NZOG looks at offer to buy Tui share

With Tamarind on board and oil prices rising, the Tui field could potentially operate beyond 2019.

New Zealand Oil & Gas says it's considering an offer to buy its 27.5 per cent interest in the Tui oilfield after Tamarind, an energy company backed by Blackstone Energy Partners, agreed to buy the 57.5 per cent stake held by field operator AWE for US$1.5 million.

The agreement between ASX-listed AWE and Tamarind was announced on Tuesday, with AWE saying the bidder had the ability to "maximise value from late life assets" and experience in decommissioning offshore oil projects. With Tamarind on board and oil prices rising, Tui could potentially operate beyond 2019, AWE said.

NZOG said the Tui joint venture partners, which include Pan Pacific Petroleum with 15 per cent, have certain rights when the operatorship is transferred and must give consent to the deal.

"We are currently reviewing the announced transaction and considering the offer we have received to determine whether our interests are best served by accepting the offer or continuing to participate in the asset through its decommissioning phase," said NZOG chief executive Andrew Jefferies.

NZOG said the value of Tamarind's offer would be disclosed if it was accepted.

Based on the offer to AWE, NZOG's stake could be worth US$715,000 although Tamarind is agreeing to buy AWE New Zealand, AWE Taranaki, assets, inventory, AWE's oil hedge book and a working capital cash balance of US$10.8m.

Tamarind was set up in 2014 with a US$800m capital commitment from Blackstone to develop, operate, improve "and ultimately abandon fields across SE Asia and Australasia", according to its website.

Earlier this month, NZOG recommended shareholders support the proposed sale of the energy explorer and producer's stake in the Kupe oil and gas field to Genesis Energy for $168m after an independent appraisal deemed the offer was fair. Shareholders meet to vote on the Kupe transaction on December 16.

NZOG plans to sell its Kupe stake to partner Genesis Energy to reduce its exposure to a single asset and give it funds to diversify its investments. NZOG would use the sale proceeds to return $100m of capital to shareholders next year and would retain about $160m of cash for reinvestment and for funding its remaining operations.

We are currently reviewing the announced transaction and considering the offer we have received to determine whether our interests are best served by accepting the offer.

NZOG chief executive Andrew Jefferies

At the annual meeting in October, chairman Rodger Finlay told shareholders the company had "pulled back on exploration because, in the current environment, oil prices are considerably lower than they were two or three years ago".

"We have been exiting our lower priority exploration acreage around New Zealand," he said.

Finlay described Kupe as NZOG's most valuable asset "and a good model for the sort of asset we would like to acquire more of".

NZOG shares closed down 0.5c yesterday at 60c.BusinessDesk