NZOG sales fall 57% on reduced output

Friday 30th January 2009

New Zealand Oil & Gas, whose shares were one of only two to gain on the NZX 50 Index last year, reported a 57% drop in sales last quarter as the price of oil fell and output from the Tui field slowed.

Sales fell to $30.9 million in the three months ended December 31, from $72.3 million a year earlier, the company said in a statement. Output from NZOG's 12.5%-owned Tui field fell to 2.4 million barrels in the latest quarter from 3.2 million barrels, matching the company's estimates for annual production of 9 million barrels.

The price of crude oil has tumbled more than 50% in the past 12 months as slumping world economic activity shrinks fuel demand. NZOG, which had $211.9 million of cash on its books at December 31, is well placed to cope with the downturn and has been scouting opportunities to make acquisitions and increase reserves.

The drop in the price of oil has been partly offset by a weakening New Zealand dollar, which increases the local currency value of exports. The kiwi dollar fell to a six-year low 50.78 US cents today.

Its most recent acquisitions include a 15% stake in Pan Pacific Australian, another small oil company with a stake in Tui, and permit areas including a South Canterbury coastal zone.

By Jonathan Underhill

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