New Zealand Oil & Gas plans to return $100 million of the $168m it reaped on the sale of its stake in the Kupe oil and gas fields through a court-approved share cancellation.

The Wellington-based company signalled the payment when it sold the Kupe investment, and today said it will do so via a scheme of arrangement to cancel one out of every two shares for a payment of 62.7 cents per share. Part-paid shares issued as part of NZOG's employee share scheme won't participate in the capital return.

The transaction will need to be approved by shareholders, with a meeting likely next month, and will also require High Court approval and a binding ruling from Inland Revenue that the capital return isn't in lieu of a dividend payment. If everything goes to plan, the scheme is expected to be effective in late May, NZOG said.

The energy explorer and producer had been overhauling its operations as it seeks out new prospects and plans to use the remaining proceeds from the Kupe sale to buy cheap assets after a protracted period of low energy prices meant lenders were less willing to keep backing unprofitable projects.

Advertisement

The shares last traded at 62.5 cents and have gained 49 per cent over the past 12 months.