Weak dollar, low oil price delivers 'remarkable' first half turnaround for NZ Refining

Thursday 20th August 2015

New Zealand Refining, the country's only oil refinery, has delivered what management describe as a "remarkable improvement" in its first half, underpinned by a weaker currency and dramatically lower oil prices.

The Marsden Point refinery posted an after-tax profit of $65.2 million in the six months ended June 30, compared with a loss of $6.9 million from the same period last year, it said in a statement.

The company will return a 5 cents per share dividend to shareholders, its first distribution in two years, as the refining margin per barrel of oil processed rebounded from an average of $1.66 in the previous half to $9.09 in the latest half-year, with plant availability of 95.4 percent up on the previous half's 88.4 percent.

The New Zealand dollar averaged 74 US cents during the period, compared with 84 US cents on average the previous year, while the average price of a barrel of oil dropped dramatically, from an average US$105 in the first half of the previous year to US$57 a barrel.

"During the first six months the team capitalised brilliantly on the consistently high margins and improved New Zealand dollar/US dollar exchange rate by processing (at times), record volumes at close to, or above, margin cap levels," said NZ Refining chief executive, Sjoerd Post.

The refinery's upgrade project, Te Mahi Hou, was also now 95 percent complete and entering the pre-commissioning phase and the company is advancing proposals to bring bigger crude oil shipments into Marsden Point and double the use of natural gas at the plant.

"Strong operating cashflows continued to strengthen and in the first half allowed us to reduce borrowings by $73 million from a peak of $342 million," said Post.

The refinery operated the full year with no lost time injuries.

The shares last traded at $3.10, and have jumped 40 percent this year.

BusinessDesk.co.nz

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