"We have set an exploration target of three to five wells each year with an expected cost in the order of $US35 million," chief executive Andrew Knight told shareholders at today's annual meeting.
BUSINESSDESK: New Zealand Oil & Gas, the nation's largest listed oil explorer, says it has about $162 million in cash available to acquire more oil and gas reserves.
"We have set an exploration target of three to five wells each year with an expected cost in the order of $US35 million," chief executive Andrew Knight told shareholders at their annual meeting in Wellington. "This is an ambition for 2017 rather than a firm boundary and some years we will be able to invest more, some years less."
He singled out the Kakapo prospect off the southeast Taranaki coast which has the potential to be "several times the size of the Tui field" and is 90% owned by NZOG. The company is seeking a semi-submersible rig to drill the prospect and expects to farm out more of it.
The companies two main existing fields are Tui, which produced 2.2 million barrels of oil last year, with NZOG's share 276,000 barrels, and Kupe, which gave NZOG 2.8 petajoules of gas sales, 12,500 tonnes of LPG and 269,000 barrels of light oil.
Kupe and Tui generated $74 million and $42 million of revenue, respectively.
This week, the company announced it had farmed out its Kaheru prospect, east of Kupe, to Beach Energy. The prospect has recoverable reserves of 45 million barrels of oil.
The company will find out in December how successful it has been in bidding for blocks in the government's 2012 blocks offer.
Mr Knight says the company must increasingly look to overseas reserves because having to rely on rigs coming to New Zealand every few years for local drilling puts it in a "make-or-break situation every three years" and this is "clearly not acceptable" in terms of a balanced investment and risk profile.
The shares rose 0.6% to 85.5 cents and have rallied 23% this year.
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