Kupe royalties deal boosts NZOG

Last updated 10:59 30/07/2014

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New Zealand Oil & Gas revenues for the June quarter were $29.7 million, boosted by a new royalties deal with Kupe partner Genesis.

The company reported that production volumes from the offshore Tui field fell, but Kupe gas field production was up.

The revenue from Kupe in the quarter was $29.2m, including the sale of gas, LPG and light oil, and a contribution of $7.1m from overriding royalties.

The revenue from Kupe was almost double the $15.8m of the last quarter.

NZOG said the agreement reached with Kupe partner Genesis over the payment of overriding royalties was expected to lift net profit after tax by $5m for the financial year. In future, revenue from Kupe would increase by $1m to $2m each year as a result of the royalties agreement.

But revenue from Tui was just $0.5 million, with no tanker shipments in the quarter. In the last quarter, Tui revenues for NZOG were worth $15.8m. NZOG said production remained "stable at normal levels throughout the quarter".

NZOG's share of production volumes from Tui was just under 80,000 barrels of oil in the quarter, compared with about 93,330 barrels in the previous quarter.

In the past year, Tui partners have drilled two wells, Pateke-4H and Oi.

Pateke-4H drilling suggested a better-than-expected reservoir, but it was not drilled as far horizontally as earlier expected. As a result recoverable reserves are estimated at 2.5 million barrels, in line with pre-drill estimates, with NZOG's share at 687,500 barrels.

However, no significant oil shows were found at the Oi well, with indications that the reservoir held water not oil. The well was plugged and abandoned.

Kupe gas production was equal to just under 1 petajoule of gas in the June quarter, compared with 0.76pj in the last quarter. Light-oil production was also up to almost 70,000 barrels, from about 55,000 in the last quarter.

In the quarterly report, NZOG also said it had a cash balance of $135.1 million, down from $158m from the same period last year. Cash is held in both New Zealand and US dollar accounts. The company has no outstanding debt.

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