Wednesday 16th November 2016
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New Zealand Oil & Gas shares jumped to a 20-month higher after the energy explorer and producer agreed to sell its stake in the Kupe oil and gas field, giving it enough cash to make a capital return to shareholders and pursue new acquisitions.
The Wellington-based company has agreed to sell its 15 percent stake in Kupe to partner Genesis Energy for $168 million, more than NZOG's market value before the deal was announced, and some 2.5-to-3 times the market's valuation of the asset, acting chief executive Andrew Jefferies told a media briefing. The shares jumped 28 percent to 64 cents, valuing the company at $204.1 million.
Genesis approached NZOG with the deal and the companies have been discussing it since Jefferies' became acting CEO in late August.
The transaction needs approval from NZOG's shareholders at a special meeting to be held next month and, if approved, will see a capital return of some $100 million in 2017.
Jefferies said that will leave the company with about $100 million to fund acquisitions in a market where they are "starting to see some come at a reasonable valuation." NZOG is comfortable investing in New Zealand, Australia and Indonesia, and Jefferies said it would want producing assets or investments that are near-term developments.
NZOG will be looking at how it could participate in the sale of Royal Dutch Shell's New Zealand assets, which is one of the few opportunities in New Zealand, though Jefferies said his company was too small to go it alone.
"We wouldn't be a purchaser of Shell on our own but there's not that many incumbents in New Zealand that would be looking to take on the Shell assets and if you have an external party that's coming into a country, quite often they like to join up with a local company that's got knowledge," Jefferies said."If I was an international company looking at New Zealand and looking at an entry into a mature asset portfolio like Shell's, you really want a friend who knows the lie of the land."
He declined to comment on whether NZOG was in a bidding consortium but said that's the way the company could be involved in a Shell transaction.
The Australian newspaper this week reported Shell was in a stand-off with partner Todd Energy over the sale process of the New Zealand portfolio, citing unnamed sources. Todd declined to comment on the report, while Shell said it had hired JP Morgan to look at options for the assets, but had nothing material to report.
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