Despite promising shows from TAG Oil’s Ngapaeruru-1 well east of Dannevirke, falling oil prices mean a partnership may be entered or the exploration permit dropped.
Despite promising shows from TAG Oil’s Ngapaeruru-1 well east of Dannevirke, falling oil prices mean a partnership may be entered or the exploration permit dropped.
Plummeting oil prices has Tag Oil reviewing its East Coast exploration programme, says CEO Garth Johnson.
"We are keen as ever about New Zealand, however as you can expect, low commodity prices and the uncertainty around how long prices will stay low has made TAG, and I'm sure most companiesin the industry worldwide, review its work programme," he said.
Expenditure would be reduced to adapt to the lower prices "allowing TAG to step back a bit in the short-term but maintaining long term goals".
Another exploration partner may be on the cards.
"We continue to review our programme and investment criteria throughout New Zealand and we intend to continue to focus on our core areas and, where needed, we may look to partner with credible companies, postpone certain capital investments and/or, if needed, we may choose to relinquish permits that exceed our comfort levels in terms of risk and capital required."
In 2013 TAG announced an East Coast venture with fellow Canadian company East West, which was to pay drilling costs of $12 million.
The companies jointly won the 430sq km PEP 55770 permit inland from Gisborne. TAG holds 100 per cent of other East Coast permits, estimated to potentially hold billions of barrels of oil.
TAG had a similar East Coast venture with Apache Corporation, but after Apache pulled out TAG has continued drilling alone thanks to a debt-free balance sheet and continuing success in Taranaki.
