Fall in Tui output eats into NZOG profit result

New Zealand Oil & Gas has a 12.5 per cent stake in the Kupe gas and light oil field which is expected to be commissioned later this year. Photo / Supplied

Falling production at the Tui field has eaten into revenue at New Zealand Oil & Gas which has reported a 45 per cent fall in profit.

For the year to June 30 NZOG reported a net profit of $53.2 million. Revenue fell 38 per cent to $138.7 million.

The company said its share of oil from the offshore Taranaki fields, in which it has a 12.5 per cent stake, was 1.14 million barrels, down 36 per cent from the previous financial year.

But following an annual reserves assessment, the initial proven and probable (2P) reserves have been upgraded slightly, from 50.1 million barrels to 50.5 million barrels, the fifth reserves upgrade since the field began producing in July 2007.

NZOG also announced it had entered a conditional agreement to take a 40 per cent stake in the Albacore permit, covering 715sq km in the northern Taranaki Basin about 80km north of New Plymouth.

The permit contained a number of identified prospects and preparations were already in place to drill one of those prospects, NZOG said.

The well was expected to be drilled in October and November at a total estimated cost of $20 million to $25 million.

Westech, a wholly owned subsidiary of Energy Corporation of America, will be the operator and hold a 50 per cent stake while taxpayer-owned Mighty River Power will have 10 per cent.

Albacore contains three separate target zones that may contain hydrocarbons.

NZOG chief executive David Salisbury said the potential was great. "NZOG's internal analysis is that Albacore is more likely to contain oil than gas and, if successful, could support an offshore development similar to Tui."

The company now has interests in seven permits in the offshore Taranaki Basin and one in the Canterbury Basin. NZOG will be participating in the drilling of at least four wells this summer.

During the past year in addition to Tui revenue, NZOG received a $3.3 million dividend from its investment in Pan Pacific Petroleum and recognised a $3.7 million foreign exchange gain for the year.

During the year NZOG invested around $120 million in total in its existing business and in new investment opportunities.

The company has a 12.5 per cent stake in the Kupe gas and light oil/condensate field which should be commissioned later this year.

NZOG also has a 30 per cent stake in Pike River Coal which on Tuesday announced a further delay in first coal shipments to Japan. Salisbury said the announcement was "disappointing."

Shares in NZOG closed down 1c at $1.64 yesterday.