Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZEC scales back, warns of ‘significant doubt’ on future

NZ Energy Corp scales back, warns of ‘significant doubt’ on future

By Pattrick Smellie

May 2 (BusinessDesk) – Small-scale Taranaki oil and gas producer New Zealand Energy Corp has warned “there is significant doubt about the company’s ability to continue as a going concern” if a range of production initiatives currently under way fail to provide expected earnings.

In a management discussion and analysis accompanying disclosure of a C$9.3 million comprehensive loss for the year to Dec. 31 (C$1.2 million in 2012), NZEC chief executive John Proust also announced the deferral of the company’s plans to drill new wells in the Tikorangi limestone formation this year, and the withdrawal of production guidance issued last August.

That guidance forecast daily production of 2,300 barrels of oil equivalent daily “exit 2014”, approximately 10 times more than the company is currently achieving. Production in March averaged 233 barrels per day, which fell to 228 barrels per day in April, reflecting various moves to increase production from newly reactivated wells.

The share price for the Vancouver-based, Toronto Stock Exchange-listed company fell 21.6 percent to 15 Canadian cents following the news.

The decision to delay Tikorangi was a direct result of delays in NZEC finalising the purchase of the Tariki, Waihapa and Ngaere (TWN) assets from Origin Energy, a protracted process that required NZEC to bring on a 50/50 joint venture partner, L&M Energy, to complete the transaction.

“NZEC still expects to achieve that production target,” said Proust. “All that’s changed is the timing.

“For the remainder of 2014, NZEC will prioritise low-cost, low-risk opportunities that are expected to bring near-term production and cash flow,” he said.

The company, which turned over C$10.7 million in total in the last financial year, compared with C$16.5 million in the previous year, had working capital on hand at April 30 of C$2.7 million, which Proust described as “sufficient to meet short term operating requirements.”

While it has successfully reactivated four previously producing wells in the first few months of the year, Proust said new “higher impact operations” initiatives such as Tikorangi would only occur “once the company has established a strong production and cash flow base.”

However, there were “no assurances that these activities will be successful, or that the company will be able to attain sufficient profitable operations from those activities.”

“In light of the reliance on successful completion of ongoing development activities, there is significant doubt about the company’s ability to continue as a going concern,” said Proust. The company was considering initiatives including increased oil sales, credit facilities, joint or commercial arrangements, or “other financial alternatives” to meet planned capital expenditure in the next 12 months.

The announcements show NZEC has managed to improve field netbacks per barrel of oil produced from a weak average C$44.38 per barrel for the year as a whole to C$61.84 a barrel in the last three months of the year.

Average production costs fell to C$43.39 a barrel in the final quarter from an average C$58.73 during the last financial year. But that’s still well ahead of the C$31.57 per barrel production costs and C$70.08 field netback per barrel it achieved in the 2012 financial year.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Sky City : Auckland Convention Centre Cost Jumps By A Fifth

SkyCity Entertainment Group, the casino and hotel operator, is in talks with the government on how to fund the increased cost of as much as $130 million to build an international convention centre in downtown Auckland, with further gambling concessions ruled out. The Auckland-based company has increased its estimate to build the centre to between $470 million and $530 million as the construction boom across the country drives up building costs and design changes add to the bill.
More>>

ALSO:

RMTU: Mediation Between Lyttelton Port And Union Fails

The Rail and Maritime Union (RMTU) has opted to continue its overtime ban indefinitely after mediation with the Lyttelton Port of Christchurch (LPC) failed to progress collective bargaining. More>>

Earlier:

Science Policy: Callaghan, NSC Funding Knocked In Submissions

Callaghan Innovation, which was last year allocated a budget of $566 million over four years to dish out research and development grants, and the National Science Challenges attracted criticism in submissions on the government’s draft national statement of science investment, with science funding largely seen as too fragmented. More>>

ALSO:

Scoop Business: Spark, Voda And Telstra To Lay New Trans-Tasman Cable

Spark New Zealand and Vodafone, New Zealand’s two dominant telecommunications providers, in partnership with Australian provider Telstra, will spend US$70 million building a trans-Tasman submarine cable to bolster broadband traffic between the neighbouring countries and the rest of the world. More>>

ALSO:

More:

Statistics: Current Account Deficit Widens

New Zealand's annual current account deficit was $6.1 billion (2.6 percent of GDP) for the year ended September 2014. This compares with a deficit of $5.8 billion (2.5 percent of GDP) for the year ended June 2014. More>>

ALSO:

Still In The Red: NZ Govt Shunts Out Surplus To 2016

The New Zealand government has pushed out its targeted return to surplus for a year as falling dairy prices and a low inflation environment has kept a lid on its rising tax take, but is still dangling a possible tax cut in 2017, the next election year and promising to try and achieve the surplus pledge on which it campaigned for election in September. More>>

ALSO:

Job Insecurity: Time For Jobs That Count In The Meat Industry

“Meat Workers face it all”, says Graham Cooke, Meat Workers Union National Secretary. “Seasonal work, dangerous jobs, casual and zero hours contracts, and increasing pressure on workers to join non-union individual agreements. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news