New Zealand Oil & Gas is ramping up spending in exploration and evaluation as it looks to find replacements for its Kupe and Tui oil and gas fields.
The Wellington-based company spent $25 million on exploration and evaluation in the three months ended March 31, according to its quarterly cash flow report. Both its Tui oil field and Kupe oil and gas fields are in decline as the company looks for alternative sites.
The Pateke exploration well, which falls in the Tui permit zone, is thought to have 2.5 million barrels of oil, the company said. If Pateke production went ahead it would "bolster output rather than changing the end date" of the Tui field, said Andrew Knight chief executive.
"It has oil in it which appears to have the same characteristics as discoveries nearby elsewhere in the Tui permit and we are cautiously optimistic it will get to the point where we complete drilling (and) we will be able to develop it," Knight said.
NZOG has a 28 percent stake in the Tui field, with Australian-based operator AWE holding about 58 percent.
NZOG's share in Tui's oil production increased to 93,330 barrels in the quarter, from 43,622 barrels in the same period a year earlier, as the company took a greater stake in the field. Kupe's gas and oil production recovered in the quarter after a shutdown in operations in the comparable period.
Both Tui and Kupe recorded a drop in quarterly revenue for the company, reflecting the timing of shipment arrivals which have been reduced as the operations produce less, chief financial officer Andre Gaylard said.
Offshore exploration in the Canterbury Great South Basin continued. NZOG also holds exploration permits in Indonesia and Tunisia.