But NZOG is predicting its 12.5% interest in the Tui fields will swiftly turn the company’s finances around following first oil production from June.
The Wellington-headquartered company announced total revenue for the December half year of $NZ2.6 million ($4.0 million for the December 2005 period), which included interest income of $1.7 million and a foreign exchange gain of $900,000.
Last December, Tieke-1 in the Tui mining licence PMP 38158 was suspended for a possible re-entry after encountering only minor hydrocarbon shows in the main Eocene-aged Kapuni formation.
NZOG said its 12.5% share of the costs of drilling Tieke-1 amounted to $2.5 million and that costs had been “fully provided against, even though the well remains suspended pending a decision on possible re-entry for drilling to a deeper target”.
During the last six months of 2006, NZOG raised $17 million of additional capital through a share options placement in November. So far this year, it has raised a further $25 million from a rights offer and associated placement of securities.
“All three of NZOG’s developments are being actively progressed, with $NZ41 million having been invested during the half year,” said executive chairman Tony Radford, referring to the Tui Area, Kupe gas-condensate and West Coast Pike River coking coal projects.
“The first development to come into production will be Tui, with first oil due by June 2007. This income stream will also utilise a significant portion of the company’s accumulated tax losses.”
The PMP 38158 partners have previously said Tui’s initial full production rates, of up to 50,000 barrels of oil per day (bopd), will enable “payback” of the $US225 million (about $A300 million) project costs in as little as three to four months if crude oil remains above $US40 per barrel.
The PMP 38158 partners are operator AWE with a 42.5% stake, New Zealand Oil & Gas (through its subsidiary Stewart Petroleum) (12.5%), Mitsui E & P New Zealand (35%) and Pan Pacific Petroleum (10%).