Wind-up move to get $4m from FCL baby

By Geoff Senescall

Shell company New Zealand Petroleum is seeking to wind up Southern Petroleum Services in a bid to extract $4.58 million from the Fletcher Challenge Energy subsidiary.

Its last-ditch move, expected to be heard in the High Court at Auckland today, came as Fletcher Energy disclosed that it was unlikely for now to develop the gasfield in question at Mangahewa in Taranaki.

NZ Petroleum owns preference shares in Southern Petroleum, which in turn has an interest in oil licence area PPL38705 at Mangahewa.

The preference shares will be paid out only when profits begin to flow from gas or oil production at Mangahewa.

A spokesman for NZ Petroleum, Stuart Wilson, said the delaying of development of the gasfield was another example of Fletcher's "continued oppression of minority shareholders' interests."

If another operator, which did not have the conflicts of interest of uncommitted gas reserves, owned Mangahawa it would be more likely to be developed sooner, Mr Wilson said

"This latest ploy, however, does not affect our case of winding up the company."
Fletcher Energy spokesman Stephen Jones said the timing of the decision not to develop Mangahewa was unrelated to the court case.

"It is not about Fletcher's, it is about the New Zealand market. Buyers of gas from Maui - Natural Gas Corporation, Contact Energy and Methanex - are actually paying for gas they are not using at the moment," he said.

Furthermore, recent drillings at two test sites at the Ohanga-2 well within the Mangahewa licence area were not successful.

In 1997 when the onshore Mangahewa gasfield was discovered it was described by the company as one of the biggest finds in New Zealand.

Last year the company indicated it might spend $250 million developing the site.

But Mr Jones said the progress since then had been disapointing, the company only booking 101 billion cu ft of gas.

Extraction costs at the field are also high compared with other Taranaki fields. Although oil prices have risen in the past week, they are still at 22-year lows.

NZ Petroleum has 4380 preference shares in Southern Petroleum, with a face value of $1000. In reporting a loss of $158,000 for the year to last May the company wrote back $2.2 million on its preference-share investment.