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NZ Oil & Gas buys into Canterbury Basin, acquires Tap Oil stake

Tuesday 28th October 2008

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New Zealand Oil & Gas, whose shares have bucked the NZX 50 Index's slide to gain this year, agreed to acquire an interest in a permit in the offshore Canterbury Basin.

NZOG will acquire a 40% stake in permit PEP38259, which lies from a unit of Australia's Tap Oil, it said in a statement today. That will make it the biggest party in the permit, which is 25% owned by operator AWE New Zealand, 20% by Beach Petroleum (NZ) and 15% by Anzon New Zealand.

The permit gives access to the Barque gas and condensate prospect, which NZOG estimates has recoverable resources of 600 billion cubic feet of gas and 58 million barrels of light oil.

"We have concluded that the Canterbury Basin has proven effective petroleum systems present and the potential to produce commercial quantities of oil and gas," chief executive David Salisbury said.

AWE is planning a marine seismic survey in early 2009 and under the agreement NZOG would fund 40% of the seismic programme. The permit conditions require a decision on whether to drill an exploration well to be made by August 2010.

NZOG and AWE already work together on the Tui oilfield, which has boosted NZOG's revenue since going into production.

NZOG's shares fell 5.7% to NZ$1.15 after the price of crude oil declined.

By Jonathan Underhill

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