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NZOG to target $35M annual exploration spend

Wednesday 20th June 2012

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New Zealand Oil & Gas is telling investors it is entering a new phase now that it's in a position to start trying to extract value from the portfolio of oil and gas exploration acreages it's built up over the past two or three years.

In a roadshow presentation for New Zealand investors, released to the NZX, chief executive Andrew Knight says the emerging focus is "different from the last few years."

"NZOG had been focused on opportunity assessment (acquisition) to achieve country entry and reserves targets," the presentation notes said. "Acquisition will now focus on enhancing marketed position (capability). Building our own exploration opportunities will increase value and balance acquisition."

With interests in New Zealand, Indonesia, and Tunisia, NZOG would be targeting exploration spends of about $35 million annually, averaging some $7 million on up to five projects each year, through a combination of farm-out and farm-in. The near term opportunities are clearly identified, but a table in the presentation indicates there are plenty of gaps to fill from 2015 onwards.

Knight indicated the deep-water Barque prospect, off the Canterbury coast, would prove challenging to develop.

While it was a "large prospect", it was "expensive to drill". An international campaign to attract additional partners was underway, with a drill-or-drop decision due by the end of August.

NZOG shares were up slightly today, gaining 0.6 percent to 80 cents apiece.

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