NZOG buys ‘quality asset’ Maari through Cue
NEW ZEALAND Oil & Gas is buying a 19.99 per cent stake of Cue Energy, which in turn holds a 5 per cent interest in the Maari oil field off Taranaki.
The holding was bought ‘‘off market’’ from Todd Petroleum Mining at A10 cents a share, for a total value of A$13.96 million (NZ$14.7m).
‘‘Cue has a 5 per cent interest in the Maari field, which we view as a quality asset and exposure to it fits our portfolio well,’’ NZOG chief executive Andrew Knight said yesterday.
NZOG holds a 27.5 per cent stake in the offshore Tui field and 15 per cent in the Kupe gas field.
NZOG chose a 19.99 per cent holding in Cue because that was the stake on offer. But if NZOG had gone beyond 20 per cent of the Cue shares it would have been obliged to make a full takeover offer. It has not commented one way or the other if it might do that in future. NZOG shares rose 2 cents to 62.c yesterday after the purchase was announced. However, like many oil company shares, NZOG’s are down from earlier this year, when trading about 80c.
Cue shares have traded as low as low as A7.5c recently, well down from around A13c in August, as some oil companies have seen their share prices hammered in the wake of the 40 per cent slump in global crude oil prices in recent months. At its annual meeting last month NZOG indicated that it planned to look for acquisitions here and overseas.
Prices were looking cheap given ‘‘the current market dislocation’’, with markets undervaluing some attractive producing assets, NZOG said at the time of the meeting.
At the end of September, NZOG was sitting on a cash balance of $130m, though shareholders were due a windfall of $60m this month in a capital reduction.
Late yesterday NZOG said that final court orders for the return of
it
was capital were not expected till the end of January. The return of capital would be in February and would be tax free.
The Cue deal may be an indication that Maari has not been as big a money spinner for shareholders as it had been in the past.
Revenue from Maari was limited last year when the big oil field was out of production for more than four months while its floating tanker ship Raroa was repaired. As well, partners in the field have invested heavily, about $470m, in new production which started to come on stream last month. So the cash coming in from the field has been much lower, while the investment has been much bigger, putting the squeeze on shareholders.
However, as an indirect shareholder, NZOG will not face any call to stump up money for field development at Maari.