NZOG seeking acquisitions, won't raise capital

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New Zealand Oil & Gas said it is actively seeking acquisitions of a scale that won't require it to raise additional capital.

The firm said its strong balance sheet, and its weighting to gas rather than oil, means it is well-positioned in the current "distressed' market to pursue production and exploration assets.

Its focus area remains Australia and New Zealand and it will seek assets that can be funded without having to raise significant additional capital, given the "challenge" to do that in the current market.

"New Zealand Oil & Gas has recently signed several confidentiality agreements and is actively evaluating opportunities that fit within the above parameters," the firm said in a statement on NZX.

"While it is too soon to tell if this will lead to attractive investment opportunities, we are optimistic that assets at value will emerge in this time of intense dislocation for our industry."

NZOG shares fell 0.9 per cent to 55.5 cents, taking their loss so far this year to 10 per cent.

Majority shareholder

Wellington-based NZOG is majority-owned by the oil and gas arm of Ofer Global. It owns 4 per cent of the Kupe gas field and has interests in the Maari oil field and Indonesia's Sampang field through its controlling interest in Cue Energy Resources.

It also has a 15 per cent stake in the Ironbark gas prospect that operating partner BP is planning to drill off Western Australia later this year. Melbourne-based Cue also has a 21.5 per cent stake.

NZOG has struggled for direction since the government's 2018 ban on new offshore exploration killed international interest in its acreage off the South Island. Efforts to use its cash – proceeds from the 2017 sell-down of its Kupe stake - to buy other producing assets in the region have also been unsuccessful.

NZOG had $115 million of cash on its books at March 31.

Today's announcement marks the completion of a strategic review the board committed to in December. The month before, shareholders rejected a proposed takeover by 70 per cent-owner OG Oil & Gas in favour of the yet-to-be-defined exploration and production strategy.

Shareholder soundings

The company said board members conducted a series of meetings and phone calls early this year with some of the firm's largest shareholders to understand their preferences.

That was then distilled in a series of strategy sessions with an extensive review of assets in Australia and New Zealand that were of a size that the company could afford.

The Covid-19 pandemic and the subsequent collapse in oil prices then turned the world "on its head," bringing forth potential growth opportunities, NZOG said.

"We are not content to sit and wait for the results of Ironbark. We will look to acquire high-quality assets, using our well-developed expertise in oil and gas and leveraging the capabilities of the wider group."