New Zealand Oil & Gas has reached agreement to sell its 15% interest in the Kupe gas and light oil fields and production station to Genesis Energy for US$119 million (NZ$168 million), offshore New Zealand.
The effective date of the transaction will be 1 January 2017 and includes New Zealand Oil & Gas (NZOG) entitlement to overriding royalty interests.
"Since we worked with our joint venture partners to upgrade our Kupe reserves over the last year or so, we have been clear that the investment provides considerable upside for our shareholders," said Andrew Jefferies, acting-CEO, NZOG. “The transaction with Genesis allows New Zealand Oil & Gas to realize this upside now, while removing the risks of development and uncertainty around future market conditions.”
The agreement will need approval from both the Minister of Energy and Resources and the NZOG shareholders. A special meeting will be arranged on 16 December 2016, where the Board intends to vote shares they control in favor of the agreement.
"New Zealand Oil & Gas believes the offer from Genesis is fully priced,” said Jefferies. “It is at the higher end of our valuation range and therefore the Board recommends that shareholders should approve the transaction. Should the transaction be approved at the special meeting, we will return $70.8 million (NZ$100 million) to shareholders in 2017.”
Kupe is operated by Origin Energy (50%) with partners Genesis Energy (31%), NZOG (15%), and Mitsui E&P (4%).