The Company’s near-term objective is to increase production and cash flow while reducing exploration expenses. To achieve this objective, NZEC is going to focus on commercial opportunities in the pending acquisition of assets from Origin Energy Resources NZ (TAWN) Limited (“Origin”). While this decision in no way diminishes the Company’s view of the prospectivity of the Eltham and Alton permits, NZEC intends to focus in the near-term on lower-cost opportunities that are close to infrastructure.
The acquisition from Origin includes new petroleum licenses that are central to a network of oil and gas gathering pipelines and the full-cycle Waihapa Production Station. The Company is working diligently to conclude this complex transaction and expects closing to occur in Q2-2013. Upon closing, NZEC plans to reactivate six wells in the Tikorangi formation using an established gas lift system, and has also determined that six previously drilled wells on the petroleum licenses have uphole completion potential. Recompletion of these wells would be significantly less expensive and faster than drilling new wells, and successful discoveries could be quickly tied in to the Waihapa Production Station using existing oil and gas gathering pipelines. Both the reactivations and uphole completions could bring near-term, low-cost production and cash flow to the Company.
NZEC’s technical team has also identified five high-priority Mt. Messenger targets in the southwest corner of the petroleum licenses. NZEC has completed permitting for a new site called Waipapa (Oru Rd) and will shortly begin construction of the drill pad to ensure that the Company can move quickly to access these targets once the acquisition has closed. Longer-term exploration plans on the petroleum licenses include accessing Mt. Messenger targets from existing drill pads, many of which have gathering pipelines in place, that offer lower-cost exploration potential and can be tied-in to the Waihapa Production Station on an expedited basis. NZEC is advancing a number of new commercial opportunities to use the Waihapa Production Station to its full potential and maximize facility revenues, while ensuring that NZEC’s gas and associated natural gas liquids production can be efficiently delivered to market.
On the East Coast, NZEC plans to drill two exploration wells by the end of 2013. NZEC continues to analyse core and seismic data, collected in 2012, to pinpoint drill locations and plans to drill one well on each of the Ranui and Castlepoint permits.
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