Kupe development costs rise for NZOG
Kupe development costs rise for NZOG
Oct 28 (BusinessWire) - Development costs on the Kupe gas field have risen, with New Zealand Oil and Gas Ltd's share of costs creasing by up to $20 million, managing director David Salisbury told shareholders today.
"NZOG has contributed $180 million to date, and our final bill appears likely to be in the range of $195 million to $200 million," Salisbury said. With the production station near Hawera now completed and handed off to the operator, Kupe was in a commissioning period, with pipeline gas to be introduced to the station next week and full production using gas from the offshore production platform to be introduced in following weeks.
"At the completion of the commissioning period, Kupe
will go into permanent production", yielding a solid income
stream over the next 15 years, said Salisbury in notes for
the company's annual meeting in Wellington.
While
development costs were higher, so too were the expected
recoverable reserves from Kupe, although no detail was
offered on the extent of the expected additional
resource.
NZOG's share price had risen 0.6% to $1.72
by mid-morning, an increase of 35% in the year to date.
While the company would have liked to have seen returns
before now from its 30% shareholding in Pike River Coal, a
ventilation shaft collapse and subsequent production
problems had delayed its development, with first coal
shipments now scheduled for the first quarter of 2010.
"It is in the nature of the mining business that there
are surprises and obstacles to overcome," Salisbury said.
"Pike has proven itself to be competent at addressing the
obstacles and we remain confident of the mine's future."
Salisbury outlined again the company's summer drilling
campaign, confirming that the Kan Tan IV drilling rig would
now not arrive in New Zealand waters until early 2010, at
which point it will undertake exploration drilling in the
Hoki prospect, offshore Taranaki, followed by fresh drilling
in the Tui licence area in the hope of finding easily tapped
additional resource from the field.
"Any commercial
discovery could potentially be brought into production
within 18 months," Salisbury said.
The company also
continued low-cost evaluation of prospects in Romania, with
the potential to lodge bids for exploration licences in
mid-2010.
Outlining the company's approach to new
investments outside New Zealand, Salisbury said NZOG was
"focused on one creating or two new core areas, as opposed
to a wide geographic spread of interests" with an emphasis
on "near term payback as opposed to long term horizons".
The company was not interested in stranded gas assets,
and was looking for "oil, condensate and gas in proven
basins, with existing open access infrastructure, ready
access to product markets at transparent prices, with scope
to grow, healthy financial returns, manageable risks, and
fiscal and political stability".
NZOG would be an
active rather than a passive joint venture partner.
While the company had added $120 millioin of new and
existing ventures in the last year, including its 15% stake
in the "under-valued" Pan Pacific Petroleum, there had been
fewer "fire sales" generated by the global credit crunch
that might have been expected.
A variety of possible
transactions were active consideration at present, Salisbury
said.
(BusinessWire) 10:42:20