New Zealand-focused oil and gas company Kea Petroleum today announced the relinquishment of its Mercury licence, PEP 52333, offshore Taranaki, and an update on its ongoing strategic review.
The Mercury permit was awarded to Kea on October 13, 2010. It covers an area 90 square miles, mainly offshore in the north Taranaki area.
As part of an agreed work programme, Kea acquired about 46sq miles of 3D seismic data and, following interpretation of this, identified a 6sq mile prospect with original resource potential estimated to contain 108-688million barrels of oil.
Kea offered the prospect to potential farm-in partners but, “given the present challenging environment” and lack of success in recent offshore exploration in New Zealand, it has not been possible to reach a satisfactory agreement to commit to drilling an offshore well before September 2015.
The company’s board has now decided to surrender the licence to New Zealand Petroleum and Minerals and will spend no more money on the prospect.
Kea’s strategic review continues under the advice of Rockpoint Corporate Finance and may lead to asset sales.
The company said a number of potential funding partners had reviewed technical data on its Shannon and Mauku prospects.
Chairman Ian Gowrie-Smith said: “We are disappointed that we have been unable to conclude a farm-out of the Mercury prospect but it is prudent to surrender the permit.
“Our limited resources must be focused on our lower cost onshore permits at Mauku and Puka as we seek to secure funding to enable the drilling of our Shannon prospect.
“Rockpoint’s strategic review process is at an early stage and we will provide further updates in due course.”
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