Output from Kupe tipped to turn around $6.5m loss

The Kupe field, which started producing in early December, is expected to contribute more than $60 million to NZOG's earnings. Photo / Supplied

Revenue from its stake in the Kupe field is expected to boost New Zealand Oil & Gas' earnings by between $60 million and $65 million a year.

The company yesterday announced an after-tax loss of $6.5 million, hit by lower production from its Tui field, lower oil prices, an exploration write-off at another Taranaki prospect and currency hedging losses.

In the corresponding period last year its profit was $54 million.

The average price per barrel of oil dropped from $150 to $104, pushing revenue from oil production down to $37.7 million in the six months to December, compared with $103.2 million in the same period in 2008.

Other contributors to the loss were NZOG's share of Pike River Coal losses of $4.2 million, Albacore well write-offs of $10.9 million and foreign exchange losses of $14 million, reversing a $19 million gain in the comparable period.

NZOG said production should double in the second half of the financial year, boosted by Kupe oil and gas.

To date NZOG's share of production had been 52,000 barrels of light oil, 0.5PJ of gas and 840 tonnes of LPG although this revenue was not booked in the first-half results.

NZOG has a 15 per cent stake in the field, which started producing in early December.

"Along with ongoing, albeit reducing production from Tui, this will provide the strong cash flows that will support the company's growth strategies," said chief executive David Salisbury.

Production targets from Tui for the year have been revised down from 5.1 million barrels to 4.8 million.