NGE has secured a 100% interest in four petroleum prospecting licenses that cover 28,000 square kilometres in PNG and has applied for two more leases covering a further 24,000sq.km.
"We have estimated a risked resource of about 218 million barrels in our existing prospects," managing director Jeremy Towner told the Excellence in Upstream Energy conference in Sydney on Tuesday.
Oil seeps in its PPL 267 block cover a 40km trend that seems to follow a fault trend, according to Towner.
"It's a light crude," he said. "It has a diesel smell, so it's very light indeed."
But it is the PPL 269 permit, located in a region rich in oil and wet gas discoveries, that is the jewel in the company's crown, Towner said.
While PNG was notorious for access and transport difficulties, these problems were relatively mild in the Foreland region where New Guinea Energy holds its main assets, according to Towner.
Over the last decade, development to serve the Ok Tedi mine and logging operations had given this part of PNG good transport infrastructure with a network of logging roads and two ports. In addition, the Fly River was navigable and regularly used for transporting commodities downstream.
Towner said the Ok Tedi mine trucks 2000 barrels of diesel each day from the coast, so he saw no reason why New Guinea Energy would be unable to shift oil and condensate by road or river.
"We can operate in the region with minimal use of helicopters," he said.
"At this stage, we think our drilling costs will be about half of what is typical in PNG and our development costs will be similarly low."
The company plans to start drilling an initial series of six wells in October or November. One of the first wells will be the Tarim-1 re-entry in PPL 269.
Drilled by Conoco in 1990, Tarim-1 logged oil pay but the reservoir was not tested as the test tool became irretrievably stuck. With oil prices being relatively low and access to the prospect being difficult at the time, Conoco chose not to continue with the well.
While Tarim-1 found oil, most discoveries in the region were wet gas. The company planned to initially undertake condensate stripping and gas reinjection at any gas finds.
Towner also said the company was comfortable about operating within PNG.
He said the country's past reputation as being a risky investment destination was overstated and current fiscal benefits offered to the oil and gas sector meant now was a good time to be exploring PNG.
"PNG is on sale now," he said.
"They've reduced their tax rate from 45% to 30% and now have some of the best fiscal terms in the region – just below New Zealand and better than Australia."
Towner said New Guinea Energy had already raised $18 million from seed investors in Australia, the UK and PNG and recently completed an $8 million capital raising at 50 cents per share.
It is still unlisted but plans to list on the London Stock Exchange's Alternative Investment Market shortly.
The company has offices in Sydney and Port Moresby. Twelve staff, led by general manager Ian Trevitt, formerly of Santos, are based in PNG.