Messenger oil zone, and a successful test could result in restarting oil production from the currently suspended Puka oil field.

TAG chief executive Toby Pierce says: “It is highly probable that we can produce from the Mount. Messenger zone in this well in due course and, along with the shut-in Puka-2 well (drilled by the now defunct Kea Petroleum a few years ago), this will allow us to monetise this asset at the appropriate time.”

And last December 31, the company had a healthy C$3.3 million in cash and cash equivalents and C$9.8 million in working capital. TAG’s average net daily production for the December quarter decreased by nine percent to 1043 barrels of oil equivalent per day (boepd) compared to the 1151 boepd for the September quarter. However, revenues from oil and gas sales increased by six percent from C$6.0 million for the September quarter to C$6.4 million for the December quarter.

Last November New Zealand Petroleum and Minerals approved TAG’s application to extend the company’s 70 percent working interest in the of Cheal East mining license PMP 54877 for an additional five years.

Meanwhile, also in onshore Taranaki, Greymouth Petroleum has shifted its Tiger Drilling Rig 3 from its Kowhai A wellsite to the nearby Radnor wellsite in onshore Taranaki to do some or both of the following: clean out the old Radnor-1 (well first drilled some 14 years ago by then Auckland-based operator Bridge Petroleum and Denver-based partner Westech Energy New Zealand) and redrill Radnor-1; drill a new and probably deviated well testing other geological formations.

With Radnor-1, Bridge and Westech were later awarded a 10-year mining permit for the Radnor onshore gas-condensate field and even built a small production station near Stratford though it soon proved non-commercial. Then Canadian listed junior TAG Oil took over the licence and drilled a deviated Radnor-1 well, which also proved non-commercial, TAG later relinquished the permit. Then early this decade Greymouth took over as operator.

Contact Energy taking over the Ahuroa means more petroleum production through the nearby Waihapa production station benefiting owners Canadian listed junior New Zealand Energy Corp and private Kiwi company L&M Energy.

Meanwhile, methanol manufacturer Methanex is planning another shutdown later this year but is not commenting on whether this will involve one or more of the three methanol production facilities it operates – two at the Motunui site north of New Plymouth and the nearby Waitara Valley plant.

Recent advertisements include contractors or sub-contractors wanting positions for qualified and suitably experienced boilermakers, fitters and trade assistants for the proposed shutdown. However, Methanol is declined to comment on specifics of the proposed shutdown.

Aussie company Beach Energy has been given the green light by the Overseas Investment Office for a $1.75 billion deal to buy the rights or interests in up to 100 per cent of the fully paid ordinary shares in Lattice Energy, a subsidiary of ASX-listed Origin Energy. Lattice has a 50 per cent interest in the Kupe joint venture, which operates the Kupe Production Station and other assets associated with the Kupe gas field.

Recent takeover target New Zealand Oil & Gas has asked for more time before it, as operator, and joint venture partner Beach Energy, have to commit to drilling in the Clipper licence PEP 52717 (containing the Barque Prospect). The previous deadline was to commit by April 2018 to drilling by mid-2020. However, NZOG has asked the NZ Petroleum & Minerals unit for more time to analyse new information and new Energy and Resources Minister Megan Woods has already extended NZOG's commitment date. Now NZOG has another year, until April 2019, to decide on whether to drill or drop the permits.

NZOG have been looking for farm-in partners for two years to help fund the drilling of the Clipper project to a depth of between 2500 and 3000 metres. However, new NZOG “owner” Ofer Global will not underpin the cost of drilling in the deepwater licence and outside partners will continue to be sought. Monaco-based Global recently paid NZ$84 million for a 67.5% stake in NZOG, but will not be funding any exploration drilling.