NZO
01/07/2014 08:53
GENERAL
REL: 0853 HRS New Zealand Oil and Gas Limited
GENERAL: NZO: Agreement reached on Kupe overriding royalty
Agreement has been reached between New Zealand Oil & Gas and Genesis Energy
over the payment of overriding royalties from the Kupe oil and gas field.
The agreement will increase New Zealand Oil & Gas net profit after tax for
the 2013-14 financial year by $5 million. The impact in the 2013-14 financial
year will reflect payments relating to that financial year as well as for
prior years. New Zealand Oil & Gas expects its future revenue from Kupe will
increase by $1-2 million each year.
The overriding royalty has been under negotiation for several years.
Negotiations are continuing with another Kupe partner, Origin Energy.
The royalty arrangements originate from a series of transactions in the
1980s, when National Petroleum acquired an 89 per cent interest in what was
then a prospecting licence in Kupe. As part of the acquisition, National
Petroleum agreed to pay overriding royalties to the parties it acquired its
interest from.
Complex corporate reorganisations and transfers since have affected those
arrangements. The effect is that an overriding royalty is payable to New
Zealand Oil & Gas for petroleum produced from the Kupe licence area. The
calculation of the value payable has been the subject of negotiation, which
has been disclosed in financial accounts for recent years as a contingent
asset.
"New Zealand Oil & Gas is pleased to conclude negotiations with Genesis
Energy on mutually satisfactory terms," New Zealand Oil & Gas chief executive
Andrew Knight says.
John Pagani
External Affairs Manager
+64 21 570 872
End CA:00252273 For:NZO Type:GENERAL Time:2014-07-01 08:53:40
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