NZ Oil & Gas profit sinks

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Last updated 09:46 26/08/2014
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New Zealand Oil & Gas's full-year profit has dropped to $10 million as its investment in exploration and evaluation nearly doubled from the previous year.

The listed Wellington company said today its net profit for the year ended June 30, fell 61 per cent.

This was because of a sharp increase in exploration expenses and some foreign exchange losses, the company said.

But revenue for the oil and gas business rose 4.7 per cent, to $104m.

Production during the period was up 26 per cent on a barrel of oil equivalent basis, because of a return to full production at Kupe and NZ Oil & Gas taking a larger stake in its Tui asset.

The company increased its share in Tui from 12.5 per cent to 27.5 per cent in October last year, the cost of which had already been recovered from additional production.

Another key asset was a 15 per cent stake in the Kupe oilfield, which had been shut down for part of the previous year for planned maintenance.

This year, a settlement of negotiations with Genesis Energy regarding royalty revenue from Kupe also delivered an additional $7m in revenue to NZ Oil & Gas.

"Operational performance over the last year has been excellent and this is reflected in the strong production and operating cashflow results," chief executive Andrew Knight said.

Net profit, however, had declined because of a 77 per cent increase in exploration expenditure, to $75m.

NZ Oil & Gas has signalled it expected to spend about US$35m (NZ$41.9m) on exploration a year.

Two successful wells were drilled during the year in Sumatra, Indonesia, which the company said added to the future production profile for the company.

New seismic surveys were also completed at permits in the Canterbury Basin, in Taranaki, and another in Sumatra.

A final investment decision on the development plan for the Kisaran wells in Indonesia was expected before the end of this year.

"The company will continue to use its strong cash-generation capability and enduring community partnerships to deliver growth through exploration investment while delivering value to shareholders," Knight said.

NZ Oil & Gas declared a final dividend of 3 cents a share.

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