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

 

NZOG 1H loss widens on Tui, Maari writedowns

NZOG 1H loss widens on Tui, Maari writedowns; cost-cutting to go up to the boardroom

By Paul McBeth

Feb. 29 (BusinessDesk) - New Zealand Oil & Gas, whose chairman Peter Griffiths unexpectedly resigned this month, widened its first-half loss as it wrote down the value of its Tui and Maari investments and switched its accounting policy to cope with a cheaper oil environment.

The Wellington-based company posted a net loss after minorities of $27.6 million, or 7.9 cents per share, in the six months ended Dec. 31, compared to a loss of $7.7 million, or 1.8 cents a year earlier.

The latest loss included an $8.7 million impairment charge on the Tui oil and gas field and a $26.8 million charge on the Maari field after NZOG moved to a "successful efforts method" of accounting, which recognises all general exploration and evaluation costs as expenses as they're incurred, except direct costs of acquiring exploration rights, drilling wells, and evaluating results. Costs of successful exploration are capitalised as assets pending the outcome of a well and those costs are immediately expensed if there isn't a successful discovery.

Revenue rose 21 percent to $65.4 million as Cue Energy Resources made a bigger contribution after being taken over last year, helping offset declines from NZOG's Tui and Kupe investments.

NZOG has adjusted its corporate strategy to deal with oil prices falling to the US$30 a barrel range from US$50 when it last reported and new chairman Rodger Finlay said the company intends to focus on cutting costs. That will stretch all the way to the boardroom, with directors' fees set to drop by about 30 percent because Griffiths will not be replaced.

"Exploration costs have been minimised with no intention to spend further on exploration beyond our contractual obligations," Finlay said. "The board intends to manage capital carefully and retain only capital needed for the company's strategy."

NZOG's operating cash inflow climbed 40 percent to $31.7 million in the period, leaving it with cash and equivalents of $94.5 million as at Dec. 31. Chief executive Andrew Knight has previously said the firm is looking at acquisitions to take advantage of any bargains that might arise from the globally depressed oil price.

"Despite the write-downs of asset valuations, the underlying business is performing well and is cash positive with a strong balance sheet," Finlay said. "I expect to see improved performance as costs are cut and growth through acquisition as assets come to market at value."

The shares last traded at 43.5 cents and have increased 2.4 percent so far this year.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Back Again: Government Approves TPP11 Mandate

Trade Minister Todd McClay says New Zealand will be pushing for the minimal number of changes possible to the original TPP agreement, something that the remaining TPP11 countries have agreed on. More>>

ALSO:

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO:

Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>

ALSO: