Kahu drilling disappointment for NZOG
NZ Oil and Gas (NZOG) shares dipped this morning on news that the Kahu-1 exploration well is to be abandoned.
After reaching a depth of 3,835m and hitting the target Kahu valley feature, no significant hydrocarbons were found, NZOG announced this morning. The well will now be plugged and abandoned.
Kahu-1, located three kilometres east of the producing Tui oilfield, is operated by Australian company AWE (42.5%) in partnership with NZ Oil and Gas subsidiary Stewart Petroleum (12.5%), Mitsui E&P Australia (35%) and Pan Pacific Petroleum (10%).
NZOG (NZX:NZO) shares last traded down 2.4% to $1.22.
This is the second disappointment for NZ Oil and Gas in as many months, after the Tui SW-2 offshore well was discovered to lack commercially significant oil accumulation in June.
The Kan Tan IV drilling rig is next headed to drill the Tuatara-1 wildcat exploration well off the top of the South Island, also operated by AWE (65%).
AWE's Tuatara-1 joint venture partners are Australian company Carnarvon, Australian-headquartered ROC Oil and British-listed KEA Petroleum at 10%, 15% and 10% respectively.
The Tuatara-1 well is due to be drilled to a depth of 2000 metres in pursuit of up to 100 million barrels of potential oil reserves.
New joint venture partner Carnavon has estimated the well’s chance of success at a “relatively low risk” 25%.