PPP 'one to watch' after Asian oil find

Pan Pacific Petroleum's stake in an oil discovery off the coast of Vietnam makes the NZX-listed company one to watch, an analyst says.

The company has a 15 per cent stake in the Red Emperor well where testing at two reservoir zones have produced flows at a combined rate of 3265 barrels of oil and 8.1 million cubic feet of gas a day.

PPP has about 5000 New Zealand shareholders, including NZ Oil & Gas, which has a 15 per cent stake in the Australian-based company. Both have a stake in the highly productive Tui field off Taranaki - NZOG with 12.5 per cent and Pan Pacific with 10 per cent.

Research head at McDouall Stuart, John Kidd, said PPP had stayed below the radar but was becoming more interesting from three perspectives; its stake in Tui, the NZOG cornerstone stake and the progress it was making in Vietnam.

"That's a reasonable find from a single well - and to have a flow rate like that is very promising."

No water was found in either zone as the explorers drilled to a depth of 3810m.

The Vietnam venture includes Britain's Premier Oil, Vietnam American Exploration and a unit of Abu Dhabi-based Mubadala Development.

Drilling began at the Rong Do exploration well in Block 07/03 last month. The area was opened up for drilling by a 2003 accord between the Indonesian and Vietnamese Governments.

PPP said a 3D survey was planned to define the potential of the Red Emperor discovery and nearby structures, and to determine future exploration and appraisal activity.

"The discovery of oil and gas is very encouraging for future exploration in the block which has multiple leads and prospects," the company said.

A second exploration well is planned for the final quarter of this year.

PPP said last month that it aimed at a balanced exploration portfolio in proven basins, with a priority on low-medium, rather than high-risk prospects. Vietnam was an exciting first step.

PPP shares have risen from a 12-month low of 34c and yesterday closed down 1c at 55c.