TAG Oil* (TAO : TSX : $6.36) New Zealand Energy* (NZ : TSX-V : $2.04 )
All of New Zealand seems to have news pending.
Shares of New Zealand Energy hada great week, rising over 25%. The New Zealand focused oil & gas explorer and producer, plans to drill an additional eight exploration wells between now and year end in the Taranaki Basin.
The first well should have been spudded last week. At last update (July 9, 2012), NZ had completed a production test of Copper Moki-4 (CM-4), the company’s first Urenui formation well. The well produces 29 degrees API oil which has a higher temperature pour point than Mt. Messenger oil. The well is shut in while NZ completes the well test analyses and economic evaluation of artificial lift systems required to make a production decision for CM-4.
The company looks to achieve 3,000 boe/d by year-end 2012.
Separately this week, roughly 5km east of NZ’s CM discoveries, U.K.-listed Kea Petroleum plc reported successful initial results from its Puka-1 production testing in the Taranaki Basin. The well delivered oil flow rates of up to 290 bopd and up to 2.2 MMcf/d of gas.
Elsewhere in the country this week, TAG released its fiscal first quarter 2013 results, including a 102% increase in production revenue, and provided an operations update. Production revenue for the most recently completed quarter was $11.83 million compared to $5.85 million for the comparable quarter last year and the company generated a net profit for the quarter of $5.56 million, before deducting $840,721 for non-cash stock-based compensation, compared to $2.18 million for Q1/12.
As for the East Coast Basin, TAG and Apache (APA) have completed the 2D seismic program and are continuing an extensive consultation process relating to the upcoming drilling of four vertical wells targeting the Whangai and Waipawa source rocks. Upon receipt of the necessary drilling consents from district and regional councils being obtained in a timely manner, TAG and Apache anticipate well-site construction to begin in the first quarter of calendar 2013 followed shortly by drilling operations.
Highlights – Copper Moki gas pipeline is complete and tied in to Waihapa Production Station– Eight-well drill program to commence in early August– Copper Moki-3 is producing approximately 242 barrels of oil per day (“bbl/d“) and 135 thousand cubic feet of natural gas per day(1) (“mcf/d”)– Average production in June from Copper Moki-1 and Copper Moki-2 was approximately 688 barrels of oil equivalent per day (391 bbl/d and 1,784 mcf/d)
Copper Moki Production Update
Copper Moki-1 and Copper Moki-2 continue to flow from natural reservoir pressure, with a total of more than 132,000 barrels of oil produced to date. Copper Moki-3 flowed 7,456 barrels of oil and 4,765 mcf of natural gas1 during production testing and commenced continuous production onJuly 2, 2012. The well is producing from natural reservoir pressure out of the Mt. Messenger formation at an average rate of 242 bbl/d and 135 mcf/d1 through a 20/64 inch choke.
NZEC’s natural gas pipeline is complete and tied in to theWaihapa Production Station. The operator is finalizing arrangements to receive the gas and NZEC expects to begin generating cash flow from its natural gas production in July.
NZEC has completed a production test of Copper Moki-4, the Company’s first Urenui formation well. The well produces 29 degrees API oil which has a higher temperature pour point than Mt. Messenger oil. The well is shut in while NZEC completes the well test analyses and economic evaluation of artificial lift systems required to make a production decision for Copper Moki-4.
TAG Oil provided an extensive Taranaki Basin drilling and operations update.
The company’s current daily production is approximately 2,600-2,800 BOE/d (57% oil). There are currently 18 wells at the Cheal oil and gas field that are capable of production, eight of which are currently on-stream. In addition, TAG has two of the four commercial wells currently on-stream at Sidewinder. Once infrastructure upgrades have been fully completed, a minimum of ten more Cheal wells and two additional Sidewinder wells will be placed into full-time production.
In addition, results from TAG’s ongoing drilling program and a number of workover operations are expected to contribute to future increases in production. With twelve successful wells already drilled with behind-pipe production awaiting tie-in, the company believes its daily oil and gas production will increase to more than 5,000 BOE/d over the next six to nine months. Cheal-C3 recorded a total of 17.5 m of pay including 6.5 m of pay within the Urenui Formation and 11 m of pay in the Mt. Messenger Formation. Cheal- C3 was drilled updip of the Cheal-C2 gas/condensate discovery, and continues to extend the known oil and gas saturation area in this new discovery site. Cheal-C4 is currently drilling, it is the first down-dip follow-up well to the Cheal-C1 oil discovery announced on December 8, 2011. The well will reach total depth on or about June 27, 2012. TAG intends to drill the Cheal-A11 and A12 wells once its rig has been released from drilling the Cheal-C4 well. At Sidewinder, on June 6, 2012,
TAG received consent from the New Plymouth District Council (NPDC) to drill four new wells within TAG’s 100%-owned Sidewinder Oil and Gas Field in New Zealand. The final decision granting consent in support of TAG’s drilling operations was handed down after affected landowners requested a hearing. The consent grant is subject to an appeal process however if an appeal is not filed, TAG plans to resume drilling operations at Sidewinder.
This drilling at Sidewinder will represent the first wells drilled since the four Sidewinder oil and gas discovery wells were drilled in 2010 and 2011. In addition, TAG reports that its infrastructure program is progressing on time and on budget to ensure.
TAG CEO Garth Johnson, commented “We plan to have our behind-pipe production unrestrained in the next six to nine months with substantial upside potential through further successful development and exploration drilling in our lightly explored Mining Licences. With just 13% of our proven onshore Taranaki acreage assigned as reserves to date, we have many years of continued drilling ahead, both in the shallow formations where we’re achieving strong success and in the deeper liquids-rich gas prospects, which will soon be scheduled for drilling .”
TAG was Clive Stockdale’s top story two years ago and while we might have been suggesting taking profits over the last few weeks, it has nothing to do with TAG Oil and everything to do with fading world economies and the apparent inability or incompetence of European leaders to solve their problems.
Today TAG makes a series of announcements and Cashmir capital writes, “Pushing Forward in New Zealand with Drilling, Completions and Testing as Planned and 4,000+ boe/d Behind Pipe Set to Unlock Over Next 6-9 Months. Twelve Taranaki Basin wells awaiting tie-in to push TAG in excess of 5,000 boe/d by year end.
With 10 Cheals and 2 Sidewinders wells behind pipe, TAG is looking to increase production in the next 6-9 months from current 2,600 – 2,800 boe/d (57% oil) to at least 5,000 boe/d.
We also see significant further upside depending on well performance and new well results. Further build-out of infrastructure, including tripling lifting capacity at Cheal, a new gas plant, adding a Cheal-C permanent battery and pipeline tie-ins, are progressing as planned and on budget.
Drill program progressing with 4 key Cheal drill targetsunderway or planned to drill soon: The Cheal-C3 was successfully drilled and completions are expected soon, with 17.5m of pay seen within the Urenui and Mt. Messenger formations. C3 was drilled updip of the C2 discovery well, which initially flowed at ~14mmcf/d with assoc. condensate. Meanwhile, Cheal-C4, the first downdip well to C1, is expected to reach TD later this week. Next in line in the drilling program include 2 Cheal- A follow up wells, which are to be drilled back to back after the rig is released from C4.
Two more Sidewinder wells are also planned once the window for appeals closes on its recently approved Sidewinder program.”
–(Marketwire -May 31, 2012) -New Zealand Energy Corp. (TSX VENTURE:NZ)(OTCQX:NZERF) (“NZEC” or the “Company”) is pleased to announce that it has entered into a binding agreement (the “Origin Agreement”) withOrigin Energy Resources NZ (TAWN) Limited, a wholly-owned subsidiary ofOrigin Energy Limited (ASX:ORG) (collectively “Origin”) to acquire upstream and midstream assets (the “Acquisition”). These assets include four Petroleum Mining Licenses totaling 26,907 acres in the mainTaranaki Basin production fairway (the “Petroleum Licenses”) as well as theWaihapa Production Stationand associated gathering and sales infrastructure.
NZEC is also pleased to announce new oil discoveries in its Copper Moki-3 (“CM-3″) and Copper Moki-4 (“CM-4″) wells, with the expectation of initiating continuous production from CM-3 toward the end of Q2-2012. Continuous production from the Copper Moki-1 well (“CM-1″) along with the 16-day flow test from the Copper Moki-2 well (“CM-2″) generated positive cash flow of$4.5 millionduring Q1-2012 based on a realized netback averaging approximatelyUS$90per barrel of oil sold.
Four Petroleum Licenses in key production fairway provide significant exploration and production potential
Petroleum Licenses are permitted until 2016 and renewable without relinquishment thereafter
93 km2 of 3D seismic data with coverage over approximately 50% of the Petroleum Licenses and 585 km of 2D seismic data
Well log data from 27 wells, a number of which demonstrate multi-zone potential in NZEC’s target formations: Urenui, Mt. Messenger, Moki and Kapuni
16 established drill pads, most with existing oil and gas production infrastructure
Uphole completion opportunities in existing wells for Urenui, Mt. Messenger and Moki formations
Significant expansion to NZEC’s drilling inventory
Waihapa Production Stationprovides full spectrum midstream processing
Provides direct access to markets for NZEC production through oil and gas sales pipelines
Gathering capacity in place to service NZEC’s oil and gas production
Includes facilities for gas processing, liquefied petroleum gas (“LPG”) recovery, oil processing and water disposal with associated gathering and oil and gas sales pipelines
NZEC will own the only open-access midstream production facility in theTaranaki Basin, providing cash flow potential through agreements with third-party producers
Copper Moki Oil Discoveries
CM-3 confirms third consecutive Mt. Messenger discovery, yielding 510 barrels of oil per day (“bbl/d”) and 320 thousand cubic feet of natural gas per day1 (“mcf/d”)
CM-3 confirmed reservoir potential in the Moki formation
CM-4 oil discovery in the Urenui formation, production test underway
1 Natural gas and associated natural gas liquids are currently being flared until the Company completes a pipeline to theWaihapa Production Station, with the pipeline on schedule for tie-in by the end of Q2-2012.
First Quarter Financial Results
54,677 bbl produced and 49,486 bbl sold, representing a 170% and 172% increase over Q4-2011, respectively
Generated positive cash flow of$4.5 millionfrom production, resulting from netbacks of approximatelyUS$90/bbl
Reduced production costs by approximately 5% to$22.25/bbl from$23.44/bbl in Q4-2011
Closed a$63.5 millionbought deal financing inMarch 2012in which 21.2 million shares were issued at$3.00per share
Strong balance sheet with$70.4 millionof working capital as atMarch 31, 2012
“With 170,649 acres of Petroleum Exploration Permits and 26,907 acres of Petroleum Licenses, NZEC will control a significant portion of the exploration fairway in theTaranaki Basin,” saidBruce McIntyre, President and Director of NZEC. “We believe that the Petroleum Licenses are highly prospective across multiple formations, offering exploration, uphole completion and production potential from existing wells and the ability to rapidly drill new wells. Along with the prospects on our existing permits, NZEC’s technical team has identified a number of Urenui, Mt. Messenger and Moki leads on the Petroleum Licenses, significantly increasing NZEC’s drilling inventory in theTaranaki Basin.”
“These acquisitions increase NZEC’s presence inNew Zealandfrom both an exploration and infrastructure perspective,” said John Proust, Chief Executive Officer and Director of NZEC. “Controlling a central oil and gas production facility in theTaranaki Basinprovides NZEC with the strategic opportunity and capacity to independently process production, at reduced operating costs, as well as generate cash flow through third-party processing agreements. This transaction is consistent with NZEC’s business strategy of adding value for shareholders through acquisition and development.”
The purchase price for the Acquisition comprisesCDN$42 millionin cash (plus adjustments) and a 5% gross overriding royalty on the Petroleum Licenses, payable to Origin. The Company will be using funds previously allocated for acquisitions, working capital on hand and cash flow from production to complete the Acquisition. With a current cash position of$61 million, post-acquisition NZEC will remain fully funded to complete its previously announced 2012 capital program and reiterates its forecasted exit rate of 3,000 barrels of oil equivalent per day (“boe/d”).
Closing of the Acquisition is targeted forOctober 2012and contingent on receiving government approvals, Origin completing the current recommissioning of the TAWN LPG extraction facility, Origin and/or NZEC entering into an agreement withContact Energy(“Contact”) regarding the use and development of Origin’s Ahuroa gas storage facility, and standard TSX Venture Exchange approvals.
New Zealand Energy was been granted an extension of land to its Eltham Permit (PEP 51150) in the Taranaki Basin of New Zealand’s North Island. New Zealand Petroleum and Minerals has granted NZ an additional 700 acres (2.83 km2) in the northwest corner of the Eltham Permit. The land extension gives NZ control over two prospects that were overlapping the Eltham Permit boundary, and will allow NZ to drill the prospects from the optimal location. NZ will proceed to obtain land access agreements and resource consents and expects to drill the prospects as part of the company’s previously announced eight
well exploration program in the H2/12.
NZ has two wells in production on its Eltham Permit, Copper Moki-1 (CM-1) and CM- 2, and is currently testing CM-3 and CM-4. NZ has identified six prospects on 3D seismic with the expectation of establishing one pad per prospect. Subject to success, two to four wells could be drilled per pad.
NZ has also identified leads on 2D seismic that will be further defined with the 100 km2 3D seismic survey that is currently being acquired. The company has entered into a rig contract to drill up to eight wells in the second half of 2012, focusing on the Mt. Messenger, Urenui and Moki formations.
NZ is evaluating opportunities to accelerate its exploration program, including drilling additional wells that may target thedeeper Tikorangi and Kapuni formations.
The company provided no additional updates on CM-3 and CM-4.
NOTE : This is part of the release – see the company website for the full release . Four analysts have a ” buy ” recommendation on the stock.
New Zealand Energy Announces 2011 Year-End and Fourth Quarter Results and 2011 Year-End Reserves Estimate
---------------------------------------------------------------------------- For the year ended For the year ended December 31, 2011 December 31, 2010 $ $ ---------------------------------------------------------------------------- Production 11,623 bbl Nil Sales 9,567 bbl Nil ---------------------------------------------------------------------------- Price 106.83 $/bbl Nil Production costs 23.44 $/bbl Nil Royalties 4.96 $/bbl Nil Net revenue 78.43 $/bbl Nil ---------------------------------------------------------------------------- Revenue $ 974,517 $ Nil Total comprehensive loss (6,655,829) (10,338,136) Interest income 119,583 Nil Loss per share - basic and diluted (0.08) (0.24) Current assets 19,293,345 6,229,650 Total assets 31,152,804 6,301,322 Total liabilities 1,383,376 371,958 Shareholders' equity $ 29,769,428 $ 5,929,364 ----------------------------------------------------------------------------
OnApril 24, 2012, NZEC entered into a drilling agreement withEnsign International Energy Services Pty Ltd(“Ensign”) pursuant to which Ensign has committed to drill three exploration wells for NZEC, with the option for up to five additional wells, in the second half of 2012.
OnApril 1, 2012, NZEC commenced continuous production from its Copper Moki-2 well. Copper Moki-2 flowed 14,825 barrels of oil and 15,352 thousand cubic feet (“Mcf”) of natural gas(1) during a 16-day flow test in February and was subsequently shut-in for pressure build-up before commencing production in April. The well is currently producing from natural reservoir pressure out of the Mt. Messenger formation at an average rate of 581 barrels of oil per day (“bbl/d”) and 1,530 Mcf of natural gas(1) per day (“Mcf/d”) through a 24/64th inch choke.
NZEC has drilled five exploration wells in theTaranaki Basin, one on the Alton Permit and four from the Copper Moki pad on the Eltham Permit. Copper Moki-1 and Copper Moki-2 are currently in production. Copper Moki-3 and Copper Moki-4 will be completed and tested in Q2-2012.
NZEC’s Copper Moki-1 well has been flowing from natural reservoir pressure sinceDecember 10, 2011and has produced more than 67,000 barrels of oil since it was first tested inAugust 2011. Production rates have averaged 424 bbl/d and 1,058 Mcf/d(1) since commencing continuous production inDecember 2011. Over the last 30 production days, Copper Moki-1 has produced at an average rate of 309 bbl/d and 1,205 Mcf/d(1) through a 24/64th inch choke.
Copper Moki-2 flowed 14,825 barrels of oil and 15,352 Mcf of natural gas(1) during a 16-day flow test in February and was subsequently shut-in for pressure build-up. NZEC initiated continuous production from Copper Moki-2 onApril 1, 2012. The well is currently producing from natural reservoir pressure out of the Mt. Messenger formation at an average rate of 581 bbl/d and 1,530 Mcf/d(1) through a 24/64th inch choke.
Natural gas and associated natural gas liquids are being flared until the Corporation completes a 2.6-km pipeline and associated production and sales agreements, with the pipeline scheduled for completion by the end of Q2-2012.
Copper Moki-3 reached target depth at 3,167 metres in mid-March and is the Corporation’s first well drilled through to NZEC’s deeper exploration target, the Moki formation. After evaluation, the Corporation identified 12 metres of net pay within the Mt. Messenger formation and 15 metres of net pay within the Moki formation. NZEC brought a service rig to site and commenced completion of Copper Moki-3 onApril 25, 2012.
Copper Moki-4 reached target depth of 2,125 metres onApril 10, 2012. After evaluation, the Corporation has decided to perforate and test both the Urenui and Mt. Messenger formations, and will commence completion activities after perforating the Moki formation in Copper Moki-3.
East Coast Basin
The East Coast BasinofNew Zealand’sNorth Islandhosts two highly prospective shale formations, the Waipawa and Whangai, which are the source of more than 300 oil and gas seeps. Within theEast Coast Basin, the following PEPs have been, or are in the process of being, acquired:
NZEC will complete and test Copper Moki-4 once the service rig has finished completion operations with respect to the Moki formation of Copper Moki-3. If successful, both wells will be tied into the existing production facilities at the Copper Moki pad.
NZEC will shortly begin construction of an approximately 2.6-km natural gas pipeline that will deliver natural gas from the Copper Moki site to a gas production facility. The pipeline is targeted for completion at the end of Q2-2012. NZEC is currently producing approximately 2,630 Mcf/d(1) of natural gas.
NZEC has identified six prospects on 3D seismic similar to Copper Moki, with the expectation of establishing one pad per prospect with two to four wells per pad. NZEC has also identified 12 leads on 2D seismic that will be further defined with the ongoing 3D seismic survey.
With a fully-funded treasury, NZEC is evaluating opportunities to accelerate its exploration program, including drilling additional wells which may target the deeper Tikorangi and Kapuni formations. While previous guidance was for six wells in theTaranaki Basin, NZEC has entered into a rig contract to drill up to eight wells in the second half of 2012. NZEC also has the ability to move quickly should the team identify a strategic acquisition, partnership or farm-in opportunity.
NZEC is completing a 100-km2 3D seismic program over the northern region of the Eltham andAltonpermits. Preparation for the seismic survey is nearly complete and NZEC intends to initiate the 30-day data acquisition process in early May. Following data acquisition, NZEC’s technical team will take approximately four months to process and interpret the data and integrate the information into its technical database. The 3D seismic survey will further define existing targets and reduce drilling risk while potentially identifying new exploration targets and expanding NZEC’s inventory locations for its 2013 exploration program.