New Zealand: Octanex Believes in Matuku Prospect Potential

Octanex N.L. today provided an update on the progress made by the Joint Venture towards reaching a decision on whether to drill the Matuku prospect in PEP 51906.

PEP 51906 is situated in the offshore Taranaki Basin of New Zealand. Octanex holds a 35% participating interest in the permit. The Joint Venture is operated by OMV New Zealand  Limited (“OMV”) which holds the remaining 65% participating interest.

A new 3D seismic survey, acquired within the area of PEP 51906 and PEP 53537, was completed by the vessel, Orient Explorer in late July 2011. At the same time a number of additional lines of 2D seismic data were acquired across both  permit areas. Both the 3D and 2D surveys aimed to provide better delineation of the Matuku feature. Octanex and OMV hold the same 35% and 65% respective participating interests in PEP 53537 as they each hold in PEP 51906. While OMV acquired its interest in PEP 51906 through a farmin to Octanex’s then 100% interest in that permit, the participating interests in PEP 53537 were acquired by the two companies by being granted that permit on 5 July 2011.

Part of the PEP 51906 farmin agreement terms are that OMV would acquire (and pay for 100% of the acquisition, processing, mapping and interpretation costs) a new 3D seismic programme within that permit. That farmin term was fulfilled  by the 272 km2 3D seismic survey acquired by OMV over the Matuku feature.

Processing of the new Matuku 3D data is progressing to schedule and is currently expected to be completed by early November 2011, after which mapping and interpretation of the new data will commence.

In tandem with the acquisition and processing of the new Matuku 3D data, OMV is conducting basin modelling to assess the hydrocarbon source potential in the north-west of PEP 51906 and to the west of and beneath the Matuku feature.  Early indications from the basin modelling suggest that Matuku is ideally located adjacent to a potential hydrocarbon source ‘kitchen’ . Related exploration work has also identified a number of follow up leads adjacent to Matuku. The Joint Venture has budgeted to commence initial planning for a well, hopefully to test the Matuku prospect, with a view to drilling in H1 of 2013. However, OMV has not yet made a commitment to drill a well.

The PEP 51906 farmin agreement provides that OMV must make a drilling commitment on or before 19 November 2012 to drill a well in the permit or re-assign all of its 65% participating interest back to Octanex. If a commitment is made to  drill a well then OMV will meet 100% of the costs of that well and of all exploration activity costs in the permit. Octanex is therefore fully carried through the costs of the first well drilled in PEP 51906 and for any other exploration costs in the permit up to the time that well is drilled.

Octanex Comment

“OMV is an experienced international operator of both exploration and production interests and has substantial New Zealand permit interests. These New Zealand interests include being the operator of the Maari oil field (PMP 38160), located to the immediate south of PEP  51906 in which OMV holds a 69% interest, a 10% interest in the Maui gas/condensate field(PML 381012) and a 26% interest in the Pohokura gas/condensate field. All of these permits are located in the offshore Taranaki Basin.

Octanex is confident OMV will continue to bring to bear its considerable exploration and  operational experience, knowledge and expertise regarding the hydrocarbon potential within PEP 51906 and PEP 53537. Octanex considers PEP 51906  has the potential to contain a number of discrete oil accumulations and is encouraged in having a Joint Venturer and Operator of the substance and experience of OMV carry out the on-going exploration of these two permits.”

Source: Octanex, October 3, 2011