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Monday 6th September 2010 |
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New Zealand Oil & Gas is to buy back up to 2.2% of its issued capital, or 8.5 million ordinary shares, to bolster a share price directors say is "significantly below fair value".
NZOG rose 0.8% on the news in trading on the NZX this morning, to $1.21, still well down on last December, when its shares came close to $1.80.
"The NZOG board is of the view that the current share price is significantly below fair value and doesn't reflect a reasonable current valuation of the company, even without taking into account the growth prospects about which the board and management are confident," the company said in a statement to the NZX.
"A buy-back of shares at this time is an opportunity to provide a return to shareholders in excess of NZOG's cost of capital."
The company would maintain a strong balance sheet to fund on-going growth initiatives. NZOG announced a $3.3 million loss for the year to June 30, reflecting exploration costs and the anticipated reduction in output from the Tui oil and gas field.
Announcing the result, chief executive David Salisbury said the company may need to look further afield than New Zealand to achieve its growth potential.
Goldman Sachs will manage the buyback process. Purchases may occur from 10 September 2010 and may continue up until 30 June 2011.
Businesswire.co.nz
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