Hot Topic NBR Focus: GMO
Hot Topic NBR Focus: GMO
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Pike River continues to hurt NZ Oil and Gas

Energy company $22.2 million impairment against remaining Pike River debt, but manages to return to profit.

Colin Williscroft
Wed, 22 Feb 2012

Pike River Coal (PRC) continues to impact on the performance of NZ Oil and Gas (NZOG).

This morning the company reported that, for the six months ended December 31, 2011, it had a total operating revenue of $54.6 million, compared to operating revenue of $40.5 million in the corresponding six month period a year earlier.

It reported a net profit after tax of $2.3 million, compared to a loss of $99 million for the corresponding period a year earlier.

The profit was achieved despite taking a further $22.2 million impairment against remaining PRC debt.

NZOG shares [NZX:NZO] were up 0.68% to 74c in midday trading.

NZOG 12-month chart courtesy CapitalIQ

NZOG's net operating cash flow for the first half of the financial year of $26.5 million was built mainly on the back of the performance of its involvement in the Kupe and Tui fields.

The Kupe gas and oil field is NZOG's primary revenue source, bringing in $37.1 million over the six month period.

With a 15% stake, NZOG's share of Kupe production for the period was 1.45 PJ of sales gas; 6,300 tonnes of LPG; and 139,000 barrels of light oil.

The Tui area oil fields, while now in the decline phase, continued to make a valuable contribution, the company's half year results showed, earning NZOG $17.5 million in the six month period.

With its 12.5% stake in Tui, NZOG's share of the field's production for the period was just under 148,000 barrels of oil.

During the six months, NZOG received $41 million from the receivers for PRC, following a settlement with the coal mine's insurers. NZOG paid $4.6 million to the receivers to fund ongoing mine stabilisation efforts and the mine sale process.

The company indicated last month that it had taken the impairment to cover the remaining PRC debt.

At the time, the company said it was made after an assessment of future cash recovery from PRC and it reflected the ongoing cost of the receivership, the highly conditional nature of further receipts and uncertainty regarding timing

Looking ahead, NZOG chief executive Andrew Knight said the company needed to identify and secure further opportunities.

"In the year ahead there is the prospect of exploration drilling in Taranaki and Indonesia and a potential commitment to develop an oil field in Tunisia,” Mr Knight said.

“Further out, there are other drilling prospects. However, NZOG has the resources and capability to do significantly more.

"We are very actively pursuing further opportunities in all three of our core areas - New Zealand, South-East Asia and North Africa - ranging from study and permit applications through to drilling, asset deals and corporate acquisitions.

"Kupe and Tui are expected to provide ongoing cash flows and we intend to invest a sensible portion of those cash flows in new investments in order to grow the business and provide long-term value for our shareholders."

Colin Williscroft
Wed, 22 Feb 2012
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Pike River continues to hurt NZ Oil and Gas