AWE Begins Oi-1 Drilling Offshore New Zealand

AWE Limited, as Operator of Petroleum Mining Permit 38158 offshore Taranaki, New Zealand, has reported the semi-submersible drilling rig “Kan Tan IV” started drilling the Oi-1 exploration well at 18:30 hours (6.30pm) NZDT on Friday, 30 May 2014.

The Oi-1 exploration well is located approximately 12 kilometres northeast of the Tui Area Oil Fields in water depth of approximately 120 metres.

As at 06:00 hours (6.00am) NZDT today, operations had run and cemented 30 inch casing to 229 metres and was drilling ahead in a 17 ½ inch hole at a depth of 510 metres.

The Oi-1 exploration well will be drilled vertically to a planned total depth of 3,881 metres. The well objective is to evaluate the hydrocarbon potential of a 4-way dip closed structure similar to the producing Tui, Amokura and Pateke fields and it will target the same F10 reservoir sandstones.

The Oi prospect, in a discovery success case, represents a best estimate Prospective Resource of 11 million barrels of recoverable oil (gross, unrisked P50 estimate). AWE is participating in the Oi-1 exploration well at a reduced equity of 31.25% and has the option to increase its equity participation in any future appraisal drilling and development to 57.5% by exercising existing buyback provisions.

Gross dry hole drilling costs are estimated at USD 27 million (net USD 8.4 million to AWE at 31.25%) and the well is expected to take approximately 30 days to complete.

In the event of a commercial discovery, it is envisaged that any subsequent development of the Oi field would involve a tie back to the nearby Tui production facility, the FPSO “Umuroa”, where sufficient production capacity is available.

Press Release, June 02, 2014