New Zealand Oil and Gas has shelved immediate plans to explore for oil off the Patea coast.
The decision comes after the company announced a net loss of more than $27 million for the six months ended December last year. The loss was $7.7 million in the same period the year before.
Andrew Jefferies, NZOG's vice-president exploration and production, told the Chronicle this week that the board had decided economic conditions didn't support drilling at the Kaheru-1 prospect about 12km off the Patea River mouth.
"Meantime, we're talking to the Crown about future options," he said.
Last May NZOG said it was looking to drill off Patea in late summer or autumn this year.
The company had been through the consenting process with the Taranaki Regional Council and those consents were good through to November, 2017.
Mr Jefferies told the Chronicle in May that NZOG remained very bullish about Kaheru-1's prospects but other influences came into play and one of those was oil prices.
At that stage the price had dropped from $100 a barrel down to $67 and he said development costs were going to be in the order of $30 a barrel "so our profits are made on that margin between those costs and the current oil price".
Hiring a rig would cost around $500,000 a day which also included staff costs, supply boats and other services.
It's that high risk-low return scenario which is forcing NZOG to rethink its strategy off the South Taranaki coast. Industry sources said the Crown would be aware of the state of the industry.
Releasing its half-yearly report, NZOG said its losses last year were bigger because it had written down the value of its Tui and Maari investments and switched its accounting policy to cope with the drop in oil prices which had dropped from US$50 to US$30.
Chairman Rodger Finlay said exploration costs had been minimised with no intention to spend further on exploration beyond current contractual obligations.
NZOG has interests in eight exploration permits around New Zealand and 10,000sq km of those are in offshore Taranaki, the country's only oil and gas producing basin. It has two producing wells - Kupe and Tui.
Kaheru-1 was to be drilled at the southern end of the Taranaki Fault, which has already thrown up several oil and gas discoveries in eastern Taranaki.
Mr Jefferies said last year that to be economic, the well would need to produce in the tens of millions of barrels of oil and early signs were that Kaheru-1 was "well over that".