BUSINESSDESK: New Zealand Oil & Gas, the exploration company, will pay AGL Upstream Gas US$3 million to boost its stake and take over as operator at Taranaki permit, Kaheru.

NZOG will lift its stake in the permit to 60% from 15%, after buying out Australian energy company AGL. The remaining 40% will be held by Canadian second-tier oil explorer Tag Oil.

The joint venture comes after previous partners ROC Oil and L&M Energy withdrew.

"We will immediately pick up work previously undertaken by the joint venture and begin working with regulatory agencies to enable a timely drilling decision to be made," Andrew Knight, chief executive said.

"We are commencing a farmout campaign immediately and are hopeful of attracting significant partners to the table."

The permit is to the east of NZOG's Kupe field and is estimated to hold recoverable reserves of 45 million barrels of oil, or 200 billion cubic feet of gas.

NZOG got a toehold in the permit in March, buying a 15%stake from AGL for $US3m.

The Wellington-based company has lodged an application to extend the drilling permit with the regulator, NZ Petroleum and Mineral.

In February, the company turned a first-half profit of $2.3m from a loss of $99m a year earlier on reduced impairments from the failed Pike River Coal venture and improved revenue from the Kupe and Tui oil fields.

Shares in the company were unchanged at 76 cents and have shed about 9% this year.