Small but steady adds up to stellar oil year

NZ Energy Corporation drilling rig on Rawhitiroa Rd, near Eltham.
NZ Energy Corporation drilling rig on Rawhitiroa Rd, near Eltham.

At the end of last year New Zealand Energy Corporation had drilled one well at one Taranaki drilling site. By the end of this year the company will have operations at seven wells on three separate sites.

The shallow wells in NZEC's Eltham and Alton licence areas, from Eltham to the region's southern coastline, target the well-known geological formation Mt Messenger, and each produces just a few hundred barrels of crude a day.

But it all adds up - and right now the company's four production wells are combining to a daily flow equal to more than 1000 barrels.

And for a small company drilling small wells in onshore Taranaki, it is proving lucrative.

In the nine months to the end of September three of the wells - Moki-1, 2 and 3 - had produced 155,285 barrels at an average price of $107.33 each. Production costs and royalty payments have totalled $30.20 a barrel, allowing NZEC to net $77.13 from each barrel produced.

Now a further well has joined production, Waitapu-2, which last week was publicly confirmed as a commercial discovery.

All this is allowing Taranaki's newest oil and gas explorer to enjoy a stellar year in which it has generated $11.9 million in cashflow up to the end of September, with big improvements in sight.

Right now the company is completing the drilling of Arakamu-2, located right alongside Rawhitiroa Rd east of Eltham.

It is the third well in an eight-well drilling programme NZEC commenced in August.

Once this is finished, the rig will then be shifted to another location on the same drilling site and spud Arakamu-1A, which will target a deeper Moki formation.

In an operational update released at the weekend, the company said it expected to complete the remainder of the eight-well programme by the end of the first quarter of next year.

It has an objective of increasing production to 3000 barrels of oil equivalent a day.

The update adds that NZEC has identified another 18 more prospects in the Eltham and Alton permits.

Taranaki Daily News