Geoff Loudon swoops on NZ Energy Corp in gas deal
By Pattrick Smellie
Aug 1 (BusinessDesk) - Serial oil and minerals investor Geoff Loudon's L Energy has done a deal to help get Toronto-based New Zealand Energy Corp out of a financial hole while securing a
half-share of the long-producing gas fields known as TWN, and the associated Waihapa production station.
NZEC has been looking for months for a solution to its problem, which arose when the company ripped through working
capital due to a string of missed production targets, leaving it around C$17 million short when trying to complete its
deal with Origin Energy to buy the TWN assets.
The solution that has emerged is an $18.25 million investment by L Energy to create a 50/50 joint venture to "explore, develop and operate the Tariki, Waihapa and Ngaere licences, the
Waihapa production station and associated pipelines and infrastructure," NZEC said in a statement to the Toronto Stock
Exchange.
NZEC will be the operator for the TWN joint venture licences and "decisions regarding exploration, development and
operations of the Waihapa assets will be made by management committees with equal representation from both companies,"
NZEC chief executive John Proust said.
However, NZEC still needs a further $12 million to complete the Origin deal and add to existing working capital and is
"continuing to pursue a number of strategic options," Proust's statement said.
NZEC originally agreed in June 2012 to pay Origin C$42.5 million for the Taharoa, Ahuroa, Waihapa and Ngaere oil and gas
field licences and production facilities, onshore Taranaki.
However, a restructured deal, announced in June this year, saw the price drop $C9 million, removed the Ahuroa licence
area, and saw NZEC become operator of Contact Energy's Ahuroa gas storage facility.
"I've been watching this transaction unfold with interest," said Loudon, who owns L Energy. "I have long believed the TWN licences and infrastructure hold great potential, both from an exploration
perspective and with the strategic marketing and business opportunities presented by the Waihapa production station."
NZEC listed on the Toronto Stock Exchange in August 2011, raising just over C$21.9 million in its initial public
offering. The company raised almost C$63.5 million in March 2012, though its market capitalisation has tumbled over the
past 12 months, with its shares falling from a peak of C$3.19 to as low as 33 Canadian cents, wiping about C$350 million
off the value of the company. Its shares fell in trading since the announcement, down 1.5 percent yesterday to C32
cents.
(BusinessDesk)