UPDATED: Dividend reinvestment plan for NZOG

Wednesday 29th July 2009

NZX-listed New Zealand Oil and Gas is to introduce a dividend reinvestment plan as it prepares to announce a strong profit for the year to June 2009, chief executive, David Salisbury.

In a press briefing on fourth quarter operations, Salisbury also confirmed that full production was now unlikely before Q1 2010, making the project about two quarters late compared to the original development programme.

While the labour-intensive testing and re-commissioning was taking longer than expected, it was not adding significantly to the total $1.2 billion spend to develop the field, in which NZOG has a 15% stake.

Other field owners are Australian-owned Origin Energy (50%), Genesis Energy (31%), and Mitsui E&P Australia Pty (4%). NZOG expects to take 3 Petajoules of natural gas - already pre-committed to Genesis - 15,000 tonnes of LPG, and 300,000 barrels of condensate annually as its share of the Kupe spoils.

The gas is important as a replacement for the Maui field to run thermal power stations and Genesis has commitments for 20PJ annually. Genesis contributed $40 million to NZOG's development costs in the field to obtain a 40% share of the gas mined from Kupe.

With its full year profit announcement due on August 26, NZOG today announced a dividend reinvestment plan to allow shareholders full reinvestment of their dividends by purchasing NZOG shares at a 2.5% discount to the weighted average sale price for shares sold in the five days following the dividend record date.

Shareholders will receive information on the plan with the Quarterly Report, mailed today. Elsewhere, NZOG showed continued solid results from the Tui field, where total extractions in the year to June of 9.12 mmbbls were slightly ahead of forecast, despite the loss of 17 days production in the fourth quarter caused by foul weather.

A further 5.1 mmbbls is still forecast for the year to June 2010, as production at the field winds down.

NZOG had averaged $121 a barrel for Tui oil over the course of the year, which gave the company "a solid performance in a year of unprecedented turmoil".

While it still carried no debt, negotiations were nearly complete with Westpac for a $75 million drawdown facility for working capital, including to complete Kupe.

"It is disappointing and frustrating that the (Kupe) project schedule has slipped again. We're now looking at gas in the last quarter of this year and permanent production from next year," Salisbury says.

The delays were all related to "home run issues" relating to pre-completion tests and reinstatement of facilities.

Commenting on two side-wells to be drilled in the Tui prospect over summer, Salisbury said a commercial find at one structure "could be done relatively quickly and tied back to Umuroa", NZOG's offshore processing platform.

At the high end of possibilities, "it would be questionable whether they could produce with the capacity available on the Umuroa", he said, stressing no desire to over-hype potential from the field. On the Hoki prospect, also to be drilled in the same campaign as the extra Tui wells, and which NZOG farmed into during the last quarter, "it could be a Tui lookalike if successful", Salisbury said.

Opportunities offshore continued to be assessed, and a project in Vietnam had been rejected. NZOG's team of 19 has its hands full with its current workload and interests, so would assess new opportunities rigorously.

NZOG shares were trading down on the day by 2.5% at $1.58 at noon, but were still 27.5% higher year to date.

Businesswire.co.nz

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