Company downgraded

Forsyth Barr has downgraded its value and recommendation on New Zealand Oil and Gas as the Pike River Coal mine disaster continues on the West Coast.

NZOG has $156 million (39c per share) invested in Pike River Coal, as its largest debt-holder and largest shareholder.

Forsyth Barr broker Peter Young said the company had been downgraded to hold from accumulate and the value has been dropped 15c per share to $1.36.

"With the priority rightly focused on rescuing the miners trapped underground, there is no information upon which to assess the impact on Pike River Coal, and indirectly NZOG, in a meaningful way.

"We do not know the extent of the damage to the mine and there are a whole host of questions that need answering before the future of Pike River Coal can be adequately addressed."

It was too early to speculate on the possible outcomes, he said.

The market appeared to overreact when NZOG shares resumed trading yesterday after being put in a halt.

The shares opened at 88c, down 28% on Friday, before falling to 80c. Buyers returned to the market by mid-afternoon and the shares were up to 85c. They closed at 87c.

It was inevitable NZOG's shares would fall in value once they resumed trading. But based on the "sensitivity table", a share price of below 95c appeared to be an overreaction, he said.

"As Pike River Coal's largest debt-holder and shareholder, we believe NZOG will play a significant role in Pike River Coal's future as it will be a key source of future funding."

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