New Zealand Oil & Gas expects to start producing oil from wells in northern Indonesia next year after it finalises a deal with the government there.
To begin with, it expects to establish 6 or 7 wells producing hundreds of barrels of oil a day.
The oil and gas company said it is assessing whether more oil can be extracted from the Kupe reservoir with further drilling.
The company reported a net operating cash outflow of nearly $5 million in the September quarter, mainly because it did not sell any oil from its Tui operations during the three months.
Chief executive Andrew Knight said he expects the Indonesian government to finalise its oil exploration contract later this year.
He says there are several factors combining to create cautious optimism.
Mr Knight said they include:a potential development opportunity, capability, inclination from businesses and the government, and the right commercial settings.