Wednesday 01 March 2017 09:32 AM
NZOG narrows first-half loss in lead-up to $168 mln Kupe sale
By Paul McBeth
March 1 (BusinessDesk) - New Zealand Oil & Gas narrowed its loss in the final six months of 2016, just before the $168 million sale of its stake in the Kupe oil
and gas fields, cutting almost a third of its operating costs, and halving exploration expenditure.
The Wellington-based company posted a loss attributable to shareholders of $18 million, or 7.7 cents, in the six months
ended Dec. 31, down from a loss of $27.6 million, or 7.9 cents, a year earlier. The loss included a further $7.7 million
impairment charge on the Maari field, a loss on the sale of Cue Energy's Pine Mills field in the US, declining
production from Tui and outages at Kupe and Maari, NZOG said.
The energy explorer and producer had been overhauling its operations as it seeks out new prospects, and cut operating
costs by 32 percent to $16.4 million and exploration and evaluation costs by 51 percent to $5.3 million.
The results pre-date NZOG's sale of its 15 percent stake in the Kupe to Genesis Energy for $168 million and the exit
from the Tui oil fields off the coast of Taranaki, which relieves the company of the cost of winding up the site.
"We achieved incremental value for our legacy assets and now have a lower cost structure in the business including a
reduced executive team and lower corporate rental overhead," chief executive Andrew Jefferies said. "Progress will be
more obvious in our full year accounts, which will include the impact of returning $100 million of capital to
shareholders in May."
Last week, NZOG upgraded its assessment for the potential of the deepwater Barque prospect off the coast of Oamaru and
is hunting for a partner to join the 50/50 joint venture with ASX-listed Beach Energy. The company is on the hunt for
cheap assets, which it plans to buy using some of the proceeds from Kupe sale.
Domestic exploration has dwindled after last year's slump in global oil prices below US$30 a barrel made forays into
remote parts of the world, such as New Zealand, less appealing for major international players. Since then prices have
partially recovered, with Brent Crude recently at US$55.56 a barrel.
NZOG shares last traded at 65 cents and have jumped 55 percent over the past 12 months.
(BusinessDesk)
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