New Zealand Oil & Gas has decided to sell its interest in the Kupe project, located in the Taranaki Basin, offshore New Zealand.
NZOG intends to sell its 15 percent stake in the oil and gas project to Genesis Energy for NZ$168 million.
The effective transaction date will be January 1, 2017, however, the sale is subject to the approval by NZOG shareholders at a meeting to be held on December 16, 2016.
The company’s board has urged shareholders to approve the transaction at the upcoming meeting and directors intend to vote shares they control in favor.
“Since we worked with our joint venture partners to upgrade our Kupe reserves over the last year or so, we have been clear that the investment provides considerable upside for our shareholders. The transaction with Genesis allows New Zealand Oil & Gas to realize this upside now while removing the risks of development and uncertainty around future market conditions,” New Zealand Oil & Gas acting-CEO Andrew Jefferies said.
He said the offer from Genesis represented a premium that “crystallises the value that we see ahead,” and the transaction would provide a financial boost “that allows us to better diversify.”
He said that should the transaction be approved at the special meeting in December, “we will return $100 million to shareholders in 2017.”
“The company remains committed to our ongoing exploration obligations and this transaction provides a springboard into new investment opportunities.”
First discovered in 1986, Kupe entered production in 2009. It is operated by Origin Energy, which has a 50 percent interest. Genesis Energy currently holds a 31 percent interest and Mitsui E&P holds 4 per cent. New Zealand Oil & Gas sells its gas from the field to Genesis, and its LPG to Vector. “New Zealand Oil & Gas believes the offer from Genesis is fully priced. It is at the higher end of our valuation range and therefore the Board recommends that shareholders should approve the transaction. A notice of meeting will be posted soon,”
“New Zealand Oil & Gas believes the offer from Genesis is fully priced. It is at the higher end of our valuation range and therefore the Board recommends that shareholders should approve the transaction. A notice of meeting will be posted soon,” Jefferies said.