New Zealand Oil & Gas is clinging to hopes of a billion-barrel discovery in its Tui-1 well off the Taranaki coast, despite the well's main target zones proving dry.
Exploration manager Eric Matthews admitted to being "totally gutted" at the disappointing result in the main zone.
But NZOG believes natural gas
may have been discovered at deeper levels in the exploration well 20km northwest of the Maui field.
Hydrocarbons have been found in a geological zone known as the Kapuni Group sandstones, which have been the source of the most gas found in Taranaki, including Maui.
Matthews played down events at Tui-1, saying it was far too early to confirm anything from information received so far.
"My preference would have been to say nothing about this - but our shareholders demand it," he said from his Sydney office.
"If I were you, I'd hold off from reaching any conclusions until we are able to give you something more definitive.
"Until we evaluate the wireline data from the well, we can give no firm view on the success or otherwise of Tui-1."
Tui-1 is being drilled by New Zealand Overseas Petroleum, a subsidiary of Bermuda-registered Transworld Oil, which last year took a 45 per cent stake in the exploration licence area containing the Tui prospect.
Other partners in the joint venture are NZOG, which holds 20 per cent, NZOG associate Pan-Pacific Petroleum, with 15 per cent, and Australia Worldwide Exploration, which holds 20 per cent.
NZOG's shares have been rising on Tui's prospects, up from 27c in mid-October to a peak of 40c in late January. They were unchanged at 30c yesterday.
Matthews said NZOG would have to look more closely at the geology to see why the main target zone prospects proved wrong.
It was possible that hydrocarbons had leaked out of the geological "trap" that should have kept the oil and gas in a pool.
"It is not as though there has not been oil in the system here," he said.
The secondary target - the deeper "F sands" - showed "elevated cuttings gas and hydrocarbon fluorescence" which were detected in the uppermost 20m of the sand.
Earlier estimates for the F sands suggested 50 million barrels of oil, which would be commercial but far below the original hopes for Tui.
- NZPA
