NZOG reports $3.3m loss

Exploration costs and declining revenues from the Tui oil and gas field were the primary reasons for New Zealand Oil & Gas reporting a $3.3 million loss in the year to June 30.

Revenue was off 28% compared to the previous year, at $99.4 million, as the Tui field production declined, albeit slightly less than anticipated, while exploration expenditure of $30.7 million on four unsuccessful wells was expensed ($4.2 million the previous year). 

Unrealised foreign exchange losses also had an $8 million impact on the result, while NZOG’s share of the losses of its associate, Pike River Coal, amounted to $11.5 million.

NZOG shares were steady this morning at $1.19 apiece.

However, production volumes are forecast to rise strongly over the next two years as full year contributions from the Kupe oil and gas field more than offset the decline in Tui revenues. Kupe contributed $31.4 million in revenue in the second half of the last financial year, after it came on-stream and will be “a significant income stream for the next 15 to 20 years”.

For that reason, directors will for the third year in a row pay an annual dividend, unchanged from last year at 5 cents per share, fully imputed.

The company offered no earnings guidance in its reports to the NZX, but showed production from the Kupe and Tui fields combined rising from a little over one million barrels equivalent of oil in the year just gone to peak at just over 1.2 million barrels equivalent next year, and dropping slowly back to around one million barrels a year by 2015.

None of the four exploration wells that NZOG participated in – Albacore, Hoki, Tui Southwest, Kahu – made commercial discoveries, and the Kan Tan IV drilling rig used in those plays is now engaged working over the Pateke 3-H well in the Tui field so that it can resume production.

Chief executive David Salisbury said New Zealand remained an attractive place to invest, but warned that “the availability opportunities going forward may not provide sufficient depth and breadth for a company of our size to be confident we can meet our growth objectives from New Zealand alone.”

“Our business strategy includes the goal of establishing one or two new core areas, in addition to offshore Taranaki.”

The company had assessed and declined a range of “corporate deals, asset purchases and exploration acreage” during the financial year just gone, but generally judged the prize too small or the risk too great.

“However, several overseas investment opportunities remain under consideration and we remain hopeful of progressing one or more in the current year,” Salisbury said.

NZOG still intended to sell its stake in Pike River, once it was at full production and its full value could be realised. 

“At this point, no decision to sell has been made,” said Salisbury.

Businesswire.co.nz

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