Deposits lure in NZ Oil & Gas bid

Southern deepwater oil and gas deposits are at the heart of a takeover bid for NZ Oil & Gas, as rival companies each seek to grab a controlling stake in the explorer.

OG Oil & Gas, a division of Ofer Global Group, is not the major joint-venture partner NZ Oil & Gas has been seeking for the past two years to directly open up the southern prospects for drilling.

However, it has said it would fund work to get closer to the test-drilling stage.

One of two rival bids for NZ Oil & Gas, OG Oil & Gas has been recommended by its independent directors after it upped its bid 1c to 78c yesterday.

OG Oil & Gas wants to lift its present 4.29% stake to a minimum 50%, and potentially to a 70% stake in the company, while rival bidder Zeta Resources is offering 72c, and wants to lift its 31.08% stake to more than 50%.

In the weeks ahead, shareholders will have to decide whether to back OG Oil & Gas and its plans to ramp up high-risk exploration, including deepwater prospects off southern coasts, or go with Zeta, which wants to scale back operations and return $50million to shareholders.

The prospects are the Clipper and Barque prospects off the coast of Oamaru, and to a lesser extent, the Toroa prospect south of Invercargill.

NZ Oil & Gas has a 50% stake in Clipper and a 30% stake in Toroa, alongside operator Woodside Energy (NZ)'s 70% stake.

Yesterday, New Zealand Oil & Gas' four independent directors unanimously backed the OG Oil & Gas bid and recommended shareholders accept the higher offer.

OG Oil & Gas chief executive Alistair McGregor said Clipper and Toroa were ''big prospects'' and warranted ''more thorough evaluation'' before moving towards drilling.

''With Clipper and Toroa we're eager to take them to the next development phase ... Now is the right time to invest.''

He said OG Oil & Gas was not the major joint-venture partner being sought by NZ Oil & Gas, noting a single exploration well would cost $US60million-$US80million ($NZ84.8million-$NZ113million).

''You'd expect two to three players around the table,'' he said of any drilling venture.

''We are willing to put more capital in to get to the next stage.''

NZ Oil & Gas chairman Rodger Finlay said OG Oil & Gas' vision aligned with that of NZ Oil & Gas, which was to invest in new exploration opportunities for growth.

Mr Finlay committed his 0.5% stake in NZ Oil & Gas to be sold to OG Oil & Gas.

OG Oil & Gas is expected to lodge an offer document with the NZX this week.

Mr Finlay acknowledged OG Oil and Gas' 78c offer was below the top-end independent valuation range of 93c, but it was the ''best offer'' for consideration.

''With a group of this scale in the industry, there is a lot of non-monetary value [coming with the offer]'' he said.

Given up to 70% of shareholders could potentially sell to OG Oil & Gas, the balance could in theory be held by Zeta, which yesterday had a 31.08% stake.

He said he hoped if OG Oil & Gas was successful, Zeta would offer up its stake for sale.

He would not be drawn on forthcoming director elections, in which each takeover company has an applicant.

He said NZ Oil & gas' board would not be making recommendations on directors, and he doubted there would be a large number of proxy votes involved, but the board did need to discuss the execution of proxy votes.

In January NZ Oil & Gas sold its Kupe interest to Genesis Energy for $168million, making a $96million gain, while the Tui sale to Tamarind for $750,000 reaped a $200,000 gain.

As at year-end June, NZ Oil & Gas' cash balance had grown from $96.8million last year to $125.1million, but that includes $35million being held for settlement after buying Mitsui E&P's 4% interest in Kupe.

NZ Oil & Gas shares were up 0.5c to 75c yesterday.

Ofer Global is a private, Israeli family company based in Monaco, credited with a $US9billion net worth in 2016. It is a group of international businesses mainly focused on shipping, real estate, banking and investments. Its oil and gas interests range from green-field exploration to full field development and production and owns exploration and production interests, onshore and offshore, around Australasia and Southeast Asia.


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