Ann: MINE: NZO: New well drilled at Oi

• Release Date: 10/06/14 09:04
• Summary: MINE: NZO: New well drilled at Oi
• Price Sensitive: No
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					NZO
10/06/2014 09:04
MINE

REL: 0904 HRS New Zealand Oil and Gas Limited

MINE: NZO: New well drilled at Oi

A new well will be drilled in the Oi prospect in Petroleum Mining Permit
38158 after encountering difficulties setting casing.

Oi-1 had drilled a 17.5 inch hole to a depth of 1,507 metres when operational
difficulties were encountered setting casing. Attempts to install cement
plugs and sidetrack the well were also unsuccessful.

The joint venture has decided to seal Oi-1 and abandon it, drilling a new
well, Oi-2, nearby.

To improve conditions in Oi-2, 13 3/8 inch casing will be set at 550 metres
rather than 1,500 metres planned in Oi-1. This will enable a drilling fluids
system to be established at a shallow depth and improve management of
conditions in the well bore. Then a 12.5 hole will be drilled to 1,500 metres
before 9 5/8 inch casing is set. An 8.5 inch hole will then be drilled to the
target depth of 3,881 metres.

The drilling programme is now planned to take up to 48 days at a cost of
around USD40 million ($7.5 million to New Zealand Oil & Gas).

Oi is about 37 kilometres off the coast of Taranaki, New Zealand in about 120
metres of water.

The operator has publicly stated a pre-drill un-risked best estimate
prospective resource of 11 million barrels of recoverable oil. The New
Zealand Oil & Gas share at drilled equity of 18.75 per cent is 2.06 million
barrels, with the option to restore to 27.5 per cent equity (3 million
barrels) in exchange for reimbursement of pro-rata costs and a buy back
premium. A further joint venture partner, Pan Pacific Petroleum, has publicly
released its own estimates of the prospective resource. New Zealand Oil & Gas
considers the well has a 17 per cent geological chance of success, and a 16
per cent chance of commercial development.

Resources in this statement have been evaluated using a probabilistic
methodology. The estimate of prospective resources referred to in this
statement is based on, and fairly represents, information and supporting
documentation prepared by New Zealand Oil & Gas Vice President of Operations
and Engineering Andrew Jefferies (B Eng Mech Hons, Msc Pet Eng, MBA), a
Society of Petroleum Engineers Certified Petroleum Engineer who has over 23
years of industry experience, and reflects and summarises the most current
information supplied by the joint venture operator. The estimated quantities
of petroleum that may potentially be recovered by the application of a future
development project relate to undiscovered accumulations. These estimates
have both an associated risk of discovery and a risk of development. Further
exploration appraisal and evaluation is required to determine the existence
of a significant quantity of potentially moveable hydrocarbons.

The joint venture partners in the Oi exploration well are:
AWE Limited: 31.25% (Operator).
Pan Pacific Petroleum: 50%
New Zealand Oil & Gas (through subsidiary): 18.75%.

John Pagani
External Relations Manager
+64 21 570 872
End CA:00251379 For:NZO    Type:MINE       Time:2014-06-10 09:04:46