Investors in New Zealand Oil & Gas are pressing the company to resume paying dividends now that it is profitable again and generating imputation credits.

In briefings for investment analysts and media on the Wellington-based company's June quarter cash-flow and production reports, NZOG chief executive Andrew Knight said it was a subject the board "debates regularly", although there was no announcement he could make at present.

Knight also confirmed that NZOG would likely be a buyer of a chunk of the 50 per cent of the Kupe oil and gas field owned by the field operator, Origin Energy, should the Australian energy giant decide to quit its only remaining New Zealand investment of significant size.

While Origin had given no signal of an intention to quit New Zealand, its Kupe stake was something of an "orphan asset" and the company was divesting assets in Australia as it meets the balance sheet challenges of a multi-billion investment on liquefied natural gas export facilities. Origin sold its controlling stake in New Zealand electricity and gas retailer, Contact Energy, a year ago.


Today's cash-flow statement shows the company has no debt and $96.8 million in cash at the end of the quarter, some $22 million of that sitting with Cue Energy, in which NZOG recently took a 48 per cent stake.

Cash on hand rose by $7.6 million in the quarter, although production of high-value LPG from Kupe was lower than normal because of an equipment outage, which the company expects will be repaired by September.

NZOG shares rose 3.3 per cent to 46.5 cents in trading on the NZX today, and are up about 6 per cent this year, although today's share price is a touch below the 48 cents per share the company has paid on average in a share buyback programme undertaken in response to the board's view that the company is undervalued.

Knight said Cue was producing strong cash flows from its producing assets, including its stake in the Maari field, offshore Taranaki, and was about a year behind NZOG in a programme of quitting exploration permits that were no longer attractive in the current environment of low global oil prices.

He confirmed that while NZOG's main producing assets remained in the traditional New Zealand oil and gas region, Taranaki, the company's main focus on future opportunity in New Zealand has shifted to the Canterbury Basin, where it is seeking an extension on its Clipper exploration permit as it explores the potential for a large gas condensate find in the Barque prospect.

While no drilling was in prospect in the next one to two years, Barque was emerging as a "very attractive if we can get someone on board and get the technical analysis right to justify drilling," Knight said.

Net oil production across the whole portfolio for the three months to June 30 totalled 191,334 barrels, a 7 per cent reduction from the previous quarter, although production from the Tui field had come in higher than NZOG's already more optimistic assessment.

The company would reassess abandonment of the declining field towards the end of the financial year.

Net gas production for the quarter was 1.77 petajoules, a 5 per cent increase from the March quarter, and LPG production was down 27 per cent at 2,850 tonnes because of an outage that is affecting gas processing.