LONDON (ShareCast) - New Zealand-focused oil and gas company Kea Petroleum has started drilling at its Mauku well and is set to begin testing at the Puka well.
Mauku will be drilled to a planned total depth of 3,400 metres which is expected to be completed in April.
Methanex is funding half the costs of the project as part of an Alliance Agreement.
Kea is continuing talks with parties for farm-out agreements but the group is uncertain whether it will reach a deal within project time constraints.
Meanwhile, drilling operations have concluded at the Puka well and the group is ready to start assembling surface test equipment, tanks and oil transfer equipment.
Testing of Puka 2 is expected to begin in mid-March and will run between 30 and 45 days.
Chairman, Ian Gowrie-Smith, said: "It is with a mixture of excitement and trepidation that we look forward to the drilling of Mauku.
"In the event of success, the impact of owning 100% of Mauku would be transformational for Kea given that the Board estimates the upside potential prospective resource to be 1,031bn cubic feet of gas and 61m barrels of condensate oil.
"Using the cash flow we expect from the Puka field, the company will continue to develop some of the large prospective deposits in our extensive acreage within the Alliance Partnership with Methanex."
Shares fell 2.44% to 10.00p at 09:08 Tuesday.