New Zealand Energy (CVE:NZ) (OTCQX:NZERF) says it has now made its fifth oil discovery in the Taranaki Basin of New Zealand's North Island, as it further advances its prospects in the region.
Its Waitapu-2 well was drilled to a total measured depth of 2,085 metres, encountering roughly 6.2 metres of net pay in the Mt. Messenger Formation.
The company said Monday the well is now flowing at a rate of 325 barrels of oil per day, and 800,000 cubic feet of natural gas through a 24/64th inch choke
The Waitapu site is just 1.3 kilometres south of Copper Moki, where the company already has three producing wells.
The New Zealand-focused oil and gas producer said its Waitapu-2 well, which has produced 1,880 barrels of oil so far, is producing sweet, high quality 40° API oil that is being trucked to the Shell-operated Omata Tank Farm - located 45 km north of the site - and sold at Brent pricing.
The well will be flowed for around two weeks, and then shut-in for pressure build-up, said the company, adding that depending on the ongoing production, a decision will be made to lay 1.3 km of new pipeline to tie-in to the Waihapa Production Station through the existing Copper Moki pipeline.
"The fact that the Waitapu-2 well is flowing from natural reservoir pressure, as the Copper Moki wells did, further confirms NZEC's geological model," said executive director, Bruce McIntyre.
"Most Mt. Messenger wells in the region have required artificial lift almost immediately. We are continuing to refine our geological model based on drilling success to date and interpretation of the recently completed 3D seismic survey, and have many more prospects to drill that we feel are comparable to the Copper Moki and Waitapu discoveries."
Indeed, New Zealand Energy is in the midst of an eight well drilling program at the Taranaki Basin, which is expected to wrap up in the first quarter of next year. Earlier this month, the company said it was drilling its third well of the program, Arakamu-2, and today said the well reached target depth at 2,380 metres. Casing has started with completion to follow.
The well encountered 8.1 metres of net pay in two potentially productive zones in the Mt. Messenger Formation. The oil and gas company said it will announce results from the Arakamu-2 well once it can estimate productive potential, with testing expected to start in late November.
It expects to spud another well at the site, Arakamu-1A, in December, targeting the deeper Moki Formation at around 2,700 metres, after which it will drill four more wells.
In mid-October, the company said its 3,000 barrels of oil equivalent per day guidance has shifted to the first quarter of 2013, so as to coincide with the completion of its eight well drill program.
The Arakamu site sits around 2.5 kilometres south of Waitapu, where the company said its first well, Waitapu-1, did not yield economic production due to permeability and porosity, despite identifying a significant sand interval with oil and natural gas shows.
The first well has been suspended pending further evaluation and/or sidetrack to an alternate target, New Zealand Energy said.
The company is slated to report its third quarter financial results on November 30, including a full update on exploration activities and the results of production optimization on its three Copper Moki wells, which are now producing under artificial lift.
New Zealand Energy’s property portfolio covers nearly 2.25 million acres of prospects in the Taranaki Basin and East Coast Basin of New Zealand’s North Island.
A large chunk of its properties are located in the Taranaki Basin, which is situated on the west coast of the North Island and is currently the country's only oil and gas producing basin, producing roughly 130,000 barrels of oil per day from 18 fields.
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