New Zealand Oil & Gas says potential partners for the deepwater Barque prospect off the Canterbury coast are "studying the data" and the company may be willing to put up more of its own capital if one of them comes on board.
Chief executive Andrew Jefferies made the comments at a special meeting in Wellington where shareholders overwhelmingly approved a $100 million capital return through a scheme of arrangement. The funds are available after NZOG sold its 15 per cent stake in the Kupe oil and gas field to Genesis Energy for $168m and the company reiterated today that the capital return won't leave it too poor to pursue acquisitions. Some 99.16 per cent of votes were cast in favour and 63 per cent of total voting rights that voted.
Jefferies said he hoped the offshore Canterbury permit would turn out to be "a new North Sea in the South". The Barque prospect had been ranked ninth in a list of the world's top oil and gas targets, based on a survey presented to a petroleum conference in Taranaki last month, he said. Top of the list was the Ironbark prospect off West Australia, held by NZOG's Cue subsidiary and which BP has just farmed into, he said.
"We have more than a handful of potential partners studying the data. So they are allocating resources and time to looking at our work and seeing if an entry to New Zealand is right for them," he said. NZOG will tout Barque at conferences in Singapore and Australia in April and May.
NZOG has been pushing the farm-in internationally on behalf of its 50/50 joint venture with ASX-listed Beach Energy. It got an extension to the Clipper exploration prospect for the Barque prospect in October, at the time saying it could be equivalent to 530 million barrels of oil, at least twice the size of the Maui discovery that's been operating since the 1970s.
In February the company updated the market, saying further analysis and scoping work had lifted its estimate for the prospect to 11 trillion cubic feet (tcf) of gas and 1.5 billion barrels of oil or gas condensate, across three different developments. The primary reservoir target it estimated to contain 5.5 tcf of gas and 785 million barrels of liquid.
The primary Barque prospect was given a 19 per cent chance of discovery and the other two horizons each have a 15 per cent chance, according to NZOG's presentation to potential farm-in partners two months ago. A gas-to-shore LNG project was the most likely model if all three were developed at the same time.
Today, Jefferies reiterated that NZOG sees more upside potential in natural gas than oil. "We see the price of gas assets has come down alongside oil assets - yet gas prices have not declined as much and look relatively more stable. Gas will underpin the world's transition a lower carbon future, which is already boosting demand."
Chairman Rodger Finlay allowed discussion of a shareholder motion at the meeting that NZOG retain the $168m plus enough from reserves to drill two wells offshore near Oamaru for gas or oil, but said passing such a motion would be "irresponsible" given shareholders had approved the Kupe sale on the basis that surplus capital would be returned. The motion was defeated on a show of hands.
The company's shares last traded at 59 cents and have fallen 6.4 per cent this year.