NZOG shares down a third after Pike River trading halt

File photo / Paul Estcourt

New Zealand Oil & Gas shed as much as a third of its market value when the shares resumed trading after being halted for the Pike River Coal mine explosion.

NZOG shares slumped 36 cents to 84 cents and earlier sank to 80 cents, the lowest since April 2005.

The oil and gas company owns 29 per cent of Pike's shares, which remain on trading halt, 17 million options, $29 million of convertible bonds and a short-term funding facility with $13.1 million outstanding. It also has an option until March 2013 to purchase Pike coal at market prices.

In an announcement made to the NZX, the company said the "prime thoughts and concerns of the NZOG Board and management continue to be for the men trapped at the Pike River Coal mine, their families, friends and colleagues."

The information released today outlines exactly the NZOG exposure to Pike River, so the NZX has allowed its shares to be traded again.

"While PRC is a significant investment for NZOG, the majority of NZOG's assets are its direct oil and gas holdings and cash," said NZOG in its statement.

NZOG's 29.4 per cent stake in Pike River Coal represented a $82m investment, which it says was worth $77m at the end of June this year.

The announcement goes on to say that NZOG advanced Pike River $US29m on May 21 this year. Another short term funding facility was provided by NZOG to Pike River on September.

As at today, a total sum of NZ$13,116,733 was outstanding.

"NZOG is continuing to honour the short term funding facility and arrangements are being implemented for PRC to drawn down the balance of the facility, being NZ$12m, on the understanding that all secured creditors will approve a stand-still period of 90 days," says the announcement.

The total funding provided and offered to PRC equates to 16 cents per NZOG share, which last traded at $1.20.

"Research coverage of NZOG is provided by a number of market analysts. Four analysts have issued reports in the past month.

Excluding the value attributed in the research reports to NZOG's Pike River interests, the value of NZOG's other assets is estimated by the analysts to be between NZ$1.05 and NZ$1.20 per share. These numbers exclude the oil discovery potential of NZOG's exploration portfolio."

- HERALD ONLINE/BUSINESSDESK