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NZOG Drops Into Half Year Loss

Fuseworks Media
Fuseworks Media

Wellington, Feb 24 NZPA - New Zealand Oil & Gas reported a sharp turnaround in its half-year results, with a net loss of $6.5 million in the six months to December, compared to a net profit of $54m a year earlier.

Revenue was down to $37.7m in the latest period from $103.2m in the half year to December 2008.

NZOG chief executive David Salisbury said the reported loss did not reflect the underlying health of the balance sheet and expanding petroleum production.

All of the revenue for the latest half year came from NZOG's 12.5 percent share in the Tui area oil fields off the Taranaki coast.

The result reflected several key factors including slowly reducing production, as expected, from Tui, lower average international oil prices, exploration write-off of $10.9m from the Albacore well, $4.2m as an apportioned share of Pike River Coal's reported loss, and $14m in unrealised foreign exchange losses, the company said today.

The unrealised foreign exchange losses arose from NZOG's large US dollar cash balance and the fluctuating exchange rate. If the NZ dollar remained below US72c it was likely NZOG would report foreign exchange gains in the second half.

Also earnings from the Kupe oil and gas field were being treated as revenue from the start of this year, after having been capitalised until the end of 2009.

Mr Salisbury said the start of production from Kupe in early December 2009 was the major milestone achieved during the period.

Once in permanent production, and depending on exchange rates and international oil prices, Kupe was expected to provide NZOG with a long-term annual revenue stream of about $60-65m, Mr Salisbury said.

Along with ongoing, albeit reducing production from Tui, that would provide the strong cash flows that would support the company's growth strategies.

In the six months to the end of December, Tui produced more than 2.7m barrels of oil, of which NZOG's share was 340,000 barrels.

While still in a commissioning period, Kupe was producing substantial quantities of sales gas, LPG and light oil. NZOG's production in the second half of 2010, on a barrel of oil equivalent basis, was expected to be about double that of the first half, as a result of the contribution from Kupe, the company said.

NZOG shares closed at $1.57 yesterday, having ranged between $1.80 and $1.18 in the past year.

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