New Approach To Oil And Gas Exploration

NEWS RELEASE

26 November 2009

New Approach To Minerals, Oil And Gas Exploration

The Trans Tasman Political Letter reports the Government is
looking at plans for a new Government-backed exploration &
production (e&e) enterprise.

The most extensive exploration programme for oil and gas ever
undertaken in NZ has begun, mostly in the Taranaki Basin, and if
new discoveries are made could run for several years. The
Government is eager for exploration to be extended to other
prospective basins.

Reports commissioned by Energy and Resources Minister Gerry
Brownlee say it needs to attract billions in investment for this
work, it needs an improved framework to manage the petroleum
estate, and it probably needs a new vehicle to ensure economic
benefits are sustained.

Trans Tasman says one of the expert reports commissioned by the
Government proposes special fiscal terms for gas-only finds. This
could encourage processing the gas for LNG exports. This report
argues since petroleum reserves are part of the nation’s capital
stock, the depletion of hydrocarbons should see sufficient
revenues go into an oil fund to keep the capital stock intact.

If the Govt were to provide tax breaks for gas, as opposed to
oil development, the State would be entitled to share some of
the benefits. This could be done through a new enterprise, which
is proposed in another of the expert reports.

Trans Tasman says the enterprise would be underpinned by hiving
off into it Genesis Energy’s 31% stake in the
soon-to-be-Commissioned Kupe gas field, which is valued at $600m.

The newsletter points out a brilliantly researched McDouall
Stuart report proposes Genesis’s ownership entitlements,
principally its Kupe stake and its Cardiff and Mangatoa licence
holdings, be transferred at fair commercial value into a new
company.

This would employ cash flow generated from its Kupe holding with
equity raised from a public offer to investors to establish a
new, publicly listed e&p (exploration & Production) company.

The focus of activity would broadly involve a NZ exploration
programme targeting known producing regions.

See the McDouall Stuart report at http://www.med.govt.nz/templates/
MultipageDocumentTOC____42259.aspx “

Ends

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