NZOG buys 5.77% of Pan Pacific, seeks strategic stake

Wednesday 17th December 2008

New Zealand Oil & Gas, whose shares have bucked the NZX 50 Index's slide this year with a 20% gain, acquired a 5.77% stake in Pan Pacific Petroleum, increasing its exposure to the Tui oil field.

NZOG said it paid a premium to Pan Pacific's recent trading price for the shares and is seeking "to acquire a strategic stake." Australian Foreign Investment Review Board rules restrict NZOG from gaining more than 15% of the Australian oil company unless it gains clearance, which it isn't immediately seeking, NZOG said in a statement.

Pan Pacific holds 10% of the Tui oil field while NZOG has 12.5%. Investors have been awaiting moves by NZOG to acquire more reserves or make acquisitions.

Production from Tui began in July 2007 and proven and provable reserves were increased to 50.1 million barrels in June this year. It raised $190 million through the exercise of options in 2008, stoking its war chest, and said it is "actively pursuing" new growth opportunities.

"It is a time of opportunity to create greater wealth for shareholders and we are looking to use our strong position to secure attractive new ventures," chief executive David Salisbury said on Dec. 8.

In October, the company agreed to acquire an interest in a permit in the offshore Canterbury Basin, making it the biggest holder in permit PEP38259. The permit gives access to the Barque gas and condensate prospect, which NZOG estimates has recoverable resources of 600 billion cubic feet of gas and 58 million barrels of light oil.

NZOG's shares fell 0.8% to $1.32 today after crude oil for January delivery fell 1.7% to US$43.74 a barrel on the New York Mercantile Exchange

By Jonathan Underhill

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