Prospects positive for oil, gas producer

This year is shaping up to be a defining time in the life of oil and gas explorer Austral-Pacific, as it prepares to test its latest Taranaki well.

The company has reported an after-tax loss for the year to the end of 2004 of $7.9 million, down from a $67,000 profit the year before.

The loss was largely due to a $7.4 million write-off of its oil and gas properties, including the Kahili field, which turned out to be a dud with uncommercial rates of gas. Despite this setback, Austral-Pacific said its other prospects were most positive.

"The financial position of the company is strong and the going-forward plan is exciting," it said yesterday. "Management expects 2005 will be a defining year and there is every reason to expect that the Cardiff and Cheal properties will be independently confirmed as having significant hydrocarbons."

Much speculation and hype surrounds the Cardiff well, 30 per cent owned by Austral Pacific and 40 per cent by state-owned power company Genesis. Tests have shown hydrocarbons are present, but the company is waiting until the end of this month before it can start comprehensive testing of the well. Once equipment arrives later this month, it can start pressure and flow testing to see whether commercial quantities of gas can be obtained from the well.

The testing programme will cost about $3.5 million and is being funded by Genesis.

A big gas find could have implications for many companies across the energy sector, including Contact and Genesis, who need gas for their power stations. Both these companies are preparing for the eventual importation of liquefied natural gas.

Austral Pacific has its shares listed on the New Zealand Stock Exchange and the TSX Venture Exchange (part of the Toronto Stock Exchange). Its shares closed yesterday up 8c at $4.38.