Jefferies, in a recent energy exploration and production update, says Houston-headquartered Swift Energy Company's overall performance for 2002 represented "a remarkable improvement over 2001's lacklustre performance".
The onshore Taranaki Tawn (Tariki, Ahuroa, Waihapa and Ngaere) fields, which Swift Energy purchased from Shell New Zealand in January, 2002, had performed steadily, said Jefferies.
However, the more southern Rimu and Kauri wells, which Swift had spent a lot of money on, continued to be an area of "tough sledding".
Capital expenditure for Swift Energy New Zealand (SENZ) had been $US27 million in 2002, but this was likely to fall to $US15-19 million in 2003, said the analyst.
Swift Energy engaged fellow Houston-based Core Laboratories last year to help it solve the problem of declining Rimu-Kauri production and Core Labs' initial studies demonstrated that water-based drilling and completion fluids had caused significant formation damage in the Tariki sandstones surrounding already drilled well bores in the Rimu-Kauri area.
Armed with that knowledge SENZ was planning to frac and test the first well, Kauri-A4, drilled and completed using entirely oil-based systems. Swift was hoping the fraccing methodology recommended by Core Labs would result in the higher production test "everyone has been waiting for", said Jefferies. Kauri-A4 flowed up to 2 million standard cubic feet of gas a day from approximately one-third of the Kauri sands pay previously encountered.
If successful, ENZ might decide to recomplete certain other Rimu and Kauri wells in an effort to improve their productivity, added Jefferies.
It is known SENZ is running its Tawn assets as hard as possible to make up for "lost" income from the poor performing Rimu-Kauri wells. SENZ recently bought two old compressors, previously used at a Rotowaro gas pipeline pumping station, from NGC Holdings and will install them once they have been reconditioned at Tariki-Ahuroa wellsites to increase reservoir pressure and gas-condensate flows.
It is understood SENZ aims to increase overall Tawn production from about 30 tcf/d to 50 tcf/d.