Pike River investor increasingly focused on overseas opportunities

New Zealand Oil&Gas (NZOG) said it missed out on buying about $NZ100 million of onshore assets in Indonesia earlier this year and it has another eight opportunities under consideration in the country.

"While disappointing, we do think that second (place) was the right answer," chief executive David Salisbury said in comment on the missed investment opportunity.

NZOG today reported quarterly revenue, helped by strong oil prices, and said it is focused on developing two new core investment areas outside offshore Taranaki in New Zealand.

The company is in the final stage of securing exploration acreage in northern hemisphere. If successful it plans to open a branch office in the area in May or June.

The company also said it was disappointed that there would be two previously unplanned shutdowns at Kupe, one of which would be for six days in May.

NZOG is a 29.4 percent shareholder in the Pike River Coal company which developed the Pike River mine, now in receivership, where 29 workers lost their lives last year. NZOG was a secured creditor of Pike River Coal in respect of a $US28.9m convertible bond and $12m of funding advanced in late November. It was an unsecured creditor in respect of $13m of short term funding.

NZOG said it remained confident it would, at a minimum recover its secured Pike River Coal debt through the sales process the receivers were now carrying out.

NZOG said there were potential purchasers other than state-owned Solid Energy for the mine.

NZOG reported March quarter operating revenue of $32.3 million from its two offshore Taranaki operations, with $12 million from the sale of Tui oil and $20.3 million from the sale of Kupe sales gas, LPG and light oil.

Oil prices had risen strongly in 2011 at the same time as production from both fields was higher than in the previous quarter.

But for Kupe, the short term forecast for production and associated revenues would be constrained until a faulty gas compression unit was replaced, NZOG said.

During the March quarter there had been no significant downtime at Kupe, where NZOG has a 15 percent interest. The field produced 4.4 petajoules of sales gas in the quarter, 18,750 tonnes of LPG, and 450,000 barrels of light oil.

The timing of the gas compression unit fault, in early March, was disappointing as a higher gas offtake, and associated liquids production, had been forecast for the June quarter. Now June quarter production was expected to be similar to that seen in March.

Because of the limit on production at Kupe, revenue from the field would be about $5m to $6m lower than they otherwise would have been. Despite that, if oil prices remained near current levels, the company still expected total revenue for the 2011 financial year to exceed $100m.

The Tui area fields, in which NZOG has a 12.5 percent interest, produced more than 776,000 barrels of oil in the March quarter.

For the half year to December 31, NZOG reported a loss of $99m, including provisions of $98.6m from the disaster at the Pike River mine.