Sharechat Logo

NZOG shares jump to 20-month high on Kupe sale, floats partnership for Shell assets

Wednesday 16th November 2016

Text too small?

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.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors
Rip Curl purchase a done deal on Kathmandu proxies alone
Comvita chair Neil Craig eyes the exit once he finds a new CEO
Mercury raises guidance on increased storage, high spot prices
Eroad reports strong 3Q sales growth, eyes ASX listing
MediaWorks puts TV business on the block
NZ dollar benefits as preliminary Brexit deal improves risk appetite

IRG See IRG research reports