Zeta Energy, a Singapore-based company, has launched a takeover offer for New Zealand Oil & Gas Limited.
The offer, of $0.72 per fully paid share, is for a partial takeover, meaning Zeta plans to buy an additional 41.955% of each class of the shares in NZOG not currently held or controlled by Zeta.
If successful, the offer would result in Zeta holding or controlling no less than 50.01% of the voting rights in NZOG.
New Zealand Oil and Gas, the target company, holds a 4% interest in the Kupe oil and gas field located in the offshore Taranaki basin and is participating in 2 deep water prospects off the South Island (including the Barque prospect). NZOG also holds a 50.01% shareholding in ASX listed Cue Energy Resources Limited.
In a letter to NZOG shareholders, Zeta explained it wanted to take a controlling interest to ensure NZOG “makes value enhancing investments in the oil
and gas sector.”
Describing NZOG, Zeta said: “It is essentially a cash box, having recently sold its 15% stake in the Kupe Oil and Gas fields (‘Kupe’) and its 27.5% stake in Tui. The Company’s residual investments are its 50.01% interest in ASX-listed Cue Energy Resources Limited (‘Cue’), a proposed 4% stake in Kupe, interests in Indonesia which are best described as potentially challenging, and the Clipper exploration opportunity.
The bidding company, a subsidiary of ASX-Listed Zeta Resources, said NZOG had recently distributed a substantial portion of its cash reserves to its shareholders by way of a capital reduction, “and is now unlikely to make further distributions in the form of dividends until its (presently modest) income exceeds its (relatively substantial) corporate overhead or unless shareholders agree on liquidation or capital return.”
“This is, therefore, an optimal time to decide what kind of investment company NZO should be, how much cash should be retained by the Company, and what the appropriate overhead cost base for the resulting company should be. The Board of Directors of NZO is currently wrestling with these important decisions,” Zeta said.
Zeta added: “Our focus going forward will be to ensure NZO makes value enhancing investments in the oil and gas sector. While we are supportive of the Clipper exploration opportunity with an appropriate partner, we do not want NZO undertaking risky exploration. Rather we want to make very considered investment decisions in more advanced assets. We also want to drive down the current overhead cost base which we believe is excessive and duplicated when taking into account NZO’s listed subsidiary Cue’s overheads.
Zeta also said it would use its best endeavors to pursue the return of a further $50m of capital to shareholders within six months of becoming the Company’s majority shareholder, subject to certain conditions.
The NZOG board confirmed the receipt of the offer but said it was not in a position to comment further “at this stage.”
“The Board will meet as soon as possible to assess the Takeover Notice and draft offer in detail. The Board will also immediately proceed with the appointment of an independent adviser and fulfilment of its other obligations under the Code,” the NZOG board said.
The Board also said it “strongly recommends” that NZOG shareholders take no action in relation to the takeover offer until shareholders receive further guidance from the Board.
Offshore Energy Today Staff