Origin Seeks Partners for Drilling off New Zealand (Update1)

By Angela Macdonald-Smith

Aug. 8 (Bloomberg) -- Origin Energy Ltd., the Australian company seeking to fend off a A$13.8 billion ($12.5 billion) bid from BG Group Plc, said it is seeking partners to drill an exploration well off New Zealand's South Island.

The company decided to drill in the ``high risk, but potentially high-reward'' Carrack/Caravel area in the offshore Canterbury Basin, Sydney-based Origin said today in a statement to the Australian stock exchange. The well will require a rig able to drill in deep water, which is expensive and difficult to contract, it said.

Origin, Australia's biggest producer of natural gas from coal seams, is the largest holder of exploration acreage in New Zealand, where it is developing the offshore Kupe gas field, due to start output in the middle of next year. The Carrack/Caravel prospect may hold oil or gas in two separate sandstone deposits, which have both been shown to hold petroleum in the nearby Galleon 1 well drilled in 1985, Origin said.

``By any comparative standard, the Carrack/Caravel prospect complex is very large and is located in an established petroliferous basin,'' Rob Willink, Origin's general manager for exploration, said in the statement. ``That said, a well on this prospect remains subject to considerable technical risk.''

Discussions are under way with drilling management services companies and operators of nearby permits seeking to drill wells in the same timeframe to secure a suitable rig, Origin said.

The Carrack/Caravel area in the offshore Canterbury Basin may hold 750 million barrels of recoverable oil, or 2.7 trillion cubic feet of recoverable gas and 500 million barrels of condensates in the upper sandstones. Should petroleum also be trapped in the lower reservoirs, recoverable oil or gas could be more than double that amount, Origin said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net