Cultus soars on oil find, report

By Mark Reynolds

Shares in oil exploration company Cultus Petroleum hit a high for the year of 88 cents yesterday as investors reacted favourably to news that the company's recent oil discovery off the coast of Taranaki was worth at least $200 million.

The shares were also pushed ahead by an independent valuation that said Cultus shares were worth at least $A1.04 each, and perhaps as much as $A1.39. That valuation was carried out in response to a takeover offer for the company at 66Ac a share. The report, by investment bank Grant Samuel and Associates, concluded that the offer by Austrian-based OMV was neither fair nor reasonable.

Full details of the report will be included in takeover offer documents to be mailed to Cultus shareholders at the end of this week, but the investment bank's findings suggest that offer is now dead in the water.

The main shareholders in Cultus, Sir Michael Fay and David Richwhite, have already rejected the offer. Without their 21 per cent shareholding OMV is unlikely to pass a minimum acceptance threshold of 75 per cent for its bid.

Cultus chairman Mark Dunphy said the valuation reinforced the view of directors that Cultus was undervalued by OMV.

Grant Samuel identified areas which could contribute to a rise in the share price of Cultus, including a recent rise in the price of oil and the discovery of the Maari field off the coast of Taranaki.

Cultus has a 30 per cent share of Maari, having diluted its holding from 50 per cent in order to get development funding for the field from its partners in the prospect, Shell Petroleum and the Todd family.

Shell and Todd have advised Cultus that the field has a net present value of $US113 million ($200 million), based on an oil price of $US14 a barrel.

That valuation is based on the field containing at least 46 million barrels of recoverable oil, making it New Zealand's largest offshore oil discovery.