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NZOG narrows first-half loss after restructuring

NZOG narrows first-half loss after restructured portfolio ready for growth

By Paul McBeth

Feb. 27 (BusinessDesk) - New Zealand Oil & Gas, which is now controlled by OG Oil & Gas, narrowed its first-half loss having largely completed an overhaul of its portfolio that's left a series of impairment charges and unprofitable businesses in the past.

The Wellington-based company reported a loss attributable to shareholders of $2.5 million, or 1.5 cents per share, in the six months ended Dec. 31, narrowing a loss of $18 million, or 5.3 cents, a year earlier, it said in a statement. The year-earlier period included a $7.7 million impairment charge on production assets and $9.2 million of losses from businesses which have since been shed, such as the Tui oilfield.

NZOG reshaped its portfolio selling its 15 percent stake in the Kupe oil and gas fields, exiting Tui and planning an exit from its Indonesian assets, and has since bought back into Kupe, buying a 4 percent interest.

The $168 million Kupe sale enabled a $100 million capital return, and prompted a tussle for control of the energy explorer and producer, with OGOG, a unit of Israeli billionaire Eyer Ofer's Ofer Global, trumping Duncan Saville's Zeta Resources in a partial takeover bid.

"Having been through an extended period of restructuring, cost reduction and changes in our asset base since the oil price downturn in 2014, we now have a strong balance sheet and the support from our new major shareholder to refocus on acquisition and growth," NZOG chief executive Andrew Jefferies said. "In Barque, Toroa and Ironbark we have three world class exploration assets and we are continuing to screen production assets suitable for our capabilities."

Revenue shrank 19 percent to $15.4 million, while operating costs fell 13 percent to $7 million, exploration and evaluation expenses reduced 34 percent to $3.5 million and other costs dropped 36 percent to $5.2 million. That left an operating surplus of $90,000 compared to an operating deficit of $2.3 million a year earlier.

The performance of the new Kupe stake was recognised as an adjustment to the $30 million purchase. Had the interest been included in the group's earnings for the entire period, NZOG would have turned a profit of $800,000.

NZOG held cash and equivalents of $83.6 million as at Dec. 31. The board didn't declare an interim dividend.

The shares last traded at 68 cents, having decreased 2.9 percent so far this year.

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