Kupe revenues overtake those from Tui

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Revenues from the Kupe field have overtaken those from the highly successful Tui field, in Kupe's first full quarter of operation for 15 per cent shareholder New Zealand Oil and Gas.

June quarter revenues from the Kupe oil and gas field were worth $18.2 million, with steady production since the end of March. Most of the revenues come from LPG and light oil condensates, rather than the gas stream.

In the quarter, NZOG announced gas reserves were upgraded 8 per cent, LPG up 5 per cent and significantly, condensate up 27 per cent. For the full year, the field is expected to produce 3 petajoules of gas, about 300,000 barrels of light oil and 12,500 tonnes of LPG for NZOG.

The Tui oil field produced revenues of $13.1 million from 122,000 barrels of oil. But the field's production is declining, with forecast total annual production of 2.8 million barrels, down from 4.8 million last year.

Kupe and Tui combined gave a total revenue of $31.3m for the June quarter and an estimated $99m for the year for NZOG.

NZOG was involved as a partner in two wells drilled off the Taranaki coast this year, Tui SW and Kahu-1, and both were unsuccessful, though Tui-SW may be a gas injection well in future. NZOG spent about $11m on exploration in the quarter.

NZOG is talking to several potential partners about joining it in plans to drill the Kaupokonui permit in offshore Taranaki. That includes a prospect which NZOG said had estimated mean prospective recoverable resources of more than 200 million barrels of oil.

NZOG chief executive David Salisbury said it was a "very interesting" prospect, with good interest from potential partners. In the past NZOG has said Kaupokonui was promising but "risky".

NZOG hopes to reduce its 100 per cent holding in Kaupokonui by bringing in other partners to share the US$15m (NZ$20.7m) cost of drilling a well.

NZOG must make a drilling commitment by January to drill within a year from then, but it was possible that a well could be drilled as soon as late summer.