Sands running out for wildcat

By FIONA ROTHERHAM

Oil explorer New Zealand Oil & Gas says further drilling results out this morning will help to determine the future of its wildcat Hochstetter-1 well off the Taranaki coast.

Investors bailed from the stock yesterday, with the share price sliding around 17 per cent or 8c down to 40c on the news that initial signs of hydrocarbons from the well were not considered economically significant.

The share price peaked at 65c earlier this month, compared with its long-held mid-40c mark, after NZOG announced it would drill for oil at the Hochstetter prospect.

However the stock had spiked down again by 25 per cent in the past two weeks before the company made a definitive statement on the prospect.

NZOG said minor shows of hydrocarbons were encountered in the D sands formation, between 2945m and 2960m deep.

Exploration manager Eric Matthews said further drilling was taking place overnight through the F sands structure below 3200m.

"If the F sands don't show anything we will not abandon it straight away. We'll have to complete the evaluation."

NZOG had initially hoped the D and F sand structures would each contain 145 million barrels of recoverable oil.

If Hochstetter is dry, Mr Matthews said the company would shift the exploration focus to Tui, a large prospect considered likely to hold gas/condensate which is northeast of the massive Maui oil and gas field.

A discovery at Hochstetter would have encouraged exploration in Hector and Tahuroa, two other identified prospects in the same area. NZOG's direct and indirect interests hold 63 per cent equity in the venture.

The company also announced progress results from exploration of its Corvus-1 well in Australia yesterday. Two sands drilled so far appear uneconomical but "provided encouragement for deeper objectives," NZOG said. NZOG has a 10 per cent interest in the well operated by US independent oil company Apache Energy.