AIM listed oil and gas group Kea Petroleum (LON:KEA) this morning reported that the offshore Tuatara-1 exploration well, which is sited close to the northern end of New Zealand's South Island, is expected to begin drilling by the end of July. Kea farmed into a 10% stake in the Tuatara licence in May this year at the same time as raising £7m in a share placing priced at 16p to fund its estimated $3m share of the drilling costs.

The Tuatara-1 operator, AWE New Zealand, a subsidiary of AWE (ASX: AWE), has apparently confirmed that its Kan Tan IV rig is making good progress on its current well, Kahu-1, which is situated near the Tui oil field where the Tuatara-1 well is situated. Once drilling is completed at Kahu, the rig is expected to move around July 27 to the Tuatara prospect in PEP 38524. Kea noted that any additional drilling or testing on Kahu in the interim would cause this date to slip.

Tuatara-1 will test the oil potential of Moki Sands, in a structure which closely resembles that of the Maari oil field, 80km further north in the basin, where the Moki Sands reservoir was successfully brought into production last year at a rate approaching 40,000 barrels of oil per day. High quality modern seismic data acquired by AWE across the Tuatara structure shows seismic amplitude anomalies at reservoir level, and overlying gas effects, of similar type to those observed across the Maari oil field. Kea's internal mid-case estimate of recoverable oil reserves in the event of success at Tuatara-1, based on the data and modelling provided by AWE, is 80 million barrels. The total depth of the well is 2,000 metres, meaning that drilling should be fairly rapid and the results known before the end of August. Partners in PEP 38524 (Tuatara-1) are include AWE (65%), Roc Oil (15%) Kea (10%) and Carnarvon Petroleum (10%).

Kea’s chairman, Ian Gowrie-Smith, said: “We are excited about the prospectivity of this acreage and to test it with drilling Tuatara. The combination of drilling Wingrove 2 , Beluga and Tuatara in quick succession has certainly seen Kea off to a busy start since our IPO earlier this year. We hope to hear shortly whether the company has been successful in acquiring additional acreage in the Taranaki basin of New Zealand we consider…

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