Kupe oil and gas field commercial reserves increase by 35%, NZOG says

Kupe Production Station, near Hawera in south Taranaki.

New Zealand Oil & Gas, Genesis Energy and Australian operator Origin Energy all stand to gain from what NZOG declared today was a 34.7 percent increase in "developed reserves" from the offshore Taranaki oil and gas field, Kupe.

The increase "not only provides additional volume from within the existing development but it's expected that contracted volumes will be able to be supplied without the need for significant additional capital," said NZOG's chief executive Andrew Knight in a statement to the NZX.

"The reserves upgrade is significant news for the company," he said. "It is pleasing to announce an increase in reserves that does not require additional capital to realise."

It is also likely to be significant for partially privatised electricity and gas producer Genesis Energy, which was due to make its own statement to the NZX this morning, saying it was still assessing information received from Origin, which is also yet to make a statement about the upgrade. Genesis was not likely to comment further before December, a company spokesman said.

NZOG's announcement comes a day ahead of its annual shareholders meeting in Wellington. The company's shares closed yesterday at 42 cents apiece, having fallen 40 percent in the last year, a period in which global oil prices have settled at new, much lower levels than were previously prevailing.

The local oil and gas explorer said its 15 percent share of Kupe developed reserves at June 30 stood at 4.4 million barrels of oil equivalent (boe) and 4.2 million boe after production since then. That total now stood at 5.6 million boe, a 34.7 percent increase.

Light oil volumes of 1 million boe was a 43.2 percent increase, while natural gas reserves now stood at 23.3 petajoules, a 34 percent rise from June. NZOG's share of the field's developed reserves of liquefied petroleum gas (LPG), now stands at 97.4 kilotonnes, a 28.7 percent uplift.

Its share of undeveloped reserves is still believed to sit at 3.2 million boe, the company said, with further work "to assess options for developing potential additional reserves."
"The additional work may provide material additional reserves, provided economic assessments support development," said Knight.

Genesis holds at 31 percent share in Kupe, Origin holds 50 per cent and Japanese multi-national Mitsui holds at 4 percent share.