NZ Red Admiral Butterfly in Wellington, New Zealand Māori: Kahukura (Photo credit: Wikipedia)
New Zealand was the greatest AMP miss in 2012 . Here is the latest chapter of that mistake:
New Zealand Energy
, Net Change: -0.25, % Change: -39.06%, Volume: 2,213,150
Financing Uncertainty.
New Zealand Energy tumbled after announcing it does not expect to achieve its 3,000 boe/d target by
the end of Q1/13.
Given its current production rate of 335 bbls/d and limited funds, the company has decided not to pursue higher-risk, higher-reward opportunities, opting instead to focus on its pending Origin asset blocks. While the Origin assets have numerous uphole completion opportunities, which will cost significantly less than regular exploration locations, Canaccord Oil & Gas Analyst Christopher Brown has concerns surrounding the company’s ability to fund the Origin acquisition, which is now projected to close in Q2/13.
The company’s working capital position, including a $5 million deposit relating to the transaction, is currently only $16.8 million. The Origin transaction will cost an additional $37 million and the company has stated it will seek alternatives for financing in 2013. On its pending Origin (TAWN) assets, the company has six wells it can move onto in Q2/Q3 which have recompletion opportunities in the upper sections of the wells. Brown estimates that recompletions would cost roughly $500,000-600,000/well, for a total capital cost of $3.0-3.6 million. Brown notes these
recompletions could potentially impact production immediately as there is infrastructure in place.
Next catalysts: i) Arakamu - NZ perforated and flow tested two zones in the Arakamu-1A well in the Moki formation, but was unable to demonstrate
recoverable hydrocarbons and has suspended the well, and ii) Wairere – NZ has cased the Wairere-1A well and will complete the well once completion activities are finished at the Arakamu-2 well.
Related articles
- New Zealand and Tag Oil Spoil AMP Results (amp2012.com)
