Australian Worldwide Seeks `Elephant' Discoveries, Gas Assets

By Angela Macdonald-Smith

Oct. 14 (Bloomberg) -- Australian Worldwide Exploration Ltd., operator of New Zealand's $269 million Tui oil project, is seeking to reverse a share-price slump by targeting ``elephant'' discoveries and widening its search for investments to Europe.

The Sydney-based company will also examine the increasing number of asset acquisition opportunities arising from the global financial crisis, Managing Director Bruce Wood said today.

The estimated size of the Tui field, off the North Island's western coast, has almost doubled since it started production in July last year. Higher-than-forecast output has added to Australian Worldwide's cash reserves, put at A$200 million ($142 million) in August. The company is seeking a rig to accelerate a New Zealand drilling program that will target two potential ``company-changing'' prospects as well as additions to Tui reserves.

``We want to expose our shareholders on a regular basis to some elephant-hunting,'' Wood told reporters in New Plymouth, New Zealand. ``We are cashed up in very turbulent times. There are a lot of opportunities coming towards us.''

He declined to comment on whether Australian Worldwide may be interested in closely held Coogee Resources Ltd. Wood ruled out a bid for a stake in Nexus Energy Ltd.'s Crux liquids project.

Australian Worldwide has sunk 48 percent in Sydney trading in the past five months, leaving the stock close to half of Credit Suisse Group's A$4.09 valuation. The shares today jumped 12 percent to A$2.13.

Hoki, Kahu

Next year's New Zealand drilling program includes the Hoki- 1 and Kahu-Stratigraphic exploration wells, each of which offers the potential for an oil discovery at least as large as Tui, Wood said. Drilling planned in the second half of 2009 will target a further ``potential elephant,'' he said. Those wells will be balanced by lower-risk probes planned near Tui and in Australia's Bass Basin.

Australian Worldwide will open a European office in January to scour for investment opportunities in the gas market, Wood said.

The Tui venture is driving forward talks with Shell Todd Oil Services, producer of more than 85 percent of New Zealand's gas, on a potential link between Tui and Shell Todd's Maui production platform, Wood said. Such a link would allow the Tui venture to send excess gas for processing to Maui, avoiding flaring, while Shell Todd could send oil found at Maui to Tui, he said.

The Tui venture is set to reach the 10 billion-cubic-feet limit for flaring, the burning of surplus gas at the production site, set under its mining permit earlier than originally expected because output has been higher than projected, said Dennis Washer, Australian Worldwide's New Zealand country manger.

The company has ``contingency plans'' should an agreement not be reached with Shell Todd, to avoid the gas-flaring limit capping oil production, Wood said, without elaborating.

To contact the reporter on this story: Angela Macdonald-Smith in New Plymouth, New Zealand through the Sydney newsroom at amacdonaldsm@bloomberg.net