New Zealand Energy Corp. (CVE:NZ)(OTCQX:NZERF) provided Thursday an update on its exploration and production activities in the Taranaki Basin of New Zealand's North Island, getting ready to spud the first well at its fourth drill site by the end of the week.
The company is undertaking an eight well exploration program in the Taranaki Basin, designed to increase production and cash flow. The junior oil and gas company expects to produce 3,000 barrels of oil equivalent per day once the campaign is complete - expected by the end of this quarter.
New Zealand Energy said today that its Waitapu-2 well started continuous production at the end of December, and produced at an average rate of 151 barrels of oil per day over the first two weeks of January.
The company's Waitapu site is just 1.3 kilometres south of Copper Moki, where it already has three producing wells.
At Copper Moki, its three wells have together produced at an average rate of 273 barrels of oil per day over the first two weeks of this month.
All four wells, at Waitapu and Copper Moki, are producing light, high quality oil from the Mt. Messenger formation, the company said, with the oil being trucked around 45 km to the Shell-operated Omata Tank Farm in New Plymouth.
The junior oil and gas producer added that the oil is sold at Brent pricing, generating a "top-tier netback".
The company is also looking to get more oil as completion operations at two wells on its Arakamu site are underway. The Arakamu-1A well reached target depth in the Moki Formation, with the well to be perforated shortly, while the Arakamu-2 well was perforated across two intervals in the Mt. Messenger formation.
The Arakamu site sits around 2.5 kilometres south of Waitapu.
New Zealand Energy's drill rig has now been moved to the Wairere site, where the company expects to spud the Wairere-1 well by the end of the week, it said, targeting the Mt. Messenger formation at around 1,900 metres.
Wairere, where the company can drill up to six wells, is its fourth drill site, located around 3.75 km southwest of its Copper Moki site and 7.5 km southwest of the Waihapa Production Station.
The station is located around 3km from New Zealand Energy's Copper Moki site, and the company expects it to reduce transportation and processing costs for its oil and gas production.
As the only open-access midstream facility in the Taranaki Basin, the station ensures the company can process its own production, as well as offers opportunities for processing third-party gas, liquids, oil and water.
After the eight well exploration program is wrapped up, the company will then move directly into its 2013 campaign. This year's program will focus on targets that are central to the Waihapa Production Station and associated gathering pipelines, expected to expedite tie-in of discoveries and reduce transport and processing costs.
The company also plans to drill two wells on the East Coast in 2013 to test both conventional opportunities in the shallower Miocene sands and unconventional opportunities in the Waipawa and Whangai oil shale formations.
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