NZ Oil and Gas (NZX: NZO) shares have risen on news that the company intends to buy back up to 8.5 million fully paid ordinary shares.The maximum purchase would be worth nearly $10.5m at the last traded price of $1.23.In a statement to NZX today, the NZOG
NZ Oil and Gas (NZX: NZO) shares have risen on news that the company intends to buy back up to 8.5 million fully paid ordinary shares.
The maximum purchase would be worth nearly $10.5m at the last traded price of $1.23.
In a statement to NZX today, the NZOG board expressed its view that current share prices are significantly below fair value and fail to reflect a reasonable current valuation of the company - even without taking into account growth prospects.
“A buy-back of shares at this time is an opportunity to provide a return to shareholders in excess of NZOG’s cost of capital,” the board stated.
NZOG shares have experienced general decline since a peak of $1.79 was reached in December last year, last trading up three cents slightly to $1.23.
The company paid a five cent dividend late last month despite posting a $3.3m net loss on the back of a disappointing drill season, with four wells in offshore Taranaki turning up sub-commercial results.
Speaking to journalists following last month’s release of annual results, chief executive David Salisbury attributed low share prices to a negative sentiment across the market.
“Good news tends not to have been picked up on and bad news tends to have got a bit more emphasis so perhaps we’ve suffering from that, especially in a context where we drilled these wells and they were disappointing.”
The NZOG board said today that the company will continue to maintain a strong balance sheet to fund capital expenditure on-going growth initiatives, including prospects overseas.
NZOG currently has 389,092,572 listed ordinary shares. The planned buyback may occur from 10 September 2010 and may continue up until 30 June 2011.
