1 Aug 2012

NZOG looks to diversify its NZ portfolio

7:01 am on 1 August 2012

New Zealand Oil & Gas is looking to diversify its New Zealand portfolio, including looking at onshore opportunities.

The energy exploration company says its cash holdings exceed $200 million helped by stronger demand for gas from Genesis during the last quarter.

It sold $27.3 million worth of oil and gas from its Kupe and Tui fields in the three months to the end of June.

The company's chief executive Andrew Knight says production at its Tui field is declining and it currently has a very offshore focused exploration portfolio.

He says NZOG is looking at how it will diversify and participating in different offshore opportunities, particularly where there's the potential for drilling with greater certainty.

"We're also looking at some of the onshore players and some of the onshore stuff, particularly in Taranaki, it's a pretty well proven basin, there are some opportunities there, we think that would provide a nice diversity to the portfolio".

This year the Government introduced block offers, an annual tender process to allocate oil and gas exploration permits.

Mr Knight says while NZOG is exploring in Tunisia and Indonesia, it is also looking at the blocks on offer in New Zealand.

He says there are some potentially attractive blocks in the Government's block offers which are outside of Taranaki, but they have a different risk profile to Taranaki because there isn't the same depth of knowledge about them.

Mr Knight says NZOG doesn't want to spread itself too thinly offshore because it's a challenging process which include building a different set of relationships and dealing with a different set of regulatory rules.

He says he considers three is about the right number of countries for NZOG.

Mr Knight says the company is giving the Pegasus blocks, off the bottom of the North Island, a good look.

He says New Zealand Oil & Gas is not ruling anything out at this stage but it's gone through the list and is working out which blocks are more attractive.

He's expecting bids for the block offers to go in in October and doesn't expect to hear until the New Year.