Tap needs new finds to offset falling production

TAP Oil will need more drilling successes this year, in its planned record Australasian exploration effort, to counter continued production declines.
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The latest quarterly report, released yesterday by the Perth-headquartered company, outlines production and revenue from Tap’s 12.22% interest in the Harriet Joint Venture, 15% interest in the Woollybutt Joint Venture and 30% interest in the onshore Taranaki Kahili Joint Venture.

Overall liquids declined by 24% in the quarter ending December 31, to 498,692 barrels, compared to the September quarter. This included a 99% decrease in Kahili condensate production due to the small onshore Taranaki, New Zealand field being shut-in late last year while operator Austral Pacific Energy investigated ways of boosting sustainable production.

Tap’s total quarterly gas production also declined, but by only 4%, to 1377TJ, with Harriet gas deliveries steady.

Total operating revenue also dropped, by 33%, to A$41.19 million, with a 35% decrease in revenue from liquids (due to falling production and world oil prices). Gas revenue increased by 3% to A$2.8 million, in line with gas deliveries, while tolling revenue increased by 121% to A$323,000.

But Tap has said it is optimistic about further expansion at the Woollybitt field and its drilling program would include one or two very high impact wells each year.

"A step change in value could come from just one of the upcoming wells," the company said.

Tap said it had budgeted roughly A$40 for exploration and appraisal work in 2005, targeting 50 million barrels in Western Australia’s Carnarvon Basin, which supplies 98% of its 6000 bopd production. Up to 31 wells would be drilled in the Carnarvon, with four wells in New Zealand – three in onshore Taranaki and one very large offshore Canterbury Basin well.

Tap has changed its focus for offshore New Zealand exploration. The company’s latest report gives more detail on the reasons for the switch from Galleon South-1 to Barque-1, both in PEP 38259.

The report said the Barque prospect was a very large structural feature off the east coast of South Island and that Barque-1 will be located 55km from the previously drilled well Galleon-1 well that flowed 2240 bopd of condensate and about 10 mmscf/d of gas.

The Barque prospect is considered to be well located for an oil or condensate charge, with the potential to contain up to 5-6 tcf of gas and 500 million barrels of oil-condensate. It is larger than the previously targeted Galleon South prospect and is interpreted by the joint venture to have larger potential volumes of oil and/or gas. It is located in 850 metres of water.

Planning and farmout activities are continuing with a view to having the well drilled in the second half of 2005, depending on rig availability.