New Zealand Oil & Gas to look overseas for oil

NZOG chief executive Andrew Jeffries says the government’s announcement was not consulted on.

New Zealand Oil & Gas says today's government announcements ending offshore oil and gas exploration permits will not have any immediate impact on its operations or the financial position of the company.

But it will mean the listed company has to start looking NZOG in other jurisdictions for new opportunities.

“New Zealand Oil & Gas intends to manage the risks associated with the government's policy change by investing in exploration and production assets in other jurisdictions," the company said in a stock exchange statement.

Its shares fell 3.23% to 60c after today's announcement.

NZOG chief executive Andrew Jeffries says the government’s move is a sudden policy change, which was not consulted on and conflicts with the government's pre-election promises.

However, Mr Jeffries says the "potentially transformational” New Zealand Oil & Gas exploration prospects in the Canterbury and the Great South Basins are unaffected by today's announcement and the company is continuing to market these prospects.

Mr Jeffries says the company is focusing on assets where its New Zealand capability can add value, with a preference for gas assets because gas is seen in most jurisdictions as a vital energy source for the transition to a lower carbon world.

He says renewable energy can provide almost all New Zealand’s electricity needs in a year of normal rainfall. However, another two thirds national energy use is industrial and transport related, for which complete renewable alternatives are not currently economically viable.

“The choice for New Zealand is whether we use our own resources for our own benefit, or New Zealanders rely on overseas energy sources benefitting those economies." 

Environmental effect of ban on new exploration 
NZOG says the ban on new exploration may mean carbon emissions in New Zealand and globally will be higher for longer.

“Petroleum resources in New Zealand are likely to be gas and gas condensate. Gas is a lower carbon alternative to coal for uses such as industrial heating, where no economically viable renewable alternative exists.

Mr Jeffries says if new gas supplies are unavailable then coal will continue to be used domestically for purposes such as dairy plants.

“Globally, ethically-produced natural gas from New Zealand produces far fewer emissions than alternatives such as Canadian tar sands or Venezuelan bitumen.

“Therefore, if natural gas from New Zealand is not permitted then the world will use more high-carbon fuel sources.”

Looking ahead
New Zealand Oil & Gas this week acquired a 25% interest in an onshore exploration opportunity in Taranaki, which will be drilled in the fourth quarter this year (subject to regulatory consents).

The company has already locked in international marketing for its offshore South Island prospects.

The Barque prospect in the Canterbury basin has a work programme agreed with the government and a drill-or-drop decision due in April 2019.

A decision on the Toroa prospect in the Great South basin is due before April 2020.

NZOG says it will continue work on these prospects as they are not impacted by today’s announcement.

RELATED VIDEO: Grant Walker talks about the government's move with PEPANZ's Cameron Madgwick (Apr 12)

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9 Comments & Questions

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NZOG has zero chance of finding partners interested in their NZ exploration permits...Barque is gone ...

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Another expedition to Tunisia?

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NZOG lost tens of millions in Tunisia, Indonesia and in Australia with Cue. They have not demonstrated any skills at all investing offshore whatsoever, so this does not bode well for long suffering shareholders. Looks like a great sell at 60 cents, heading to 50 cents real soon.

The old board did a great job getting an almost 80 cent offer on the table. That deal looks better by the day.

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Exactly. This companies board has a litany of trainwrecks littered behind it. How they think they can play with the big boys is beyond me, when they couldn't even manage a JV with a microcap oiler across the ditch.

Wind the company up and be done with it. Shareholders have suffered longer and harder than any oil catastrophe could ever do!

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The Government has no concrete alternatives just hope and pray. There is no absolute identifiable substitutes for oil and gas in the time frame. Take electric cars. So where does the power for the batteries come from. The sun. The wind. Think South Australia relying on both and failing to provide energy.
A government that fails to secure its energy supply is a failed government.
Lots of promises no hard evidence.

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Agreed.

Batteries for electric vehicles that are not glorified shopping carts, and used as a genuine not-town car, are increasing in capacity. 10 Tesla type electric vehicles all charging at the same time, on a one hour charge, requires the output of a small power station.

As some hospitals have learned, if you want that much power in one place, you have to have use an onsite fossil fuel generator, because the electricity grid cannot handle it.

The Government is just spinning up ideas, rather than looking at reality.
A good reason to ensure that MP's are regularly drug tested and must pass proper IQ tests before standing for election.

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Great idea Samuel - your first proposal would knock out one coalition partner and your second proposal the other.

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As a long suffering foundation shareholder, I wish these incompetents good luck with their search. As I don’t believe they could find oil in a full oil tanker.

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The message from the Loser Coalition is we don't particularly like business and to an extent we are closed to international investment. Take Winston Peters who is a protectionist at heart and has often spoken of his dislike of international money. And Jacinda clearly has no understanding of business. All New Zealanders, especially in Taranaki, will pay a price for this Government's ideologically driven idealism.

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