Tuesday 18th October 2011
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Canadian methanol producer Methanex has confirmed it will fund half the cost of an exploration well in Kea Petroleum’s offshore Taranaki licence area.
The Mauku-1 well is in PEP381204, which is partly onshore and offshore in the northern Taranaki region, in an area previously known as the Felix prospect and recently renamed Mauku.
Methanex is committing to half the cost of the 11 million British pound exploration in the hope of finding new gas sources to help run its methanol production plant at Waitara.
Methanex will gain the rights to buy all gas discovered in the Mauku prospect at a price linked to the world price of methanol, while Kea will retain any light oil.
Kea will also retain full ownership of the licence, allowing it to farm in other joint venture partners, as it has also previously signalled it will seek to do.
"We believe the economic potential of a discovery at Mauku for both ourselves and Methanex, and for New Zealand, could be significant,” said Kea chairman Ian Gowrie-Smith in a statement to the London Stock Exchanges secondary board, AIM, where Kea is listed.
“We believe our upcoming shallow oil exploratory drilling could potentially have a considerable impact on Kea's near-term cash flow and balance sheet, at a manageable cost to the company," he said.
Kea and Methanex have assessed the potential for the area at unrisked recoverable resource of some hundreds of billion cubic feet of gas and several tens of millions of barrels of oil.
Kea recently abandoned its first exploration well in New Zealand, in the onshore Taranaki Wingrove prospect and has been concentrating on Australian opportunities.
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