NZ Oil and Gas buys interests in three Taranaki permits

Shares rise 0.6% to 87.5 cents on the NZX and have gained 23% this year.

New Zealand Oil & Gas has agreed to acquire interests in three offshore Taranaki permits from ASX-listed Octanex for $US12.5 million plus a share of seismic costs.

The company get a 12.5% interest in PE51906, which holds the Makatu prospect and is expected to be drilled in the second half of next year. Octanex will retain 22.5% and operator OMV holds 65%,  NZ Oil & Gas says in a statement.

PEP 51906 covers 1613sq km adjacent and west of the Maui field. OMV has estimated mean recoverable resource for the Matuku prospect at around 65 million barrels.

OMV is currently seeking a semi-submersible rig to drill an exploration well in the Matuku prospect before the end of 2013. If the exploration is successful and an appraisal well is drilled at Matuku, NZOG or Octanex can exercise an option to increase NZOG's interest by a further 5% to 17.5%. In return, it would pay Octanex's share of the appraisal well.

NZOG is also acquiring a 50% interest in PEP 53473, which covers 853sq km north of Tui, paying for the interest by funding 75% of the seismic programme costs. The seismic evaluation has to be completed by March 2014.

It will also take 50% of PEP 52593, which covers 3509sq km in offshore Taranaki by meeting 60% of the seismic costs. The agreement is subject to regulatory approvals.

"These new acquisitions sit well within NZOG's New Zealand exploration portfolio, as they build on the knowledge base developed from NZOG's Taranaki history and provide exposure to the developing western fairway," chief executive Andrew Knight says in the statement.

Shares of NZ Oil & Gas rose 0.6% to 87.5 cents on the NZX and have gained 23% this year. The shares are rated "outperform" based on the consensus of six recommendations compiled by Reuters.

Octanex last traded at 18.5 Australian cents on the ASX and has fallen 12% in the past 12 months.