MOSMAN Oil & Gas has thrown its planned acquisition of New Zealand oil and gas assets into doubt after noting recent falls in the Brent oil price.

Mosman agreed to acquire up to a 70 per cent stake in the Rimu production station and two petroleum mining permits for NZ$10 million – planning to rename the assets the South Taranaki Energy project (STEP).

But the fall of oil prices below US$40 per barrel has led Mosman to issue a review notice to Origin in order to enter good faith negotiations of amendments to the share purchase agreement (SPA).

“If there is no agreement within 30 days of a party’s receipt of the review notice, either party has the option to terminate the SPA,” it added.

Mosman chairman John Barr said the volatility in oil prices meant the company had to be prudent when defining its forward strategy for 2016.

“Given the challenging oil price, Mosman is reviewing all aspects of its strategy, not only for STEP, but also all expenditure for exploration on the company’s other projects and corporate costs. This review is ongoing,” he said.

Mosman would focus on optimising production from the asset in the near term, while redefining production forecasts and operational budgets for 2016, he said.

“Mosman has indicated that as a first stage, it has identified and is planning 12 projects to increase production at STEP. In light of the current oil price, each one of those projects is again being evaluated further.”