Pan Pacific Petroleum flags capital return; shares surge

Wednesday 9th November 2011

Pan Pacific Petroleum, which holds a 10 percent stake in the Tui oil field, plans to return some cash to shareholders because it can’t find suitable new prospects.

The Sydney-based company’s board is proposing a return of 5 cents a share, provided investors support the payment at an extraordinary general meeting, chairman Neil Tomkinson told shareholders at the annual meeting in Sydney.

“High volatility on world stock markets and a paucity of deal flow fitting PPP’s acceptance criteria restricted investment in new projects,” Tomkinson said in speech notes lodged with the ASX. “Relative lack of drilling activity and prospect acquisition led to a drift in the share price to below cash backing and to a reduction of interest in PPP’s shares on the ASX and NZ.”

The return comes in a year where it had to write-down the expected oil reserves at the Tui field by a fifth, meaning the operation will probably stop some time in 2019 or 2020.

Tomkinson told shareholders the company is looking for new opportunities, including a venture in Southeast Asia that could result in drilling next year if exploration is successful.

PPP has abandoned all its other New Zealand permits after they were judged as not sufficiently attractive enough to warrant more investment, Tomkinson said.

The shares climbed 9.6 percent to 16 cents on the NZX and gained 25 percent to 15 Australian cents on the ASX.

BusinessDesk.co.nz

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