NZOG cut loss ahead of $168m Kupe sale

New Zealand Oil & Gas narrowed its loss in the final six months of 2016, just before the $168 million sale of its stake in the Kupe oil and gas fields, cutting almost a third of its operating costs, and halving exploration expenditure.

The Wellington-based company posted a loss attributable to shareholders of $18m in the six months ended December 31, down from a loss of $27.6m a year earlier.

The loss included a further $7.7m impairment charge on the Maari field, a loss on the sale of Cue Energy’s Pine Mills field in the US, declining production from Tui and outages at Kupe and Maari, NZOG said.

The energy explorer and producer had been overhauling its operations as it seeks out new prospects, and cut operating costs by 32 per cent to $16.4m, and exploration and evaluation costs by 51 per cent to $5.3m.

The results pre-date NZOG’s sale of its 15 per cent stake in the Kupe fields to Genesis Energy for $168m and the exit from the Tui oil fields off the coast of Taranaki, which relieves the company of the cost of winding up the site.

“We achieved incremental value for our legacy assets and now have a lower cost structure in the business including a reduced executive team and lower corporate rental overhead,” said chief executive Andrew Jefferies.

“Progress will be more obvious in our full-year accounts, which will include the impact of returning $100 million of capital to shareholders in May.”

Last week, NZOG upgraded its assessment for the potential of the deepwater Barque prospect off the coast of Oamaru and is hunting for a partner to join the 50/50 joint venture with ASX-listed Beach Energy. The company is on the hunt for cheap assets, which it plans to buy using some of the proceeds from the Kupe sale.

Domestic exploration has dwindled after last year’s slump in global oil prices below US$30 a barrel made forays into remote parts of the world, such as New Zealand, less appealing for major international players.

Since then prices have partially recovered, with Brent Crude recently at US$55.56 a barrel.