Tuesday 13th August 2013
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New Zealand Energy Corp has gained a six week extension in its vexed efforts to complete the purchase of gas production assets it is buying from Origin Energy, in exchange for adding an extra C$1 million to the C$5 million non-refundable deposit it has already made.
The Vancouver-based company announced to the Toronto Stock Exchange that Origin had agreed to extend the deadline for meeting finance conditions from tomorrow to Sept. 30, and the government approval deadline from Sept. 13 to Oct. 14.
The extension comes amid reports that company executives have been scrambling to find backers for a further C$12 million required to complete the deal and boost working capital after a partial solution to its funding problems emerged on Aug. 1.
That announcement saw serial oil and minerals investor Geoff Loudon's L&M Energy commit NZ$18.25 million to create a 50/50 joint venture between NZEC and L&M to run the so-called TWN assets and the Waihapa production station.
TWN refers to the Tariki, Waihapa and Ngaere gas fields, onshore Taranaki, which NZEC first committed to buy from Origin in June last year for C$42.5 million.
A restructured deal, announced in June this year, saw the price drop $C9 million, removed the Ahuroa licence area from the original purchase, and saw NZEC become operator of Contact Energy's Ahuroa gas storage facility.
NZEC's troubles stem from depleting working capital while pursuing 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.
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 32 Canadian cents, wiping about C$350 million off the value of the company.
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