Fletcher bubbling with success

By FIONA ROTHERHAM

Champagne corks are popping at Fletcher Challenge Energy following confirmation of its biggest gas discovery.

Fletcher Energy will over the next two weeks significantly upgrade its estimates of the size of the Pohokura gasfield off Taranaki, after another successful test of its second exploration well.

Results from the latest flow tests confirmed the field as the largest gas discovery behind Maui and Kapuni. Flow rates, showing the quality of the reservoir, were at 30.7 million standard cubic feet.

The rates were limited by the capacity of the rig's test equipment and Fletcher Energy estimates the absolute open-flow potential at between five and 10 times greater.

Original estimates put the field size at 430 billion cubic feet, about twice NZ's annual consumption.

Industry analysts say the figure could be as high as 620 billion cubic feet, enough to keep Methanex's two methanol plants going for seven years.

The extra upside to the gas find is the high amount of condensate, making its development by 2003 likely. The condensate-to-gas ratio in the second test was up to 89 barrels per million standard cubic feet, around twice the average Maui rate.

Pohokura is operated by Fletcher Challenge Energy (33.3 per cent) on behalf of its joint-venture partners, Preussag Energie (33.3), Shell Petroleum (18.3) and Todd Petroleum (15).

A third well is expected to be drilled this year to further define the limits of the offshore field.

Fletcher Energy spokesman Stephen Jones said the partners were likely to sit down early next year to make a final decision on development after marketing to potential gas buyers.

The recent court decision upholding Fletcher Energy's generic gas contract with ECNZ, assigned to Genesis, could speed development of Pohokura.

Analysts estimate the discovery adds at least 50c to Fletcher Energy's share price and boosts its saleability as the group's four letter stocks are restructured.

Competitor Shell has signalled it may be interested in acquiring Fletcher Energy if the Fletcher Challenge board decides in August to put it up for a trade sale.

Fletcher Energy's shares rose 2c to $5.92 yesterday, as the market had already factored in the goods news on Pohokura in recent weeks.

One analyst said it was one of the few New Zealand stocks to be recommended as a strong buy and is forecast to keep going higher.

The Pohokura find has not yet led to any increased activity by neighbouring permit holders.

Clyde Bennett, Crown Minerals NZ petroleum sector manager, said a lot of activity by adjacent permit holders had already been scheduled to go ahead and there was no vacant acreage left to grab in sought-after Taranaki.

Canadian-listed Pacific Tiger Energy is due to drill a well by October in PEP38463, northeast of the Pohokura permit.