NZOG back in black after Kupe sale, keeps dividend unchanged

Tuesday 29th August 2017

New Zealand Oil & Gas was back in the black and kept its dividend unchanged after reaping a $95 million gain on the sale of its stake in the Kupe oil and gas fields and trimming its operating and exploration costs.

The Wellington-based company reported a net profit to shareholders of $61.2 million, or 20 cents per share, in the 12 months ended June 30, turning around a loss of $35.9 million, or 8.6 cents, a year earlier, it said in a statement. The bottom line was bolstered by the $168 million sale of its stake in Kupe, which saw a 25 percent fall in revenue to $37.1 million.

The energy and gas explorer has been cutting costs in response to the slump in global oil prices, while the exit from Kupe flooded its coffers which it plans to recycle into new prospects as global rivals quit more marginal exploration areas. NZOG's operating costs shrank 16 percent to $15.9 million and exploration costs fell 44 percent to $12.3 million.

"The main contributor to the net profit after tax was a gain on the sale of the company's 15 percent stake in the Kup gas and light oil field," NZOG said. "Together with the disposal of the mature Tui interest, the company has successfully minimised its exposure to abandonment liabilities."

The board declared a fully imputed final dividend of 4 cents per share, payable on Nov. 3 with a record date of Oct. 24. That's unchanged from last year, and adds to the $100 million share buyback which returned capital from the Kupe sale.

The shares rose 1.5 percent to 69 cents, having already gained 7.4 percent so far this year.

The earnings result comes as NZOG's biggest shareholder Zeta Resources plans a partial takeover to lift its stake to at least 50 percent from almost 42 percent now, offering 72 cents per share.

NZOG chair Rodger Finlay said the actual offer hasn't been sent yet, and that an independent response committee will make its recommendation once they've seen the formal takeover bid. Until then, the board stresses shareholders should wait until that document is received, he said.

Finlay said the energy explorer will exit lower priority Indonesian assets as it looks to generate better returns from its best assets in the south-east Asian nation, and also wants to squeeze more value from its 48.1 percent stake in Cue Energy by stripping out "unnecessary and wasteful duplication of services".

(BusinessDesk)

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