- New Zealand Oil and Gas (NZO) flags a potential appraisal opportunity at its Pacoota P3 formation in the Northern Territory even as exploration cost pressures rise
- JV partner Central Petroleum (CTP) identified the opportunity at the Pacoota P3 formation in the Amadeus Basin and is considering integrating it into a current drilling program
- The opportunity comes even as CTP flags that due to increased costs within the industry, a drilling program in the area suffered a $3.1 million cost increase at the end of April
- Central Petroleum relayed this information to NZO as its A$22.7 million renounceable rights issue offer is open, which is going towards the Amadeus Basin petroleum assets
- NZO shares last traded at 43 cents on May 10 and CTP traded at 11 cents on the same day
New Zealand Oil and Gas (NZO) has flagged a potential appraisal opportunity at its Pacoota P3 formation in the Northern Territory even as exploration cost pressures rise.
The energy stock said its joint venture (JV) partner and the operator of the NT assets, Central Petroleum (CTP), revealed the “potentially attractive” near-term appraisal opportunity at Pacoota P3 through a technical review in the area. The JV partners will now undertake follow-up work to further assess the opportunity.
According to the companies, the P3 appraisal opportunity could be integrated into the current PV-12 drilling program. However, this may result in changes to the timing and costs of the remaining program.
Central Petroleum is progressing the drilling program at the Palm Valley permit, with PV12 being the first of two wells planned. The second will include the Dingo-5 well at the Dingo permit.
The PV-12 well is reportedly expected to intersect the P3 formation in the next two to three weeks as it targets the Arumbera formation.
The JV plans to make a decision regarding the added appraisal target once the current well has reached its total depth and the Arumbera formation has been evaluated.
In line with this, the companies are considering the purchase of necessary equipment to “preserve the opportunity” to appraise the P3 formation.
Regardless of integrating the P3 opportunity into the current program, Central Petroleum told NZO that as of April 30, around $3.1 million of additional costs had been incurred on the drilling program.
The company attributed the cost increase to higher fuel and freight costs, increased cost of civil works and equipment, and delays in rig logistics.
New Zealand Oil and Gas CEO Andrew Jefferies said he expected costs would continue to increase.
“Whilst the cost pressures currently being observed within the drilling campaign are not ideal, inflation is hitting everyone’s hip pocket at this point,” Mr Jefferies said.
“I am pleased that we are being agile in evaluating the newly recognised P3 opportunity and preserving the option to exploit it in this campaign, which could achieve significant cost efficiencies compared to returning to appraise it separately.”
NZO recently launched a NZ$25 million (A$22.7 million) equity raise to invest in its projects in Australia and New Zealand, including the Amadeus Basin petroleum assets.
NZO shares last traded at 43 cents on May 10, and CTP traded at 11 cents on the same day.