KEY POINTS:
New Zealand Oil & Gas appears likely to fulfil an ambitious capital raising exercise to fund its Kupe oil and gas prospect, according to a source familiar with the deal.
NZOG's $23 million renounceable rights issue, which closes today, was on course to get "around 75 per cent take-up", the source said. Shares closed yesterday at 91c, well below the rights issue price of $1.
However, the rights issue includes a share option - the right to buy a share for $1.50 before June 30 next year - with every share taken up.
One market observer said the long lead times for most of NZOG's projects - it took eight years for NZOG to get consent to develop Pike River - meant it had "offered a lot, but delivered little". Most shareholders probably still had not yet decided what to do with their rights, he said.
"They've had this rights issue thrust on them, and what with everything that's been happening in management they're probably thinking, do I want to put more money into this thing?"
The amount raised would not be known until Tuesday or Wednesday, said Andrew McDouall, managing director of sharebroker McDouall Stuart, which is managing the capital raising. About $17.5 million of new shares were placed with institutional investors in November.
The capital raising exercise, begun in November, further delayed NZOG's plan to float its subsidiary Pike River Coal, a mine in the Paparoa Range northeast of Greymouth that will produce high-quality coking coal.
NZOG, which owns a 61 per cent stake in Pike River, announced in March last year that it planned to float the project on the NZX this year.
The plan was delayed four times, and seemed in jeopardy when chairman Dennis Wood and independent directors Graeme Duncan and James Ogden resigned en masse in December. The resignations followed an NZOG decision to take direct responsibility for a Pike River float and to treat its coalmine development as its own project.
In a move that NZOG hoped would give the market more confidence before the float, the company this week announced that Gordon Ward would take on the role of chief executive at Pike River Coal in March.
NZOG chief executive Tony Radford will retire at the end of March to be replaced by David Salisbury.
Meanwhile, excavation of a 2300m tunnel at the Pike River mine began in late September with about 222m cut so far.
"We anticipated the rates would increase as we got deeper into the mountain side and we're seeing that happening now which is good," Ward said.
