Wednesday 14th December 2011
|Text too small?|
New Zealand Oil & Gas has taken another step into Tunisia, paying US$3 million to Canadian oil and gas company Chinook Energy, for a 40 percent stake in an offshore oil play with proven and probable reserves equivalent to some 6.3 million barrels of oil.
The farm-in to the Cosmos South project, in the Gulf of Hammamet, sees NZOG equal partner with Chinook, while the remaining 20 percent is owned by the Tunisian state oil company, ETAP, which is also contributing its share of development costs, according to the Chinook website.
First oil from the project could be flowing as early as 2014, assuming a final investment decision is made towards the middle of next year.
At that point, NZOG will be committed to another US$19 million of development costs in what its new chief executive, Andrew Knight, says is a “a near term, low risk development opportunity, with both production upside and exploration potential.”
The Chinook website puts the total cost of developing up to two producing wells and a single water injection well at between C$130 million and C$150 million.
Cosmos South oil is a 42 API light sweet, high quality oil, priced at a slight premium to Brent, and the prospect “contains at least six other seismically defined prospects, two of which have been tested and proven hydrocarbon bearing,” Chinook says.
NZOG already has interests in an offshore exploration block in the Tunisian Gulf of Gabes, with seismic exploration of the area due to commence this month.
In his first statement as chief executive, following the departure from Dec. 1 of David Salisbury, Knight said the development plan was currently based on three wells, a small platform and a floating production and storage offtake vessel (“FPSO”), with initial production rates of 15,000 to 20,000 barrels of oil per day.
“NZOG’s initial cost exposure is relatively small”, while the development costs could be “comfortably” funded from the NZOG balance sheet.
Located in 120 metres of water, and at a depth below ground of 1,500 metres, the Cosmos discovery was first made in 1983, but undeveloped since.
The field is adjacent to Shell’s legacy Tazerka field and Lundin’s current Oudna FPSO development.
Shares of NZOG fell 0.7 percent to 70 cents in trading on the NZX today.
No comments yet
Debt-free NZ Oil and Gas will use cash buffer as it hunts for oil
NZ Oil and Gas cedes promising Kakapo permit after failing to attract farm-in partner
NZOG chair Griffiths backs director liability over health and safety failures
NZOG in trading halt, Tunisian oil field announcement due
NZOG returns to interim dividends after more than a decade
NZOG's first well outside NZ to spud in late Jan
NZ Oil and Gas buys interests in three Taranaki permits from Octanex
NZ Oil and Gas has $162 million to add oil and gas reserves
NZ Oil and Gas farms out quarter-stake in Kaheru prospect
NZ Oil and Gas misses out on stake in deepwater Taranaki permit