NZEC holds a 100% working interest over the 93,167-acre Eltham Permit, acquired in December 2010 from the previous permit holder. In August 2011 NZEC drilled the Copper Moki-1 well at the north end of the Eltham Permit. The well intersected nearly 25 metres of net pay with excellent porosity in the Urenui and Mount Messenger formations with initial test rates of 1,100 barrels of oil per day, making it one of the best wells ever drilled into the Mt. Messenger formation. This superb early result confirmed the wealth of immediate opportunities on NZEC’s permits in the Taranaki Basin and transitioned NZEC from an exploration company to an oil and gas producer, with continuous production from Copper Moki-1 since December 2011.
Following the success of its Copper Moki-1 well, NZEC made four more oil discoveries in the Mt. Messenger formation. Copper Moki-2 achieved continuous production in April 2012 followed by Copper Moki-3 in July 2012 and Waitapu-2 in December 2012. The wells are producing, sweet, high-quality 41 degree API oil that is sold at a premium to the Brent reference price. In April 2013 NZEC discovered oil at a third site with its Arakamu-2 well, which is awaiting installation of artificial lift.
NZEC's sixth oil discovery, in the Copper Moki-4 well, is a Urenui formation discovery. The oil is slightly heavier that Mt. Messenger oil, at 29 degree API, and has a higher pour point, and may require heated artificial lift to achieve production. NZEC is reviewing artificial lift options and well economics before making a production decision at Copper Moki-4.
NZEC has identified strong potential on the Eltham Permit with numerous onshore and offshore structural and stratigraphic leads. NZEC's exploration strategy is to use its large database of 2D and 3D seismic to prioritize prospects that have a well-defined lower-risk Mount Messenger target and provide multi-zone potential from the Urenui, Mount Messenger, Moki and Kapuni formations. All are fine-grained turbidite sandstone reservoirs with high porosity in the 20% range and conventional permeability. The Eltham Permit area has remained unexplored because previous-generation seismic could only identify very large, conventional prospects such as structural features. Modern seismic reprocessing and interpretation can image combined stratigraphic-structural features, as well as features of comparatively smaller size, of which there are many on the Eltham Permit. In Q2-2012 NZEC shot 100 km2 of 3D seismic across the Eltham and Alton permits. Interpretation of the seismic data is revealing large targets in the deeper Tikorangi and Kapuni formations that NZEC will evaluate as part of its 2013-2014 exploration plans, with additional targets in the Moki, Mt. Messenger and Urenui formations that will be prioritized in the context of NZEC's 2013 exploration program.
Approximately one-third (31,876 acres) of the total Eltham Permit area lies offshore. Being relatively close to land, much of this area could be drilled directionally from onshore. NZEC has several leads on the offshore permit area, all of which lie on-strike with existing onshore and offshore producing pools. Additional marine seismic is planned to refine the drilling locations.