Investing in Z Energy has paid off well for the New Zealand Superannuation Fund.
The fund announced yesterday it had sold 36.4 million shares in Z Energy, formerly Shell, in an underwritten block trade.
The price achieved was $8.01 a share.
The fund initially invested $209.8 million in purchasing Z Energy, alongside Infratil, in 2010.
The fund had now received nearly $1.1 billion in proceeds from the investment while the value of the fund's remaining 1.5% stake is $47 million (at block trade sale price).
The fund's head of international direct investment, Nigel Gormly, said Z had been an excellent investment for the fund with a gross return to date of about 48% per year.
The sale yesterday reflected the achievement of the fund's original goals for its private-equity-style investment in Z.
"We are delighted to have contributed to the establishment of an iconic Kiwi company all New Zealanders can be proud of. Over the last six years, Z has grown into a strong, dynamic, listed company.''
The fund's intention of a 1.5% holding in the company reflected the confidence in Z's management team and staff who were ding an excellent job, he said.
The New Zealand Superannuation Fund is commonly known as the "Cullen fund'' after its founder, former finance minister Sir Michael Cullen.
The National Government stopped payments into the fund when it took office in 2008 but promised to restart payments when the Crown accounts returned to surplus.
On Wednesday, Z Energy took over the assets of Chevron NZ which ran the Caltex fuel operations in this country.
Forsyth Barr broker Suzanne Kinnaird said Z had so far been unable to provide much in the way of new detail on the Chevron acquisition and what the implications were for the business.
However, it was estimated Chevron's 2015 operating profit was $156 million, 18% higher than 2014.
"This is a little better than Z has been able to achieve and points to better underlying earnings than we have built into our forecasts.''
Z confirmed about $706 million of the purchase price would be debt-funded, with the bank debt to be partially replaced eventually by a bond issue.
Full-year 2017 dividends were forecast to grow at about 10%, implying a relatively low payout ratio as Z repaid debt in the first instance, she said.
Z had indicated it would provide the market with regular updates on the progress of merging the two entities.
No formal guidance was expected before mid to late July on Chevron's earnings.
Forsyth Barr remained positive about the benefits Z would be able to extract being significant and they should exceed Z's guidance range of $25 million to $30 million, Ms Kinnaird said.
In addition, there was potential improvement in Chevron's underlying earnings as the business optimised a New Zealand business as opposed to a global operation.
Part of Z's own growth story following the Shell exit was its ability to focus on New Zealand, as opposed to reporting to a global entity with different goals, she said.
The divestment programme of Z selling 19 retail sites and one truck stop would be completed by March next year.
In mid-October, Z would host an investor day, outlining its plans for its new core business, highlighting insights gained through the integration process and updating the market for any metrics or modelling assumptions.
"We believe the news flow over the coming months will be largely positive, hence our outperform rating,'' Ms Kinnaird said.
Separately, the New Zealand division of ExxonMobil, the world's largest publicly traded international oil and gas company, said it had narrowed its 2015 loss even as revenue dropped 15% and the company spent more on refinery fees.
The local company's net loss for the year ended December was $2.7 million, compared with $33.5 million a year earlier, as revenue fell to $2.4 billion from $2.8 billion in 2014, financial statements lodged with the Companies Office showed.
ExxonMobil NZ's spending on raw materials and consumables dropped 27% to $1.4 billion, a faster decline than revenue as global oil prices fell through the year.
"Other expenses'' rose 12% to $188.2 million.
It spent $587.9 million on sales taxes and duties, a 14% increase from a year earlier.
The company received a $1.4 million income tax benefit.
Its refinery processing fees were $91 million, a significant increase on the $34.8 million paid a year earlier.
New Zealand Refining, the operator of the country's only oil refinery, produced a net profit of $151 million for the 12 months to December, compared with $10 million in 2014.
That company's profit boost was driven in part by a near doubling in the average gross refining margin at $US9.20 ($NZ13.50) a barrel.
The ExxonMobil group owns 17.2% of NZ Refining.
ExxonMobil NZ's assets were worth $1.1 billion in 2015, up 4.6% from 2014.
The value of its available-for-sale financial assets, which are its shares in NZ Refining, rose to $201.6 million from $118.8 million a year earlier.
