$650 million-plus boost to Kupe reserves

$650 million-plus boost to Kupe reserves

By Pattrick Smellie

July 14 (BusinessDesk) - The Kupe oil gas field holds substantially more light crude oil than previously estimated, as well as additional gas and LPG which will boost its value by more than $650 million at today's prices, 15% owner New Zealand Oil & Gas Ltd. told the NZX this afternoon.

The increase represents a boost of perhaps $200 million-plus for state-owned electricity generator, Genesis Energy, which owns 31% of the field, and has contracts to offtake all Kupe gas for use in its power stations.

ASX-listed Origin Energy is the operator and owns 50% of the Kupe field, meaning its share of the increase is likely to be in excess of $325 million, with the remainder going to 4% owner, Mitsui E&P Australia.

NZOG shares jumped 4 cents a share to $1.33 on the news.

The most dramatic reserves upgrade is for light oil, up 27% to an estimated 18.6 million barrels equivalent, while natural gas reserves have been revised up 8% to 273 Petajoules, and there is a 5% increase in recoverable LPG to 1114 kilotonnes.

“The light oil provides the greatest financial return of the three products, so confirmation that the field is more ‘liquids-rich’ than initially estimated is particularly significant," said NZOG chief executive David Salisbury, who said the increase was worth $100 million at today's prices for NZOG's portion.

The reserves review has clarified future capital expenditure requirements in the region of $20 million to $30 million, later in the field's life, allowing the drilling of two additional production wells, with costs and timing to be refined over the coming year.

(BusinessDesk)

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