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NZOG pitches Kupe sale to shareholders

NZ Newswire logoNZ Newswire 15/12/2016 Paul McBeth

New Zealand Oil & Gas made its final pitch to shareholders to sign off the sale of its 15 per cent stake in the Kupe oil and gas field to Genesis Energy for $168 million as the energy explorer and producer looks to diversify its portfolio at a time when it should be able to pick up assets cheaply.

The Wellington-based company's board recommended the deal, which was above the valuation by independent adviser Northington Partners and at the high end of NZOG's own internal valuations, chairman Rodger Finlay told shareholders at a special meeting in Wellington. Shareholders approved the sale, with 87 per cent voting in favour.

Some $100 million is slated for a capital return to shareholders and Finlay said he expected the that to be done by May next year, with the balance reinvested in new producing assets with development potential.

NZOG has been on the hunt for acquisitions for some time as global oil prices have tanked, prompting energy firms to reassess their portfolios.

Finlay acknowledged NZOG has sat on piles of cash in the past, but on Friday told shareholders it won't do that in the future and will return those funds if it can't find the right opportunity.

"With oil at prices where they're at now, with major participants in New Zealand and some in Australia putting everything up for sale, with the bankers finally giving up on loss-producing fields, if we can't find something to buy at value now, we should give all the money back," Finlay said.

In response to a question by Christine Pullar of the New Zealand Shareholders' Association on whether winding up the company should be considered, Findlay said the board thinks there's more value in team's capability to reinvest the funds from the sale of Kupe.

Earlier this week, NZOG said it's considering selling its 27.5 per cent stake in the Tui oil field after Tamarind, an energy company backed by Blackstone Energy Partners, agreed to buy the 57.5 per cent stake held by field operator AWE for US$1.5 million.

The shares were unchanged at 61 cents, having gained 22 per cent since the Kupe deal was proposed in November.

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