Kea Petroleum plc gets ministerial consent
Kea Petroleum plc (AIM: KEA), the oil and gas company focused on New Zealand, is pleased to announce that New Zealand Ministerial Consent has been granted to the transfer of a 30% participating interest in PEP 51153 to MEO Australia Ltd (“MEO”). This consent represents the final condition to approve the transfer under the staged farm-out agreement (the “Agreement”) announced on 7 April 2014.
The PEP 51153 permit (the “Permit”) covers an area of 104.4 sq km situated onshore along the Eastern Margin of the Taranaki Basin, New Zealand’s prolific hydrocarbon province.
Under the Agreement, MEO will earn a 30% interest in the Permit in return for funding NZ$4m (80%) of a NZ$5m first phase work program (“Phase 1”). Phase 1 is intended to boost existing production and assist future field appraisal and involves a workover of the existing two Puka wells and drilling of a new well (Puka-3) from the existing pad with the objective of further increasing production and appraising the anticipated primary channel sand identified on the recent 3D seismic survey. Phase 1 also involves further testing of the suspended Douglas-1 well. The testing program will be designed to definitively test the Tikorangi Limestone and to confirm log pay in the northern extension of the Puka field at the lower Mount Messenger level. Phase 1 is intended to commence by the end of June 2014.
Upon assessment of the results of Phase 1, MEO can elect within 6 months to earn an additional 20% participating interest in the Permit by funding NZ$7.5m of a NZ$9m second phase work program (“Phase 2”). Phase 2 is intended to further appraise and commercialise Puka by developing a surface location from which the central portion of the field can be accessed. Further wells, potentially including horizontal wells, are planned to be drilled and tested from this location to assist with field appraisal, reserves certification and design of a full field development plan. Upon completion of Phase 2, which will also involve the establishment of permanent production facilities, MEO will have earned a 50% interest in the Permit.
Both work program phases are designed to move the discovery towards full field development in 2016 by reducing uncertainties in relation to resource size and recovery. At the conclusion of Phase 1 or 2 the parties have agreed that MEO has the option to enter into negotiations to acquire KEA’s remaining interest in the Permit.
Commenting, Ian Gowrie-Smith, Kea Petroleum’s Chairman, said:
“We are delighted that the Minister has approved the transfer of equity and we look forward to a prosperous partnership with MEO.”