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NZOG expects strong cashflows from Kupe
11 March 2010 - New Zealand Oil & Gas Ltd (NZOG) says it expects the Kupe gas condensate field to provide the Wellington-based company with a long term annual revenue stream of around $60-65 million.
Sources: NZOG and Lindsay Clark
Along with ongoing but reducing production from its stake in the Tui oil field, the Kupe output would provide strong cash flows, chief executive office David Salisbury says.
The commencement of production from Kupe in early December 2009 was the major milestone achieved during the period.
Kupe is still in a commissioning period but is producing substantial quantities of sales gas, LPG and light oil. To date, NZOG’s share of production has been 0.5 PJ of gas, 840 tonnes of LPG and 52,000 barrels of light oil.
Earnings from Kupe will be treated as revenue from 1 January 2010. Up until 31 December, Kupe earnings were capitalised.
NZOG’s production in the second half of 2010, on a barrel of oil equivalent basis, is expected to be approximately double that of the first half, as a result of the contribution from Kupe.
NZOG said a number of attractive leads and prospects have been located in its 100%-owned PEP 51311 permit to the west and south of Kupe. This is as a result of new and newly re-processed seismic data. The primary prospect (formerly called Gamma) has been re-named Kaupokonui.
NZOG has commenced a process to farm down its interest in the permit.
The company is also seeking to farm down some of its 40% interest in the Barque exploration permit in the Canterbury Basin. Mapping and prospect evaluation is largely completed ahead of a drilling commitment required by August 2010.
NZOG reported a net loss after tax of $6.5 million in its interim financial results for the six months to 31 December 2009. This was on an operating revenue for the period of $37.7 million.
The loss was the result of a number of factors including $14 million in unrealised foreign exchange losses, slowly reducing production from Tui, lower average international oil prices and an exploration write-off of $10.9 million from the Albacore well.
