NZ Oil & Gas strikes gold on share market

Deborah Hill Cone

Friday 23rd April 2004

The sexiest share on the market this week, New Zealand Oil & Gas, has dismissed speculation it may be a takeover target, saying its wide spread of investors would make that difficult.

After years as a penny dreadful stock, the company has clung on to its core business while other explorers turned themselves into dotcoms or gave up.

NZ Oil & Gas literally struck black gold last week with the discovery that there was a 12-metre column of oil in the top of the F sand in Amokura-1 field off Taranaki.

It has been a long time coming for tenacious NZ Oil & Gas executive chairman Tony Radford, who has been with the company from its inception in the 1980s.

NZ Oil & Gas shares took off, with Mr Radford's 4.6 million shares and 3.7 million were options worth about $3.4 million this week, up $1.2 million since March.

At press time shares were trading at 71c, up from a year low of 27c, and the options were at 20c, up from a low of 5.9c.

Punters were agog at the unexpected surge in their shares, filling 77 pages of the Sharetrader website with gleeful comments about the stock.

"Sold out this morning half my holdings. Happy, nice profit! Half in to see if we can squeeze a little more out of this one," one investor said.

"This is NZOG's golden time," another gushed.

Some investors claimed the stock was undervalued following the find, noting the stock was rising despite the selloff by investors.

They picked NZ Oil & Gas is ripe for takeover and suggested Todd Corporation, JV partner Transworld or Sir Ronald Brierley's GPG Group as potential suitors.

But company secretary Brian Roulston dismissed takeover talk saying that while, according to the share price, the company was undervalued, the latest strike was a small find on a world scale: "It's not huge."

The company's shares are widely held between a large number of small shareholders.

"So it would be quite difficult, I believe, for a person to accumulate a sufficient pile without pushing the price up," Mr Roulston said.

Excited investors will have to wait a few months for any further information about the Amokura-1 field.

Its scientists are examining evaluation cores (samples), wire line logs (which show the quality of the oil and how it can be produced) and seismic survey information (underground maps using sound waves.)

Mr Roulston said the company estimated the field might contain 22-30 million barrels of oil, which at today's price of about $32 per barrel would net $800 million.

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