Tag Oil approaches Greymouth Petroleum

File Photo / AP

Toronto Stock Exchange-listed Tag Oil has submitted a non-binding expression of interest to New Zealand-owned Greymouth Petroleum.

There has been no formal due diligence and no definitive agreement had been struck, Tag said in a statement. It disclosed the move after a report in the Wall Street Journal said it had bid $650 million for all of Greymouth.

Tag Oil chief executive Garth Johnson said the non-binding expression of interest was not an offer and it was subject to strict confidentiality "that appears to have been breached".

Greymouth is 86 per cent owned by chairman and chief executive, Mark Dunphy, and investor Peter Masfen. Previous chief executive John Sturgess owns the remaining 14 per cent.

The three shareholders have been embroiled in a bitter dispute which is currently being heard in the High Court in Auckland. A court judgment last year detailed how Dunphy and Sturgess fell out over the course of 2010.

Dunphy and Masfen are seeking a court order to force Sturgess to sell his stake while Sturgess is seeking a court-ordered sale of 100 per cent of Greymouth to Tag Oil as a method for him to sell his shares. The offer from Tag Oil was addressed to a person associated with Sturgess, the Wall Street Journal reported.

Dunphy and Masfen intend to retain control of Greymouth and have proposed selling the stake held by Sturgess via a negotiated sale with a preferred party, a market tender to companies expressing interest or an initial public offering of the company.

Greymouth is the second-largest privately held New Zealand petroleum company and through its PetroMagallanes is the second-largest permit holder in Chile.

Tag operates the Cheal and Sidewinder oil fields in Taranaki, and has exploration permits for the Taranaki basin and one for the Great South Basin.