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NZO reveals more of its development plans

Wednesday 15th November 2006

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NZ Oil and Gas announces dates for its Pike River offer, a rights issue, a share placement and details about funding for its Kupe development.

New Zealand Oil and Gas (NZO) says a prospectus for its Pike River Coal development will be registered in early February.

NZO shareholders will receive entitlements to a substantial portion of the float, at a ratio of 1, $1 share, for each 8 NZOG shares held at the relevant date.

Westpac is providing a $65 million project loan, of which $60 million is to be available for capital expenditures.

Westpac is also providing funding for NZO's 15% stake in the Kupe gas/oil development.

Westpac is arranging a $125 million loan facility, together with a $10 million letter of credit facility to support contractor guarantees. These bank facilities are additional to the $20 million cost overrun facility available to NZOG from Genesis Energy.

"Together with a further $25 million equity contribution by NZO, these financings will fully fund the company's budgeted share of the Kupe development costs," the company says.

"We are encouraged that Westpac Banking Corporation has recognised the quality of NZOG's Kupe and Pike River Coal development projects and has been awarded a mandate to project finance both developments," executive chairman Tony Radford said in a statement.

In a highly-anticipated statement from NZO on developments, the company has also said that it has placed 17.5 million new shares and 5.83 million June 2008 options to New Zealand-based institutional and other investors, at an issue price of $1 per share.

"The options were issued for no additional charge at a rate of 1 option for every 3 shares and are of the same class as existing June 2008 options."

The placement raises $17.5 million.

The other news in the announcement is that NZO is making a pro-rata 1:10 rights issue to all shareholder with a June 2008 option attached to each share issued.

The shares will be issued at $1 each, with no additional charge for the options. The rights offer will raise up to $23 million.

NZO says the share/options package represents a discount of about 17% to the latest combined prices on NZX and is the company's first ever rights issue of shares.

Rights will be renounceable, and the offer is not underwritten.

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