By Margreet Dietz
July 10 (BusinessDesk) - OG Oil & Gas has offered a 25 percent premium to buy out minority holders in New Zealand Oil and Gas.
Singapore-based OGOG, the oil and gas arm of Ofer Global and 70 percent-owner of NZOG, is offering 62 cents for the shares of the Wellington-based explorer it doesn't already own.
The NZOG board is recommending the offer, subject to confirmation the 62-cent offer prices is within or above the independent valuation yet to be determined by Northington Partners. NZOG shares closed at 49.5 cents on Tuesday, having dropped more than 16 percent in the past year.
The directors noted the changed operating environment for oil and gas investment in New Zealand since the government's April 2018 decision to stop awarding new offshore acreage, the challenges the company had faced raising equity as a result, and the "significant" decline in its share price since then.
"The independent directors believe recent policy changes have had a dramatic impact on the perception of New Zealand as an appealing place to invest in the oil and gas industry."
NZOG has a 4 percent stake in the Kupe gas field and a 5 percent interest in the Maari oil field through its Cue Energy subsidiary. It also has major stakes in the Clipper and Toroa exploration permits off the South Island and a 15 percent direct interest in the Ironbark project off north-western Australia. Drilling of the prospect by the BP-led venture is scheduled for late 2020. Cue also has a 21.5 percent stake in that venture.
NZOG said its board has formed a committee of the independent directors, Rosalind Archer and Rod Ritchie to consider OGOG’s proposal, to be effected through a scheme of arrangement.
NZOG shareholders will vote on the transaction at a special meeting expected in September 2019, the company said.
OGOG bought into NZOG in 2017, paying 78 cents a share for most of its holding.
“The attractive premium offered by OGOG comes despite an uncertain future for oil and gas investment in New Zealand,” NZOG's independent directors said. “Departures by major international players continue, with recent decisions by international companies to surrender exploration acreage being the latest examples.”
“Nevertheless, OGOG is willing to increase its investment in New Zealand Oil & Gas and in doing so will allow other shareholders to realise significant value given the current market conditions, policy environment and share trading history,” they noted.