Kea seeking new rig, smarts over Kahili loss

Kea seeking new rig, smarts over Kahili loss

By Pattrick Smellie

March 1 (BusinessDesk) – Oil and gas explorer Kea Petroleum Plc is gearing up for a series of new exploration wells testing Taranaki Basin onshore and offshore prospects, but is hampered by lack of equipment for both exploration and its planned Wingrove production well.

The company is also smarting over the loss of its tender for rights to explore the onshore Taranaki Kahili block, which deprived it of a “ready-to-drill” target that would have constituted the first joint exploration under a new partnership arrangement with Methanex. Instead, the company has taken up new exploration opportunities onshore in Australia, and in the Timor Sea.

However, Kea still has significant exploration plans in New Zealand in the immediate future, according to the statement accompanying the release of its half year results to Nov. 30 to the London Stock Exchange.

Kea is in active discussions with Methanex to drill the Felix prospect in PEP381204, onshore northern Taranaki, targeting Eocene Mangahewa Sands, which are the producer reservoirs for the nearby Pohokura oil and gas field.

“Regardless of whether Methanex decide to partner in drilling Felix, Kea has already decided to drill this prospect, by itself or in association with suitable farm-in parties,” said chairman Ian Gowrie-Smith in a statement.

Kea had also reached agreement with the Singaporean company STP Energy to complete a joint seismic 3D survey over the highly prospective Mercury prospect, offshore Taranaki in PEP52333 “in the very near future”, with potential to be drilling exploration wells at Mercury “as early as next year.”

Kea also disclosed it is unlikely to pursue any further the Tariki sands play in the Beluga prospect (PEP51155) after concluding that sands intersected while drilling the Beluga-1 exploration well “are likely water saturated at the well location.”

Kea had been exploring the prospect with Methanex, which has entered into a partnership with Kea to prioritise a drilling programme intended to give the methanol producer access to new sources of natural gas for its Taranaki production facilities.

However, “there remains good potential for commercial quantities of gas in stacked pay in the lower Mangahewa Sands, and it remains a strong possibility that the company will drill a new deviated well, Beluga-2, from the current site, to test this,” Gowrie-Smith said.

Timing is dependent on other priorities and rig availability.

The company’ plans to have its Wingrove discovery, situated onshore Taranaki in PEP51153, in production by the end of last month had also been delayed because specialist equipment had been late arriving from Canada.

While most of the equipment was now on-site, the delay would have knock-on effects in assessing “a number of Mt Messenger-style prospects, including further drilling from Wingrove-2 before embarking on appraisal drilling of this oil discovery and other similar prospects.”

The joint purchase of a mobile drilling rig would alleviate some of the current rig constraints, but the company is jointly purchasing another rig to advance exploration plans.

While Kea’s directors believed the company should have been awarded the Kahili licence, instead of a joint venture between Mosaic Oil NZ Ltd. and L&M Energy Ltd., newly identified Australian prospects fitted the company’s target profile, being near existing production, relatively shallow, and capable of being brought into production quickly.

“They will not impact seriously on the company’s present financial resources,” said Gowrie-Smith. “One of the prospects is an oil opportunity the other a gas target near existing infrastructure.”

The company reported a loss of 1.1 million British pounds for the half-year, as expected prior to commencing production from Wingrove, equivalent to 21 pence per share. The company held cash of 15.9 million pounds at Nov. 30, “sufficient to cover its current lease obligations in New Zealand and the planned onshore commitment in Australia.”

(BusinessDesk)

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