Market close: NZ Oil & Gas up on Kupe, Fletcher drops

BUSINESSDESK: New Zealand shares rose as NZ Oil & Gas announced a likely upgrade to reserves in the Kupe field while Fletcher Building dropped after Australian rival Boral cuts its guidance for the second time in three months.

The NZX 50 Index rose 6.45 points, or 0.2%, 3387.77. Within the index, 27 stocks rose, 17 fell and seven were unchanged. Turnover was $78.6 million.

NZ Oil & Gas rose 3.9% to 80 cents. Kupe operator Origin Energy has provided updated data on reserves and NZ Oil & Gas said the numbers suggested the partners will agree to a lift in reserves.

“That was very encouraging and the indications are they are going to look for an upgrade,” said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch. If the upgrade is material “we will see further upside in NZOG”.

NZ Refining, which operates the nation’s only oil refinery, fell 4.6% to $2.29. Mr Williamson said refining margins remains “extremely weak” and the company’s capital spending plans haven’t pleased all investors.

Fletcher Building fell 1.5% to $5.79, dipping below its January 10 level to a new three-year low.

Boral today cut its profit before one-time items, citing “weakness in the Australian new housing construction market” among factors. Fletcher makes sales into the same market.

“Fletcher came under pressure when Boral announced its earnings downgrade,” Mr Williamson said.

Trade Me, the popular auction website, fell 1.1% to $3.66. A former Trade Me bullion trader has been warned of price fixing by the Commerce Commission and has subsequently been banned from the online auction site.

Cavalier Corp was unchanged at $1.54. New Zealand’s only listed carpet maker is closing a yarn-spinning plant in Onehunga, which employees about 90 people.

In June, the company said market conditions remain soft on both sides of the Tasman, with both volumes and margins under pressure.1.5% to $1.37.

Xero, the cloud-based accounting service, rose 2.1% to $4.95. 

NZX, the stock exchange operator, gained 1.5% to $4.95. 

Fonterra’s new shareholders’ fund will have units that trade on the local exchange and activity will get another kicker when the first of the state-owned energy companies, MightyRiverPower, is sold down later this year.

Mr Williamson said investors globally are turning their attention to Europe and the latest in a string of summits aimed at reaching consensus on tackling the region’s debt crisis.

“There’s still relatively good demand as investors continue to chase yield,” he said. That included a flow from term deposits, which are averaging 4.7% for two years, according to interest.co.nz.

Among gainers today, logistics and data storage company Freightways rose 1.9% to $3.74. The stock has a dividend yield of 6.3%.