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NZOG board recommends sale of Kupe stake

NZ Newswire logoNZ Newswire 30/11/2016 Tina Morrison

New Zealand Oil & Gas has recommended shareholders support the proposed sale of the energy explorer and producer's stake in the Kupe oil and gas field, after an independent appraisal report deemed the offer was fair.

The independent appraisal of the proposed sale by Northington Partners, which is being mailed to shareholders today, valued the 15 per cent stake in Kupe at between $130 million-$160 million. That places Genesis Energy's $168m offer 16 per cent above the $145m mid-point valuation.

"The board recommends shareholders vote to support the sale," NZOG said in a statement. "Directors intend to vote any shares they control in favour of the transaction."

NZOG plans to sell its Kupe stake to partner Genesis Energy to reduce its exposure to a single asset and give it funds to diversify its investments. NZOG would use the sale proceeds to return $100m of capital to shareholders next year, and would retain about $160m of cash for reinvestment and for funding its remaining operations.

"We believe Kupe is a quality asset but, as our other major asset, Tui, ends its production, our future cash flow would be highly dependent on Kupe's single umbilical line to shore," NZOG said. "It makes business sense to seek more diversification in our portfolio."

Shareholders will vote on the proposed sale at a special meeting on December 16.

NZOG shares last traded at 62.5 cents, and have jumped 47 per cent this year.

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