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

 

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Igniting The Spark: Bringing The Digital Enabler To Life

Changing a name is, relatively speaking, the easy part of a re-invention. Changing a culture, getting all the ducks in a row, turning yourself inside-out to become customer-inspired is a much bigger challenge. More>>

ALSO:

Ebola And NZ: Targeted Screening At Airport But Risk Low

The risk of any cases of Ebola in New Zealand remains very low, but health and border authorities are well prepared... anyone arriving in New Zealand who in the last three weeks has visited countries affected will be screened for symptoms of the disease. More>>

ALSO:

Scoop Business: Brewer Seeking Crowd-Funding Cancels Shareholders’ Dividends

Shareholders in Renaissance Brewing company, the first business to seek equity through crowd-funding in New Zealand, have cancelled their claim on $147,000 of accumulated earnings “to make Renaissance a more attractive investment opportunity.” More>>

ALSO:

It's Spark Now:
Why Telecom Wanted To Change

New Zealand led the world when Chorus demerged from Telecom. It gave us a telecommunications industry structure where the network is completely separated from the products and services it delivers. The changes brought about a new market dynamic and it dramatically changed Telecom’s role. More>>

ALSO:

Glass Half Empty: Dairy Prices Fall To Lowest Since 2012

Dairy product prices slumped to the lowest level since October 2012 in the latest GlobalDairyTrade auction, paced by whole milk powder and cheddar. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

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