Austral Pacific strikes 'oil pay'

Oil has been discovered in a new Taranaki well drilled by local exploration company Austral Pacific.

Austral says its "Supplejack South-1" well, in which it has a 36 per cent stake, has reached a target depth of 1900m, where one to two metres of "oil pay" were found.

Indications of gas at shallower levels have also found down the Supplejack well.

The Supplejack owners have decided to "deviate" the well further south, where they think it will hit a bigger oil column.

Austral told the stock exchange yesterday this deviation drilling should be finished over the Christmas-New Year period.

News of the Supplejack discovery was welcomed by investors, with the Austral Pacific share price yesterday rising 30c to close at $2.90.

Investors in Austral have not had a bumper time this year, with the company's share price falling from a high of $4.80 in March to a low of $2.60 last week.

The oil find comes as testing of natural gas flows from its much anticipated Cardiff well continue. Speculation about the Cardiff well has been going on for much of 2005, after gas was found there in 2004.

The well is 40 per cent owned by state-owned power company Genesis, which needs to find new supplies of gas for its power stations.

Tests have already shown hydrocarbons are present in Cardiff but pressure and flow testing is needed to properly determine whether commercial quantities of gas can be obtained from the well.

The testing programme, which was predicted to cost about $3.5 million, is being funded by Genesis.

Austral also has a 35 per cent stake in an exploratory oil well in Papua New Guinea, where drilling is due to begin early next year.