Fletcher farms out gas stake

By Libby Middlebrook

Fletcher Challenge Energy plans to farm out half of its 66.6 per cent stake in a Taranaki gas prospect because it wants to invest in other exploration projects.

Shell Petroleum Mining and Todd Petroleum Mining will earn 18.3 and 15 per cent respectively by funding a drilling programme at the Pohokura exploration well next year, which lies 5km offshore from the Taranaki Coast.

Fletcher Challenge will retain a 33.3 shareholding.

Energy division chief executive Greig Gailey said in a statement that the farm-out was consistent with the company's exploration strategy to "participate in a portfolio of opportunities in a risk-spread manner."

Moving to 33.3 per cent would also allow the company to invest in other exploration ventures.

A rig will be transported from Singapore to New Zealand during the next two months to carry out drilling on the Pohokura prospect, starting in February. Development and drilling is expected to cost about $28 million.

Fletcher Challenge needs shareholder approval to farm out 33.3 per cent of the Pohokura licence to Shell and Todd. Germany-based investment company Preussag Energie holds the remaining 33.3 per cent stake in the licence.