New Zealand Oil & Gas has fully paid its debt on the Kupe gas project but retained the $125 million debt facility to ensure ready access to funds, if wanted.
In its report for the September quarter, released today, the company also said its operating revenue from the
Tui field was $72.3m during the quarter. Both Kupe and Tui are in the offshore Taranaki Basin.
In a separate announcement, NZOG said it was buying a 40 per cent stake in an offshore Canterbury Basin exploration permit from Australian company Tap Oil.
NZOG chief executive David Salisbury said the permit area included the promising Barque gas and condensate prospect.
During the past year or so, the company's technical team had completed a detailed evaluation of many New Zealand basins.
"We have concluded that the Canterbury Basin has proven effective petroleum systems present and the potential to produce commercial quantities of oil and gas."
From NZOG's evaluation, the Barque prospect had potential recoverable resources of 600 billion cubic feet of dry sales gas and 58m barrels of light oil/condensate.
Operator AWE was planning a marine seismic survey in early 2009, with a decision on whether or not to drill needing to be made by August 2010.
In the quarterly activities report, Salisbury said NZOG was on "very secure financial footing".
Following repayment of the remaining $66.8m Kupe debt, NZOG had cash reserves of around $220m and a good income stream from Tui, with Kupe revenue less than a year away.
In the three months to the end of September the Tui oilfields produced 3.15m barrels of oil, in line with expectations. NZOG, which has 12.5 per cent of Tui, received a little over 390,000 barrels as its share.
The Kupe project, now estimated to cost around $1.2 billion, was more than 85 per cent complete, NZOG said. It has a 15 per cent interest.
First commercial gas sales had moved back slightly into the third quarter of next year, from the previous target of mid-2009.
NZOG also predicted that, regardless of what might happen to the world economy in the short term, in the medium to long term there would be strong upward pressure on oil prices.
US light crude for December delivery settled at US$63.22 a barrel, down 93 cents, its lowest settlement price since May 29, 2007.
Oil prices have dropped by nearly 60 per cent from a record high US$147.27 a barrel in July as global economic turmoil dents world fuel consumption.
NZOG said that when the Tui project was sanctioned in 2006, oil prices were around US$50 a barrel, and at that price was profitable.
The company's shares were down 9c to $1.13 around 10.30am, down from a year high of $1.91 in July.
- NZPA
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