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NGC eyes Indo gas prospects

Duncan Bridgeman

Friday 21st November 2003

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NGC Holdings was yesterday set to pump more cash into oil and gas exploration company Indo-Pacific in a bid to secure gas from developing fields in Taranaki.

The company is understood to have made a financial commitment for first rights to gas found in the Cardiff prospect, east of Mt Taranaki, which Indo-Pacific acquired from Bligh Oil last year. But this has been denied by Indo-Pacific.

Sources said NGC's involvement in Cardiff is similar to a wider agreement signed with Indo-Pacific in April for a 10-year first right of purchase of future gas in return for a $2 million prepayment.

An NGC spokesman declined to comment on the latest developments but said the company had a "gathering strategy," which included a number of opportunities for securing future gas supply.

Indo-Pacific managing director Dave Bennett described the Cardiff prospect area as potentially another Pohokura, which is expected to have reserves of 600-900 petajoules and be producing gas from mid-2006.

Major energy companies such as NGC distance themselves from direct participation in exploration but there is fierce competition to lend indirect support to such programmes.

The depletion of the Maui gasfield and increasing wholesale gas prices have made the search for natural gas more attractive than in the past.

This week Indo-Pacific released details of its upcoming share float and NZX listing.

The company plans to raise up to $8 million through the issue of four million $2 shares, with investors also receiving one warrant for every two shares offered. Warrants could be exercised at a price of $2.10 any time before November 30 next year.

The prospectus for the company's capital raising outlines a two-year timeframe for drilling up to 10 wells, expected to include at least four wells in the first year. Indo-Pacific will have an average 30% interest in each well.

Indo-Pacific has been involved in drilling 20 wells in New Zealand since 1996 and also operates in Australia and Papua New Guinea. The NZX listing is conditional on the company being accepted for listing on the Toronto TSX Venture Exchange.

Dr Bennett said the capital raised would also be used to help bring the Kahili and Cheal fields into production.

The onshore Kahili-1A/B discovery had flow rates of more than six million cubic feet of gas and 240 barrels of associated oil condensate a day, while the Cheal field is being appraised for development, he said.

The two fields were smaller and shallower than Cardiff and less expensive to drill.

Cardiff is expected to cost about $12 million to drill, he said.

NGC now concentrates on gas and electricity metering and is a large buyer of gas from the giant offshore Maui field, which is expected to be at the end of its commercial life in 2007.

The company announced in August it would sign a deal to buy gas from Kahili and build facilities to deliver the gas to market.

At press time, shares in NGC, which is 66% owned by the Australian Gas Light Co, had last traded up 1c to $1.76.

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