New Zealand Oil & Gas shares jumped to a 20-month higher after the energy explorer and producer agreed to sell its stake in the Kupe oil and gas field, giving it enough cash to make a capital return to shareholders and pursue new acquisitions.
The Wellington-based company has agreed to sell its 15% stake in Kupe to partner Genesis Energy for $168 million, more than NZOG's market value before the deal was announced, and two and a-half to three times the market's valuation of the asset, acting chief executive Andrew Jefferies told a media briefing.
The shares jumped 28% to 64 cents, valuing the company at $204.1 million.
Genesis approached NZOG with the deal and the companies have been discussing it since Jefferies became acting CEO in late August.
The transaction needs approval from NZOG's shareholders at a special meeting to be held next month and, if approved, will see a capital return of some $100 million in 2017.
Jefferies said that would leave the company with about $100 million to fund acquisitions in a market where it is "starting to see some come at a reasonable valuation."
NZOG is comfortable investing in New Zealand, Australia and Indonesia, and Jefferies said it would want producing assets or investments that are near-term developments.
NZOG will be looking at how it could participate in the sale of Royal Dutch Shell's New Zealand assets, which is one of the few opportunities in New Zealand, though Jefferies said his company was too small to go it alone.
He declined to comment on whether NZOG was in a bidding consortium but said that's the way the company could be involved in a Shell transaction.
