KEY POINTS:
New Zealand Oil & Gas will pay its first dividend in a decade after a"stellar" half-year profit gushed from its Tui oil field.
The company lifted its six-month net profit to $41.4 million from $500,000 a year earlier.
The profit announcement came hours after light, sweet crude for April delivery jumped to US$100.88 ($123) a barrel. At one point in the session, prices surged to a record of US$101.15.
NZOG's revenue for the six months to the end of December was $95.5 million from $92,000 in the previous corresponding period.
The company's 12,000 shareholders, more than 10,000 of whom are small retail investors, will be paid a fully imputed dividend for the 2007-08 financial year of 5 cents a share, the second in its history.
Shares closed 6c up at $1.25 last night.
Chief executive David Salisbury said: "We thought it was appropriate to announce it now to give shareholders an immediate share of the success the company is having."
The company holds a 12.5 per cent stake in the Tui area oilfield, 50km off the coast of Taranaki.
Production started on July 30 and by the end of last year had reached 6.4 million barrels, of which NZOG's share was 800,000 barrels.
On Tuesday night the field produced its nine millionth barrel.
The average return to NZOG during the six month period was just under US$89 a barrel, net of freight and oil quality differentials. In the early part of this year prices were even higher, Salisbury said.
An analyst at First NZ Capital, Jason Familton, said the dividend was a surprise but recognition of shareholders who had endured a "longhard wait".
Salisbury said Tui had transformed the company.
"It's been a stellar six months for us. We had been talking about the company going through a transformation period for us when we had Tui coming into production."
The company had already paid off the $45 million cost of the project.
Not only was the field bigger than initially thought, it was producing above forecasts and oil prices continued to work in its favour.
The company was not making full-year profit forecasts.
"We have shied away from that, we make no apology for that, there has been a lot of variability in oil prices ... and we've seen the dollar surge quite sharply. That degree of volatility is making our revenue predictions and profit predictions very challenging."
When the decision was made to exploit the field it was thought the field contained around 28 million barrels but now estimates pointed to 42 million over the 10-year life of the field.
The field could possibly go longer but NZOG did not have leases beyond 10 years.
Tui was producing up to 48,000 a day but as pressure dropped and the water content increased this was dropping to 45,000 a day. Another well in the field was scheduled to be drilled late next year.
During the half year, NZOG invested $45 million in the Kupe project in which it is a 15 per cent partner.
It has a $125 million debt facility which it said should cover the remainder of its commitment to the project, offshore from south Taranaki, and will produce gas, condensate (light oil) and LPG.
Kupe remained on schedule for first production in mid-2009, Salisbury said. While the Kupe project had forecast a cost increase of around 10 per cent on the initial development budget of $980 million, expected revenues from Kupe had increased substantially from higher light oil and LPG prices.
The float during the half year of former subsidiary Pike River Coal had resulted in a gain of $11.2 million which had been recognised in the interim results, NZOG said.
Pike River was now treated as an associate in which NZOG retained a 31 per cent shareholding.
NZOG said it expected the value of its investment in Pike River would increase as the Pike River mine near Greymouth moved through development into production, with the first coal production expected in July.
Pike River yesterday reported a net deficit of $1.58 million for the six months to the end of December.
That was related to one-off staff recruitment, relocation and related costs, together with the $1.67 million cost related to termination of transport arrangements, the company said.
BLACK GOLD
Six months to December 31
NZOG Revenue
2007: $95.5m
2006: $92,000
NZOG Net profit
2007: $41.4m
2006: $500,000
NZOG Dividend
2007: 5c per share
2006: nil
