NZ's Austral strikes more oil in Cheal field

Small New Zealand energy explorer Austral Pacific said on Wednesday it had found found oil in a new well being drilled in the Cheal field, located in the country's North Island.

It said it had encountered oil bearing sands in the Cheal B1 well, one of four new development wells being drilled as part of the Cheal oil field development

"Success at Cheal B1 goes a long way towards confirming our geological model for the northern extension of the Cheal oil field," Austral's chief executive Rick Webber said in a statement.

Austral Pacific Energy holds a 36.5 per cent interest in the field, which will rise to 69.5 per cent after the completion of its acquisition of Arrowhead Energy Ltd, with Tag Oil holding the balance.

Cheal is an onshore field in Taranaki, on the west coast of New Zealand's North Island, and reserves so far have been assessed at around 4.4 million barrels of oil.

Production from the Cheal field has started from temporary facilities with an an initial output of 300 barrels a day, which is expected to rise to 1900 barrels a day after a $25 million development of a permanent facility next year.

Shares in Austral Pacific, 11 per cent owned by utilities investor Infratil, last traded at $2.80.

- REUTERS