Indo-Pacific Energy interested in Cardiff prospect area

Nov 17, 2003 01:00 AM

Wellington-based oil and gas explorer Indo-Pacific Energy believes it may be sitting on a gas field in Taranaki "bigger than Pohokura". Indo-Pacific managing director Dave Bennett said Shell found gas in the "Cardiff" prospect area, east of Mount Taranaki, in 1991 but did not develop it because it did not stack up against bigger, better-return projects elsewhere.
Maui gas was still plentiful, inhibiting gas field development that could not compete with the cheap Maui price. However, the rundown of the Maui field was offering opportunities for the development of other fields.
"Potentially, Cardiff is bigger than Pohokura," Dr Bennett, a geophysicist, said.

Pohokura, an offshore field, is expected to have reserves of 600 to 900 PetaJoules and to be producing gas from mid-2006. New Zealand uses about 150 PJ of gas a year. Indo-Pacific, registered in Canada, is issuing 4 mm shares at $ 2 in the next month to raise $ 8 mm from New Zealand investors in order to step up its drilling and exploration programme.
The minimum parcel is 1,500 shares. A warrant is attached to every two shares giving shareholders a right to buy another share at $ 2.10 before November 30 next year. The $ 8 mm is earmarked for the commercial development of two smaller oil and gas fields -- Kahili and Cheal -- and the drilling of several other licence areas in which Indo-Pacific has interests with partners. The smaller, shallower fields are less expensive to drill and quicker to commercialise to produce revenue.

Indo-Pacific has licences to explore in Australia and Papua New Guinea, but most of its activities have been centred on onshore Taranaki licence areas. Indo-Pacific's shareholders are mainly 7,000 North Americans. In June it raised $ 1.5 mm from wealthy New Zealand investors, including Sir Ron Brierley and Alan Hubbard. Dr Bennett said they paid the equivalent of $ 1.35 a share. He said Indo-Pacific intended to bring in partners to fund the exploration of the "deep gas" Cardiff prospect. It planned to drill a new well close to Cardiff-1 next year.
"I'm confident we will get Cardiff funded," he said. Two overseas companies were interested in the project, one of them Iranian. Dr Bennett said the cost of drilling Cardiff was about $ 12 mm.

The Cardiff-1 well that Shell drilled in the 12 km long and 4 km wide Cardiff prospect area and two other wells it drilled at the northern end of the prospect near the town of Stratford flowed gas and condensate (light oil). The Shell reports on the exploration were publicly available and estimated there was a 75 % probability of gas reserves of 175 PJ around Cardiff-1 and a 25 % probability of gas reserves of 550 PJ. With the gas found at the Stratford wells, that suggested "something bigger than Pohokura", Dr Bennett said.
Indo-Pacific acquired the Cardiff prospect from Bligh Oil. According to the prospectus for the $ 8 mm share issue, the Indo-Pacific shares should be considered "speculative". Gas and oil exploration is inherently risky, the prospectus says. Dr Bennett said drilling was risky and complex.

Indo-Pacific's oil and gas exploration business had been funded by the equity from the North American investors and revenues from oil and gas sales. At the end of June this year it had accumulated operating losses of $ 12.3 mm (NZ$ 19.5 mm), the prospectus shows.
As part of its capital raising, Indo-Pacific is seeking to list on the New Zealand Stock Exchange and on the Toronto Venture Exchange, which will be considered its "home exchange". Dr Bennett said Indo-Pacific had other "deep gas" projects, such as the offshore prospect Orca, that would cost about $ 20 mm to drill. "It's a prospect very similar to Pohokura." Indo-Pacific would bring in partners to explore that field.

Source: The Dominion
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