KINA Petroleum plans to remain a “lean and efficient operator” of its oil and gas projects in 2015 in light of weak oil prices.

“Kina accepts the prevailing consensus that the oil price will remain relatively low in 2015 but will build again through 2016-2017,” the company said in a quarterly report released in January.

“Kina is addressing its development and exploration opportunities in view of this pricing scenario and will only expend shareholder funds on activities and opportunities that are economic and value accretive.”

The company, which holds stakes in seven petroleum prospecting licences, a 15 per cent stake in the petroleum retention licence 21 and a 25% stake in the offshore PRL 38, had used the past year to build its knowledge of the area, it said.

Partners in PRL 21, operated by Horizon Oil, would conduct a review of the economics of field development in the March quarter after front end engineering design work continued in the December quarter, Kina said.

“There is strong interest in Western Province with the development of gas resources from P’nyang, Elevala, Ketu and Stanley, a cumulative resource of over 3 trillion cubic feet,” the report said.

“LNG export infrastructure is now established in PNG, which provides further potential avenues for the development of the Western Province gas fields.”

Kina was left with earnings of US$15.4 million at the end of the December quarter following a placement of 19.9% of its total issued share capital to a company associated with former InterOil chief executive Phil Mulacek, raising A$18.4 million.

Exploration expenditure of US$927,000 could be largely attributed to its portion of costs for the Tingu well in PRL 21, the company said.

Preparatory site and civil works had taken place at PPL 337, the company said, though these were hampered by bad weather.

Kina, which is being free-carried through the project by Heritage Oil, said the first well on the prospecting licence would be Raintree 1, which was to test a carbonate reef similar to the one encountered at the Elk-Antelope site.

A spud of the well is imminent, with the company saying a rig in Madang was awaiting mobilisation to the drilling locations once weather conditions improve.

A severe wet season in the north of PNG had previously isolated the Raintree 1 rig site, with the road impassable, even though the wellsites remained in a largely serviceable condition.

In a mid-March announcement, Kina said it had deployed engineering crews to carry out remedial work on the access roads to allow the passage of the rig and other heavy equipment, including cement stabilisation, compacting and gravel.

This work would take between one and two weeks to complete, with the crew and other drilling equipment to be moved to site as soon as it was.

When drilled, the wells will represent the first drilling activity in the North New Guinea basin for over 20 years, Kina said.

Kina Petroleum managing director Richard Schroder said the company was delighted to be able to work on this despite low oil prices.

“In the case of PPL 337, the drilling that is shortly to commence will target gas and, in the event of success, will be high-impact given the commercialisation options that exist in the Madang region and surrounding areas.”

“The exploration programs now being undertaken are located in either relatively under-explored area of Papua New Guinea or, in the case of PPL 338, proven play fairways.”

Kina is re-processing vintage seismic data over PPL 338, saying early preliminary commercial evaluation indicated that three prospects could be drilled, “even at current oil prices”.

The company was evaluating the use of an EDA Schram 200 rig, such as that being used on Raintree, for two of the prospects.