30 Jul 2010

NZOG in talks over selling permit shares

4:39 pm on 30 July 2010

New Zealand Oil & Gas is talking with international players interested in taking a stake in some of its exploratory permits.

The listed company's exploration programme has failed to find any commercial quantities of oil or gas this year, but it is pursuing other prospects.

Chief executive David Salisbury says a key focus is the Kaupokanui field, which is between the Kupe and Maari fields in offshore Taranaki.

Mr Salisbury says an exploratory well at the site will cost about $US15 million to drill, and a rig may be available to carry out the work next summer if seismic data proves favourable.

But the company, which owns the entire permit, needs to make a commitment to drill by January or risk relinquishing the rights.

Mr Salisbury says it is now in confidential discussions with companies interested in buying a stake.

NZOG is also looking to sell part of its 40% stake in the Baaque permit in the offshore Canterbury basin.

But Mr Salisbury says the permit is in deeper water and is considered riskier, so it is proving a harder sell than the Kaupokanui field.

It has applied to the Ministry of Economic Development for more time to make a decision about drilling.

Shares in New Zealand Oil and Gas have slipped 2 cents to $1.52.