$650 million-plus boost to Kupe reserves

Wednesday 14th July 2010

The Kupe oil gas field holds substantially more light crude oil than previously estimated, as well as additional gas and LPG which will boost its value by more than $650 million at today's prices, 15% owner New Zealand Oil & Gas told the NZX this afternoon.

The increase represents a boost of perhaps $200 million-plus for state-owned electricity generator, Genesis Energy, which owns 31% of the field, and has contracts to offtake all Kupe gas for use in its power stations.

ASX-listed Origin Energy is the operator and owns 50% of the Kupe field, meaning its share of the increase is likely to be in excess of $325 million, with the remainder going to 4% owner, Mitsui E&P Australia.

NZOG shares jumped 4 cents a share to $1.33 on the news.

The most dramatic reserves upgrade is for light oil, up 27% to an estimated 18.6 million barrels equivalent, while natural gas reserves have been revised up 8% to 273 Petajoules, and there is a 5% increase in recoverable LPG to 1114 kilotonnes.

“The light oil provides the greatest financial return of the three products, so confirmation that the field is more ‘liquids-rich’ than initially estimated is particularly significant," said NZOG chief executive David Salisbury, who said the increase was worth $100 million at today's prices for NZOG's portion.

The reserves review has clarified future capital expenditure requirements in the region of $20 million to $30 million, later in the field's life, allowing the drilling of two additional production wells, with costs and timing to be refined over the coming year.

Businesswire.co.nz

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