Ann: ADDRESS: NZO: Chairman's Address, Auckland Investor Briefing

• Release Date: 26/08/14 12:14
• Summary: ADDRESS: NZO: Chairman's Address, Auckland Investor Briefing
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					NZO
26/08/2014 12:14
ADDRESS

REL: 1214 HRS New Zealand Oil and Gas Limited

ADDRESS: NZO: Chairman's Address, Auckland Investor Briefing

Investor briefing, Chairman's Address

Peter Griffiths,
Chairman, New Zealand Oil & Gas
Auckland Investor Briefing
Great Northern Room, Ellerslie Auckland Racing Club, 80 Ascot Ave 12 Noon
Tuesday, 26 August 2014.

This Auckland Investor Briefing represents a departure from our practice in
the past. Previously we have always held the briefing on the same day as the
Annual General Meeting in Auckland.
But this morning we released our Annual Results for the financial year just
completed. It seems appropriate to discuss your company's performance and our
strategies while the data is fresh.
The strategic decision that underlies everything we do is that our role as a
company is to be New Zealand's oil and gas explorers.
What makes us New Zealand? There's our name, the location of our head office,
our ownership by 14,000 New Zealanders. But what really being a New Zealand
company means is our set of New Zealand values.
We want to be seen as a dependable, capable and sought-after partner, both
for commercial partners and for the communities where we work.
The way we achieve that in practice is to work with integrity, being open,
transparent and constructive, and seeking relationships that are mutually
beneficial.
This strategy gives us a unique position in the marketplace - the company
that commercial partners want on their team and the partner that communities
welcome and trust.
In the past year our role in the New Zealand exploration sector resulted in
Woodside's decision to partner with us for a New Zealand country-entry. That
was a vote of confidence by a very large and significant player. It provides
us with the opportunity to participate in the exciting frontier stories that
are bringing global majors to New Zealand. So it's an example of how our
strategy of being partner of choice allows us to build the strongest
exploration portfolio we can, while maintaining a focus on the efficient
operation of our asset base
Looking ahead, the strategy will need to achieve balance between further
exploration and dividends that provide an immediate return to shareholders.
The Board has made a decision to fix the dividend for the half year at 3
cents per share, maintaining the full year dividend at 6 cents per share.
????This return will allow us to maintain a targeted exploration spend in the
coming year of around US$35 million.
We need to invest to grow shareholder value in future. The opportunities that
come from partnering with a company like Woodside in deepwater prospects off
Taranaki and in the Great South Basin are exciting - but they are also
demanding. It takes considerable resource to explore in deepwater frontier
plays.
We manage that by balancing the portfolio across geology, geography, markets,
regulatory regimes, and maturity.
Our onshore successes in Kisaran are an example, where wells are cheaper to
drill, with the other side of the coin being smaller target resources. A
final investment decision at Kisaran is still to be made, but if it goes
ahead, the production from there would add a new strand of revenue.
We can continue to pursue our strategic options because of the strong
operating cash-flow we have achieved in our producing fields this year.
A couple of achievements stand out for special mention.
We have announced today that the cost of purchasing a greater share of Tui
has already been recovered. This is remarkable.
Tui is a declining asset, and even with our extra share of it, returns from
the field are lower than last year's. Next year we will have production from
Pateke to boost Tui production some more.
Revenue from Kupe was also up, with contributions from accelerated gas sales
and from the settlement of negotiations around over-riding royalties.
It all added up to strong operating cash flows that will fund further growth,
allows us to maintain a dividend this year, and preserves the balance sheet
strength for future growth.
This is a sound story that I am proud to commend to you as shareholders.
End CA:00254396 For:NZO    Type:ADDRESS    Time:2014-08-26 12:14:15