NZOG cuts costs, reinstates payments
New Zealand Oil & Gas will resume dividend payments after clamping down on costs in response to the slump in global energy prices, which led to a write down in the value of its shareholding in Cue Energy Resources to produce a wider annual loss.
The Wellington-based company declared a fully imputed final dividend of 4c per share, payable on October 25 to shareholders on the register on October 11, it said.
NZOG didn’t pay dividends in the 2015 financial year when it wasn’t generating imputation credits.
The company’s shares closed up 3.5c yesterday at 52.5c.
The energy exploration firm reported a net loss attributable to shareholders of $29.8 million, or 8.6c, in the 12 months ended June 30, more than doubling from a loss of $14.4m, or 3.5c, a year earlier. The bottom line was hit by a $29.8m impairment charge on the value of Cue Energy, and NZOG’s own cost-cutting measures will be taken up by the Australian business.
“The company is able to reinstate dividends because we have tightly controlled costs in a period when lower oil prices drove asset valuations lower,” said chief executive Andrew Knight, who leaves the company at the end of this week.
Revenue increased 2.4 per cent to $119m, bolstered by a full year of contributions from Cue Energy, in which NZOG took a 48.1 per cent shareholding in 2015.
Operating and investment cash flow more than tripled to $21.1m, leaving NZOG with cash and equivalents of $96.8m at the June 30 balance date. The company will pay about $14.1m in dividends.
Operating costs rose 31 per cent to $48.3m, largely due to increased pro- duction and sales marketing spending. Knight said the company has started to manage its exposure to oil prices and carbon emission costs through modest hedging and spent $1.5m on carbon emissions.
Exploration and evaluation expenditure fell 11 per cent to $21.5m and the company is scaling back spending in Indonesia where it plans to realise returns from its investment. Knight said the company is still talking to the New Zealand government about changing conditions in the Clipper permit east of the South Island.
“The company has received new geological data relevant to the region, and Barque in particular,” Knight said. “This information is being analysed against our previous understanding of the region’s properties and we remain engaged with potential partners who have the scale and expertise to develop the prospect.”
Other expenses were up 27 per cent to $17.6m, most of which was from increased employee costs.