Takeover target New Zealand Oil & Gas is back in the black, posting a $52.6million after-tax full-year profit and turning around last year’s asset-driven writedown and $51.8million loss.
NZOG’s southern deepwater oil and gas prospects off the coat of Oamaru and Invercargill — Clipper and Toroa — also remain on the radar and test drilling decisions are likely before the end of the year.
Three weeks ago, NZOG’s 8.05% shareholder Zeta Energy launched a takeover play for the the cash-rich exploration company, looking to increase its holding by almost 42% to take a controlling 90.1% stake, but has not yet released any offer details.
About a fortnight ago NZOG appointed an independent response committee to oversee a response, but has not yet posted an update; other than telling shareholders to await the report.
Payment of the NZOG’s 4c dividend required a waiver from Zeta Energy, which it gave.
NZOG chief executive Andrew Jefferies said yesterday the main contributor to the after-tax profit was a gain on the sale of its 15% interest in the Kupe gas and light oil field.
"Together with the disposal of the mature Tui interest, the company has successfully minimised its exposure to abandonment liabilities," Mr Jefferies said in a statement.
NZOG sold its Kupe interest to Genesis Energy in January for $168million, making a $96million gain, while the Tui sale to Tamarind for $750,000 reaped a $200,000 gain.
NZOG’s cash balance grew from $96.8million last year to $125.1million, as at June, but includes $35million being held for settlement after buying Mitsui E&P’s 4% interest in Kupe.
Mr Jefferies said corporate overheads were down from $16.8million last year to $14.6million, including one-off expenses related to the capital return, due diligence on transactions, and employee final payments. Of those overhead costs, $5.4million was recorded by Cue Energy, in which NZOG has a 50.04% stake, which it lifted from 48.11% during the year.
Mr Jefferies said with accumulated Cue losses of $A104.8million during the past two years, NZOG was determined to integrate Cue into NZOG "and avoid unnecessary and wasteful duplication of services."
"We’re also looking to achieve more value from our investment in Cue Energy," he said.
Cue had recorded a $A19million net loss, of which 50.04% is attributable to NZOG shareholders.
NZOG shares rose 1.4% to 69c following the announcement, up 45% on a year ago.NZOG chairman Rodger Finlay said the company had sufficient operating earnings and imputation credits to sustain normal returns to shareholders.
"NZG has gone through a major strategic realignment after selling our major assets," he said.
"Transactions in the past year have realised substantial value and we now have a better balance of investment risk, providing us with ongoing returns from an asset we know well, cash to enter new opportunities, and transformational deep water prospects."
Although not mentioned yesterday, NZOG has a 50% stake in the deepwater offshore Clipper prospect off Oamaru’s coast and discussions were ongoing with potential joint venture partners.
NZOG also has a 30% stake on the deepwater Toroa prospect, south of Invercargill, alongside operator Woodside Energy (New Zealand) 70% and any test drilling remains subject to further evaluation this year.
Mr Finlay said following a review, lower priority assets in Sumatra, Indonesia were being shed, while NZOG was looking to recover cash from its best assets there.
"Ongoing vigilance" of corporate costs would be a feature of the year ahead for both NZOG and Cue, the former having shed corporate staff down to 16 and moved head office into lower cost accommodation.
