Horizon confirms Maari development budget increase

Horizon Oil, a minority interest holder in the Maari oil field development off New Zealand's Taranaki basin, has confirmed another 18% capex increase for the project, which now stands at $600 million.

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Dec. 1 -- Horizon Oil Ltd., Sydney, a minority interest holder in the Maari oil field development off New Zealand's Taranaki basin, has confirmed another 18% capital expenditure increase for the project, which now stands at $600 million. This latest cost blowout is due primarily to a 3-month delay in the start of development drilling.

At the final investment decision for Maari in late 2005, expected outlays were pegged at $365 million. In April of this year, that figure rose to $508 million. The latest estimate is further, although anticipated, bad news for the development consortium, which is led by OMV of Austria.

Horizon also lowered its expectation of revenue from the project in the initial years following the fall in world oil prices. The company said if the $50-55/bbl prices continue, project returns will likely be about $540 million in the first year and $1.31 billion over 4 years.

The 'good' news is that oil production is now expected to begin in February 2009 and to rise to 35,000 b/d by August 2009.

The field has estimated reserves of 68 million boe. The nearby, yet-to-be-drilled Manaia structure has potential for a further 25 million boe.

Interest holders in the Maari mining license (PMP 38160) and the Manaia exploration license (PEP 38413) are OMV 69%, Todd Energy 16%, Horizon 10%, and Cue Energy Resources 5%.

More in Drilling & Production