By Neil Ritchie

NEW ZEALAND Energy Corporation’s struggles continue with further production problems and a sliding share price on the Toronto Stock Exchange.

“They are struggling and no-one is sure what will happen,” one industry commentator told Oil & Gas Australia recently.

“The Waihapa production station is doing great, with more third party usage but there still are some production problems,” he said, referring to the onshore Taranaki production station that NZEC and L&M Energy purchased from Origin Energy last year, along with other infrastructure and the Tariki, Waihapa and
Ngaere (TWN) licences.

The Canadian listed junior’s share price on the Toronto bourse has fallen from C46.5c about a year ago, to an all-time low of C9c but is now slowly recovering to hover around C11-13c.

Some analysts say the company’s working capital, less than C$3 million, is unlikely to last the calendar year, necessitating further capital raising, farm-outs or surrendering some of its Taranaki and East Coast basin onshore leases.

NZEC started that process in late June by relinquishing the East Coast leases Castlepoint (PEP 52694) and Wairoa (PEP 38346) thus reducing its 2014 work program commitments by NZ$13.9 million.

This left only NZ$64,000 due to be spent on its remaining East Cape lease PEP 52694.

The Wairoa lease was also Westech Energy’s only remaining licence so the future of parent company Energy Corporation of America in New Zealand is now uncertain.

NZEC’s remaining Taranaki commitments for 2014 total NZ$3.2 million, of which only NZ$320,000 relate to its producing assets. But NZEC and L&M are committed to drill another well in their Alton lease PEP 51151 by the end of the year, at an estimated cost of about NZ$5 million, so NZEC will have to do something special to fund its 65 per cent stake or relinquish that permit also.

“It’s a worry what’s going to happen next; they have got to get more money from somewhere and get more production,” said the commentator.

British-listed junior Kea Petroleum has executed a contract with Drill Force New Zealand for the drilling of its onshore Taranaki Puka-3 well, targeting the Miocene-aged Mount Messenger Formation sands, identified by a recent 3D seismic survey of the area, with data reprocessed by MEO Australia. The well is expected to spud late July from the same wellsite as the Puka-1 and 2 wells. MEO stands to become entitled to a 30 per cent share of Puka oil production on completion of the third well.

Meanwhile, junior Mosman Oil & Gas plans to extend its onshore West Coast exploration program following some success with its first well, Cross Roads-1, about 40km from Greymouth on the South Island’s West Coast.

The shallow Cross Roads-1 well spudded in early June and soon encountered hydrocarbons with a total potential pay zone of 17 metres at depths of about 151 to 171 metres.

The well was then deepened to 243 metres where the Cobden limestones were encountered and cuttings from these limestones also had oil shows. Coring and wireline logs were undertaken, while the well was drilled to a total depth of 335 metres and suspended pending testing.

Mosman, which listed on the London Stock Exchange’s secondary AIM market last March, raised £3 million to advance its Petroleum Creek project in late March – possibly planning further wells after Cross Roads-1 and two Crestal wells.

The former operator of the Kotuku permit, New Zealand listed Aorere Resources, has a 15.8 per cent interest in Mosman.