Interim payout in pipeline

NZOG set to take up half-year dividend practice last seen about 15 years ago.

The company intends to drill two new wells in the Tui prospect. Photo / Supplied
The company intends to drill two new wells in the Tui prospect. Photo / Supplied

New Zealand Oil & Gas says its war-chest is full enough and its cashflows steady enough to return to paying interim dividends for the first time in perhaps 15 years, but there's no prospect of an increase on the current annual payout of 6c a share.

The company will also halt the 2.5 per cent discount previously offered in its dividend reinvestment scheme, saying it doesn't need to raise capital at the moment and the discount disadvantaged non-participating shareholders.

Recently appointed chief executive Andrew Knight wasn't sure how long it was since NZOG last paid interim dividends, but suggested it was about 15 years ago.

The announcements came in NZOG's operations report for the three months to December 30, and follow this week's disclosure of the intention to drill two new wells in the Tui prospect, one a development well to get better production from the Pateke resource, and an exploration well in a prospective tenement known as Oi.

Those wells will be drilled by the Kan Tan IV semi-submersible rig, due in New Zealand waters later this year, but NZOG is also looking for a jack-up rig to undertake drilling in the Kaheru prospect, where NZOG is the operator with a 35 per cent interest, and is joined by Australia's Beach Energy (25 per cent) and TAG Oil (40 per cent).

However, while New Zealand portfolio development continues, the company's near-term prospects for substantial new cashflows are in its Tunisian offshore oil resource known as Cosmos, where a final investment decision is likely in March, with first oil to flow by late 2014.

A proven resource of 9.2 million barrels of oil has been assessed in the "A" lobe of the Cosmos find.

Knight said that, on the current plan, the company's $209 million of gross cash holdings would meet its capital needs over the next five years.

"We would invest that cash balance and receive considerably more than that back in the five years. With Cosmos, the simple payback on a cashflow basis will be a year or 18 months, similar to Tui."

Total revenues for the quarter were $18.3 million, of which $11.4 million came from NZOG's share of the Kupe oil and gas field, and $6.9 million from the declining Tui field.

The company paid down some $4.8 million of its standing debt facility with Westpac.

Gross cash on hand stood at $209 million, or $171 million net.

Knight said that while splitting the dividend into two annual payments reflected the company's improved position, there was no prospect of the rate of payout increasing at present.

The board has yet to consider the proposal. NZOG shares closed up 2c yesterday at 89c.

Meanwhile, London-based explorer Kea Petroleum announced it would begin drilling the rest of the 3400m Mauku-1 well, onshore Taranaki, in about three weeks when a second rig would be operational on the site, while the Puka-2 well recommenced drilling on Monday and should be at target depth by mid-February.

- BusinessDesk

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