Dunphy eyes Shell's looming asset sales

By PAULA OLIVER energy writer

Greymouth Petroleum head Mark Dunphy says he is interested in buying the Taranaki oil and gas assets that Royal Dutch Shell is being forced to relinquish by the Commerce Commission.

Mr Dunphy said yesterday that he was determined to make Greymouth a company with scale, and that meant getting a decent suite of producing assets in New Zealand.

Greymouth sprang to prominence two weeks ago when it was linked with the Peak Petroleum consortium in a late play for Fletcher Energy.

That bid came to an end on Tuesday, when Fletcher Challenge shareholders voted to sell Energy to Shell, but it appears Mr Dunphy will not be leaving the spotlight just yet.

It is still not clear what the other members of Peak Petroleum plan to do.

Guinness Peat Group's Tony Gibbs, a firm backer of the proposal, last night indicated that he wanted an end to the campaign.

He said other options were available, but that the lost vote was democracy in action.

A holder of 2.8 million Energy shares, GPG will walk away from the Peak proposal with a tidy profit.

As a requirement of its Commerce Commission clearance to buy Energy, Shell has to divest itself of a number of valuable exploration and production assets over the next 18 months.

Mr Dunphy has already made two attempts to buy those assets from Shell, and said yesterday he remained interested in them. He is to discuss the possible purchases with his consortium members.

The assets include an interest in the Maui field, a tiny portion of the fast-developing Pohokura field, a third of Kupe, and majority holdings in four other fields. Shell is also disposing of the Challenge service station network to new Fletcher offshoot Rubicon, which has indicated it will, in time, sell the asset.

Shell has already gauged strong interest from a number of local and overseas parties, including New Zealand-based Todd Energy and Contact Energy.

But the asset sales could yet be tripped up by three court appeals against the Commerce Commission's decisions.

Shell has appealed against the commission's first ruling last October which denied it the right to buy Energy, and has another appeal against some of the divestments required in its second, successful, application.

Greymouth Petroleum has also appealed against the commission's approval. All three appeals will be heard next Thursday, but commission spokesman Vincent Cholewa said they would not hold up the sale of Energy.

Shell spokesman Antonius Papaspiropoulos said the appeals were still live, but the oil giant had not yet made a final decision whether they would proceed.

Mr Dunphy's move towards the assets may not be the only one that members of the Peak Petroleum camp make in coming weeks.

The sale of Fletcher Energy to Shell still depends on a sanctioning court hearing scheduled for next Thursday, and shareholders who oppose the sale have the opportunity to be heard. Market observers say it is Peak's last chance, if it wants one, to halt the sale.

Mr Dunphy would not confirm if he intended to appear at the hearing.

Attention has now shifted to the effect the breakup of Fletcher Challenge is having on the market. Fletcher Building got a thumbs-up from investors after gaining the necessary vote to become a standalone business, ending the day up 9c at $2.17.

ABN Amro's Nigel Scott said that the amount of money coming into the market from the sale of Energy was difficult to estimate.

"The fact that the mums and dads know what time they'll be getting their money means they'll be looking around for ideas," he said. "There are limited choices at this point in time other than adding to your current holdings."

He said some of the Energy money had been reinvested in the past three months, but there would be a small equity bubble as the cash came through.

JP Morgan's Arthur Lim said the focus was now on what happened to Building and Forests. A flood of Rubicon shares on the market was also expected as Energy's hedge fund holders, not natural long-term investors, sold their stock.