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New Zealand Oil & Gas will drill an exploration well in the Barque prospect, in the Canterbury Basin off the eastern coast of New Zealand’s South Island. The company has until April 2018 to present an official commitment to drill the exploration well, and then until June 2020 to actually drill it.
The Barque prospect is estimated to hold 530 million barrels of crude oil equivalent, and NZOG was granted an extension of the license it holds for the Clipper block that’s part of the prospect. NZOG has a 50-percent interest in the block, with the remaining interest held by Australia-listed Beach Energy. This, however, could go down to 25 percent, according to earlier reports, if the New Zealand company attracts more partners.
NZOG set eyes on the Canterbury Basin earlier this year, local media reported. At the time of the announcement, the Wellington-based company was looking for a partner to share the costs of exploration drilling, which was estimated at up to US$120 million. Back in July, NZOG estimated its chances of striking oil at between 10 and 20 percent, which is not a lot, especially in the subdued oil market.
New Zealand is not exactly a popular hydrocarbons exploration region, so it is generally considered a high investment risk by international majors such as Statoil, which just announced it is leaving the Reinga Basin in Northland because of uncertain chances of striking oil. BP, which drilled an exploration well in the Canterbury Basin back in 1985, pulled out shortly after, saying that the find did not make economic sense.
NZOG is optimistic, however, with chief executive Andrew Jefferies saying the block could yield a “game-changing” find for the whole region. According to the company, the Barque prospect could turn out to be twice as big as the huge Maui gas field, off the west coast of the North Island, which since the launch of commercial production in the 1970s has produced 155.2 million barrels of liquids and condensate and 3.492 trillion cubic feet of natural gas.
By Irina Slav for Oilprice.com
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Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.