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NZ Oil & Gas make leadership announcement 'in coming days'

Thursday 27 October 2016 02:48 PM

NZ Oil & Gas expects to make leadership announcement 'in coming days'

By Sophie Boot

Oct. 27 (BusinessDesk) - New Zealand Oil & Gas, the Wellington-based explorer and producer, is likely to make an announcement soon over its senior leadership, chairman Rodger Finlay told shareholders at today's annual meeting in the capital.

Former chairman Peter Griffiths resigned unexpectedly in February, while former chief executive Andrew Knight left in August and has been replaced by acting chief executive Andrew Jefferies, who has been in the role for a month.

Finlay said there had been a 30 percent reduction in headcount across the company, and despite the management changes there had been "absolutely no change in strategy of this company, just greater emphasis on some areas of implementation of the strategy."

"We're very hopeful that we will be debating in coming hours actings and non-actings, and I'm sure you'll hear more from us in coming days," Finlay said.

The company has never given earnings guidance and won't give dividend guidance, Finlay said, but noted it is "strongly cash flow positive and we are creating a solid stream of imputation credits."

The chairman also said NZOG has "no immediate intention" to take over Cue Energy Resources, of which it controls nearly 50 percent. The energy exploration firm more than doubled its net loss attributable to shareholders to $29.8 million in the 2016 year, with NZOG's bottom line hit by a $29.8 million impairment charge on the value of Cue Energy.

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NZOG is continuing its share buyback of as many as 64 million shares, which shareholders approved at a special meeting last year, and is just under one-third of the way through the programme, Finlay said. The company bought back about 17 million shares in September through a stand in the market and has now bought back and canceled about 6 percent of its capital base.

"I see a statement of considerable confidence in the company from that event because we would have been prepared to buy many more shares at that price, which was a premium to the recent market price," Finlay said. "That there were not more sellers demonstrates confidence the business is on the right track and positioned to deliver further growth and further gains for shareholders."

Acting CEO Jefferies said NZOG had about $97 million in cash at balance date, and with that added to the market value of its holding in Cue, the market valued its investments in the Kupe and Tui fields in New Zealand at less than $100 million based on the share price.

"[That's] far below a fair assessment of the true value of these assets given their future ability to generate cash returns and sustain a dividend," Jefferies said. "It makes sense to be buying back our own shares when they look this cheap in comparison to a fair valuation."

The shares last traded at 52 cents and have gained 22 percent this year.

(BusinessDesk)

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