By Neil Ritchie
AMONG the listed juniors operating in New Zealand, one continues its active, though pared down, exploration program, a second has secured another financial lifeline, while a third is preparing to sell some or all of its assets.
Canadian listed junior TAG Oil is the most active of the trio and is still focusing on its low-risk, Miocene-aged onshore Taranaki oil wells, primarily the greater Cheal field, that continue to provide stable, long-term cashflows.
The greater Cheal field – mostly 100 per cent TAG but with some wells completed in association with Canadian listed East West Petroleum – is still producing a total of about 2,300 barrels of oil equivalent per day (boepd), with about 1,800 of that total being barrels of oil per day (bopd).
TAG and East West recently drilled and completed the Cheal EJV-6 development well which is producing about 270 bopd, with another three greater Cheal wells planned from mid-2015.
East West recently relinquished its 40% stake in newly acquired onshore East Coast lease PEP 55770, with TAG now taking total control.
That said, TAG has relinquished a frontier permit, lease PEP 53674, a recently granted licence in the sparsely explored offshore Cook Strait sub-basin.
As well, TAG’s multi-million-dollar expansion of the Cheal E wellsite facilities upgrade, together with the construction of the Cheal E to A pipeline, has started. This and Todd Energy’s Mangahewa Expansion Compression (MEC) project are the only facilities expansions currently underway in Taranaki .
Fellow Canada-listed junior New Zealand Energy Corporation has completed another non-brokered private placement by issuing another 44.25 million shares, priced at C4 cents each, thus raising another C$1.77 million.
Greymouth Petroleum owners Mark Dunphy and Peter Masfen have increased their stake in and involvement with NZEC, via their Geoservices company, by purchasing 29 million of these new shares for C$1.16 million, taking their total controlling interest in NZEC to 19.82%.
Two Geoservices nominees, Mr Dunphy and well-known energy lawyer and director James Willis, have also been appointed to the board of NZEC, with Mr Willis taking over from retiring chairman John Greig.
Hamish Campbell has also retired as a director, leaving the new board dominated by New Zealanders.
“Yes, Dunphy and Masfen are buying the NZEC business by stealth, a few shares at a time, but that’s fine,” one commentator told Oil & Gas Australia, referring to last December’s initial acquisition by Geoservices when it purchased 17 million shares, priced at C5 cents each, for C$850,000.
“These moves by Greymouth are reasonably positive and will bring more focus and more discipline from a New Zealand perspective . . . and it’s better to have NZEC effectively run by New than by people in Vancouver,” said a second, referring to NZEC’s former British Columbia head office which closed last November.
“And I no longer think NZEC will fall over . . . Dunphy and Masfen have put enough money in so they will not want NZEC to fall over but rather to survive,” he added.
NZEC chief executive David Robinson says the latest proceeds will be primarily to “maintain and preserve” the company’s interests in its petroleum exploration and production permits and for “general working capital purposes”.
NZEC’s main exploration and production interests are a 50% stake in the Tawn, Waihapa and Ngaere (TWN) leases, in association with L&M Energy, and a 65% interest in the nearby PEP 51151 lease, again in conjunction with L&M. It is understood NZEC still hopes to drill Horoi-1 in PEP 51151 late this year, though commentators doubt that will happen as any exploration well is likely to cost NZ$5 million, beyond the financial capabilities of NZEC unless it gains another farm-in partner.
Meanwhile, British listed junior Kea Petroleum chairman Ian Gowrie-Smith recently admitted “the unexpected and fundamental change in the oil price environment has created too many challenges for our business.”
“The recent collapse in the price of oil, which no one appears to have foreshadowed, has made the (onshore Taranaki) Puka field uneconomic and hence, as recently announced, the Puka production station was shut down.
“Also as a result of falling oil prices, the farm-out market has become very challenging. Against this backdrop, and without sufficient financial resources ourselves, the company has had no option other than to offer itself for sale as a whole or for some of its parts.”
Kea recently surrendered its Mercury lease PEP 52333 in the northern offshore Taranaki basin, unable to commit to drilling a well before next September, though it says it is continuing discussions with potential farm-in partners for the nearby onshore-offshore lease PEP 381204 (containing the Mauku prospect) and for the onshore lease PEP 51153 adjacent to Kea’s Puka field in conjunction with MEO Australia.
Kea also posted a net loss of £8.5 million for the half-year to the end of November 2014, including the write-off of £7.5 million of previously capitalised costs relating to the drilling and testing of the Wingrove and Douglas wells during 2010-2011. And Wellington-based Rockpoint Corporate Finance, headed by energy analysts Chris Stone and John Marker, continues its strategic review of Kea.
Meanwhile, other players are preparing onshore wellsites, expanding their onshore Taranaki presence or preparing to sell some producing fields.
Going against the trend of concentrating on existing producing assets, Todd Energy is known to be preparing a coastal wellsite to the southwest of New Plymouth in preparation for drilling the Te Kiri North-1 well in lease PEP 51149.
It is believed Todd will use its own Bentec Euro Rig 450t, commonly known as “Big Ben”, once it has finished its latest batch drilling of production wells at the inland Mangahewa gas-condensate field north of New Plymouth. Todd is also hoping to attract at least one farm-in partner before it spuds the wildcat, probably in October.
As well, AWE and partner Mitsui want to increase the size of their northern onshore Taranaki lease PEP 55768 by almost 40% to almost 188 square kilometres. Awe (51%) and Mitsui (49%) do not have to commit to drill a deep (Eocene aged) well until September next year.
It is also known that Origin Energy wants to sell its Rimu, Kauri and Manutahi fields and production facilities – the Aussie major’s last onshore Taranaki assets since selling the Tariki, Ahuroa, Waihapa and Ngaere fields and facilities earlier this decade – as it concentrates on its 50% stake in the more productive and profitable
offshore Kupe gas-condensate field where about 75% of that field’s revenue comes from long-term contracts gas and LPG sales.