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

 

Planes: Jetstar Launches Regional Network

Jetstar, the Qantas Airways budget offshoot, launched its new regional network in New Zealand with special $9 one-way fares and has narrowed down its choices to five routes and four destinations - Nelson, Napier, New Plymouth, and Palmerston North. More>>

ALSO:

Fisheries: Report On Underrsize Snapper Catch

The report found that commercial fishers caught 144 tonnes of undersized snapper in the Snapper 1 area – about 3% of the total commercial catch – in the year ending February 2015. The area stretches from the top of the North Island to the Bay of Plenty and is one of New Zealand’s most important fisheries. More>>

ALSO:

Tourism: China Southern Airlines To Fly To Christchurch

China Southern Airlines, in partnership with Christchurch Airport and the South Island tourism industry, has announced today it will begin flying directly between Guangzhou, Mainland China and the South Island. More>>

ALSO:

Dodgy: Truck Shops Come Under Scrutiny

Mobile traders, or truck shops, target poorer communities, particularly in Auckland, with non-compliant contracts, steep prices and often lower-quality goods than can be bought at ordinary shops, a Commerce Commission investigation has found. More>>

ALSO:

Auckland Transport: Government, Council Agree On Funding Approach

The government and Auckland Council have reached a detente over transport funding, establishing a one-year, collaborative timetable for decisions on funding for the city's transport infrastructure growth in the next 30 years after the government refused to fund the $2 billion of short and medium-term plans outlined in Auckland's draft Unitary Plan. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news