Ann: MINE: NZO: NZOG farms in to Taranaki permits

• Release Date: 28/11/12 11:16
• Summary: MINE: NZO: NZOG farms in to Taranaki permits
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NZO
28/11/2012 09:16
MINE

REL: 0916 HRS New Zealand Oil and Gas Limited

MINE: NZO: NZOG farms in to Taranaki permits

New Zealand Oil & Gas has agreed to acquire interests in three offshore
Taranaki permits from ASX listed company Octanex NL.

The agreement includes Permit 51906, where the prospect known as 'Matuku' is
expected to be drilled in the second half of next year.

For NZOG it's the third significant step up in exploration activity off
Taranaki announced in recent weeks. It follows confirmation of an intention
to drill the Kakapo prospect and drilling commitment and farm-out of its
Kaheru prospect - both Kakapo and Kaheru are off the South Taranaki coast.

In the new agreement, NZOG will pay US$12.5 million for a 12.5 per cent
interest in Petroleum Exploration Permit 51906 (Matuku). Octanex will retain
22.5 per cent, and the operator, OMV, has 65 per cent.

OMV has announced it is seeking a semi-submersible rig to drill an
exploration well in the Matuku prospect before the end of 2013. NZOG's
interest will be fully carried through this first well. If the exploration is
successful and an appraisal well is drilled at Matuku, NZOG or Octanex can
exercise an option to increase NZOG's interest by a further 5 per cent, to
17.5 per cent. NZOG would then pay Octanex's share of the appraisal well,
which would then be 17.5 per cent.

The agreement is subject to regulatory and other approvals. NZOG's payment
will be made in three tranches on receiving joint venture and ministerial
consent to the transfer and execution of a drilling contract; consents and
regulatory approvals being received for drilling a well; and the drilling rig
arriving on site ready to drill the well.

NZOG is also acquiring 50 per cent interests in two other permits, subject to
ministerial approval, where it will become the operator in each.

PEP 53473 covers 853 square kilometres north of Tui. NZOG will pay 75 per
cent of the cost of a seismic programme to earn its 50 per cent interest. The
seismic evaluation has to be completed by March 2014.

PEP 52593 covers 3509 square kilometres in offshore Taranaki. NZOG will pay
60 per cent of the cost of the seismic programme for its 50 per cent
interest. A commitment to further seismic evaluation needs to be made before
April 2013, for completion within six months.

Chief Executive Andrew Knight says NZOG is stepping up exploration activity.

"PEP 51906 covers 1613 square kilometres. It's adjacent and west of the giant
Maui field, north of the Maari field and south of the Tui field where NZOG's
12.5 per cent earned the company revenue of NZ$42 million in the last
financial year. The operator has publicly estimated mean recoverable resource
for the Matuku prospect at around 65 million barrels.

"These new acquisitions sit well within NZOG's New Zealand exploration
portfolio, as they build on the knowledge base developed from NZOG's Taranaki
history and provide exposure to the developing western fairway," Andrew
Knight said.
End CA:00230315 For:NZO    Type:MINE       Time:2012-11-28 09:16:01