NZOG profit jumps 30%

Wednesday 25th February 2009

New Zealand Oil & Gas said first-half profit jumped 30% on a one-time foreign exchange gain and increased sales.

Net income rose to $54 million, or 13.9 cents a share, in the six months ended Dec. 31, from $41 million, or 10.3 cents, a year earlier, the company said in a statement. Sales from continuing operations rose 8% to $103 million. Profit included a net foreign exchange gain of $19.4 million.

The minority stakeholder in the Tui oilfield is almost an anomaly among companies on the NZX 50, with little debt, positive cash flow and a balance sheet stacked with cash from Tui and proceeds from last year's enthusiastic take up of options. Revenue in the second half is likely to decline, reflecting reduced output from its 12.5%-owned Tui and falling world prices for crude oil, NZOG said today.

"The combination of a strong balance sheet, ongoing production revenue and a diverse portfolio places NZOG in a very strong position compared to many of its peers, who have been hit by the double whammy of falling oil prices and the global credit crunch," said chief executive David Salisbury.

NZOG hasn't rushed to spend its funds. In October it acquired a 40% stake in a Canterbury Basin permit to probe the Barque prospect. In December it bought 15% of fellow Tui partner Pan Pacific Petroleum And last month it gained a new Taranaki permit southwest of Kupe.

NZOG is continuing to assess other opportunities, Salisbury said.

"We are determined to build further value for our shareholders and we will not be taking undue risk or overpaying for any investment," he said.

The company won't pay an interim dividend and will announce its full-year payment with its annual results in August.

Shares of the company rose 1.7% to $1.22.

Tui's reserves were last estimated at 50.1 million barrels. Its 15%-owned Kupe Project is due to begin commercial production in the third quarter.

By Jonathan Underhill

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