NZOG aims to push ahead with overseas opportunities

New Zealand Oil&Gas is hoping to push ahead with one or more overseas investment opportunities in the coming months.

In his speech to the company's annual meeting today, chief executive David Salisbury said NZOG had a goal of establishing one or two new core areas, in addition to offshore Taranaki.

Potential offshore investments assessed during the past year included corporate deals, asset purchases and exploration acreage, Mr Salisbury said.

"Our very thorough screening process rejected most of these opportunities, generally because the prize was too small, or the risk too great. However, several overseas investment opportunities remain under active consideration and we remain hopeful of progressing one or more in the coming months."

Along with its Wellington-based staff, NZOG had two explorationists based in Britain and Canada who gave the company the ability to identify and assess a range of opportunities that were not so accessible from this country.

While the four wells drilled in the past year were unsuccessful, they had been attractive drilling targets but critical technical risks that were identified before drilling had been encountered.

Mr Salisbury defended NZOG's continuous screening process for exploration and other investment opportunities, saying it was working well.

During the past year NZOG had continued to expand its exploration portfolio in this country, he said.

Geological work was being done now in the northern region of the offshore Taranaki Basin to identify further targets that could be worth drilling.

That followed the drilling of the Albacore-1 well in December, which, although it found no oil, allowed NZOG to better characterise the nature and quality of potential petroleum reservoir systems in the area.

More than 600km of new seismic lines acquired for NZOG in May across the southern offshore Taranaki Basin was helping the company evaluate some key petroleum system elements.

That comprehensive approach had not been carried out by any other company and gave NZOG an advantage in assessing the prospectivity of the southern basin, Mr Salisbury said.

That included the Kaupokonui prospect, where estimates of mean prospective resources were more than 200m barrels of oil, and for which a drilling plan had been prepared.

New Australian company Peak Oil&Gas had recently signed up as a partner for the permit, with Peak to meet 20 percent of the costs of an exploration well, with conditions, in return for a 10 percent permit stake.

NZOG was confident of signing up at least one more joint venture partner ahead of the drilling commitment for Kaupokonui needed next January.

The company said it earned $23.7m in operating revenue for the September quarter, including $5.2m from the sale of oil from the Tui field and $18.5m from sales gas, LPG and light oil from the Kupe development.

NZOG chairman Tony Radford told today's meeting the disappointing results from the four wells drilled in the past year should not deter the company.

The NZOG board had a clear view that the company's shares were under-valued, a view shared by a number of broking firms which analysed and reported on the company, he said.

Shares in NZOG closed at $1.29 yesterday having ranged between $1.79 and $1.14 in the past year.