NZOG buoyant after positive year
New Zealand Oil & Gas has enjoyed a "positive year" despite a drop in net profit to $10 million as exploration and evaluation investment nearly doubled from the previous year.
But this year's "healthy" exploration programme has hit a delay at one well, which means spending is likely to slip from the targeted US$35m (NZ$41.9m) a year to about NZ$29.9m.
The listed Wellington company said yesterday its net profit for the year ended June 30, 2014, had decreased by 61 per cent due to a sharp increase in exploration expenses and some foreign exchange losses. But revenue for the oil and gas business rose 4.7 per cent to $104m. NZ Oil & Gas declared a final dividend of 3 cents a share.
Chief executive Andrew Knight said it had been a "pretty positive year" with strong performances from its key underlying assets, Kupe and Tui.
Operating cashflow rose 63 per cent, to $88m, because of production increases and additional gas sales. "This was the year we'd stepped up on a couple of the initiatives we've been pursuing."
Production during the period was up 26 per cent on a barrel of oil equivalent basis, to 1.24 million barrels, 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.
"We're now in a position where the natural decline of the Tui field has been partly offset or significantly offset by the Matsui acquisition at what we thought was a pretty reasonable price," Knight said.
Another key asset for NZ Oil & Gas 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 over royalty revenue from Kupe also delivered an additional $7m in revenue to NZ Oil & Gas.
Net profit, however, declined because of a 77 per cent increase in exploration expenditure, to $75m.
Knight said the company had now drilled five wells in the last couple of years. Two successful wells were drilled during the year in Sumatra, Indonesia, which the company said added to the company's future production profile.
"We've had two successes at Kisaran, but we've had one success, albeit a mild success, at Pateke," Knight said.
"The two unsuccessful wells we had this year were at Matuku and Oi."
NZ Oil & Gas has signalled it expected to spend about US$35m on exploration a year.
The current year's programme was likely to be much less, however, because of a delay at the company's Kaheru well.
"We're probably more likely to be round about US$25m but we'll see how that plays out.
"It depends on when we get the rig from OMV, but we had in our original planning expected to get Kaheru under way this financial year, and it looks like that's not going to happen now."
New seismic surveys were 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 still being worked through with the regulatory authorities, Knight said.
He hoped for more clarity by the end of this calendar year.
The Dominion Post