Ann: FLLYR: NZO: 2012 Annual Results

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NZO
22/08/2012 11:42
FLLYR

REL: 1142 HRS New Zealand Oil and Gas Limited

FLLYR: NZO: 2012 Annual Results

22 August 2012

2012 ANNUAL RESULTS (Please note this version amends figure for Kupe oil
production)

NZOG (New Zealand Oil & Gas Ltd) has today released its financial results for
the year ended 30 June 2012.
o NZOG earned total operating revenue of $116.4 million and recorded a gross
profit from operating activities of $63.6 million.
o A net profit after tax of $19.9 million was reported for the full year.
o NZOG's total cash balance at 30 June 2012 was $209.2 million and the net
cash position $162.4 million.
o A fully imputed annual dividend of 6 cents per ordinary share will be paid.

NZOG continues to maintain a strong balance sheet to fund existing and future
exploration opportunities. The fundamentals of NZOG's business remain strong
and the company is keenly focused on delivering results and significantly
enhancing value.

Kupe (NZOG interest 15%)

The financial year under review saw the Kupe gas and oil field off the south
Taranaki coast continue to underpin NZOG with $74.3 million in revenue for
the year.

NZOG's share of production for the year was 2.86 PJ of sales gas, 12.5 tonnes
of LPG and 269,000 barrels of light oil.

Of particular note was a significant increase in the proved and probable (2P)
reserves in the Kupe gas and oil field with original 2P reserves (100%)
increased by 13.4% to 82.2 million barrels of oil equivalent (mmboe) and are
now 25.8% greater than the pre-production estimate.

Remaining reserves are 68.4 mmboe - 276 PJ sales gas, 13.6 million barrels of
light oil and 1.178 million tonnes of LPG.

Tui (NZOG interest 12.5%)

The Tui Area Oil Fields in the offshore Taranaki Basin continued to perform
well producing 2.2 million barrels (mmbbls) of oil in the financial year -
NZOG's share 276,000 barrels.

NZOG's revenue from Tui for the year was $42.0 million.

Feasibility assessment work on accessing additional volumes of oil with new
or sidetracked wells into the existing Tui and Pateke fields, and exploration
targets adjacent to these fields is now at an advanced stage.

Exploration

Our objective is to build a suite of opportunities that carry varying degrees
of risk, cost exposure and reward. Developing a diversified and sustainable
portfolio is progressing, but will take time. NZOG will continue to focus
preferentially on New Zealand, but insufficient continuity and impetus means
the business cannot be sustained from offshore New Zealand alone. Thus NZOG
continues to build on opportunities in Indonesia, Tunisia and onshore New
Zealand.

New Zealand

Exploration in New Zealand remains a strong commitment for NZOG to replace
current oil and gas production and grow the company.
In PEP 51311 NZOG has identified the Kakapo prospect, with estimates of mean
prospective resources in excess of 200 mmbbls of oil. NZOG acquired a 60%
interest in the Kaheru Permit in southern Taranaki, immediately to the south
of the Rimu/Kauri oil and gas field complex on the South Taranaki coast. NZOG
continues to engage with potential new partners for both Kaheru and Kakapo in
order to spread risk and reduce exposure to a disproportionate share of
drilling costs.

The company has an objective of being the partner of choice in New Zealand,
and believes that through the active farm-out processes undertaken and
increasingly active role in the sector as a permit operator, NZOG is
developing solid relationships with potential partners for the future.

In addition to the above, work is well advanced on assessing prospects in the
latest block offer which was opened by the Crown in June 2012 with bids
closing on October 15 2012.

NZOG took over as operator of PEP 38259, the Barque permit in the offshore
Canterbury Basin in January 2012 and despite efforts to find a new partner to
share the exposure to the high cost of drilling in this challenging
environment, some factors couldn't be fully addressed and the permit was
relinquished in August.

Indonesia

NZOG has made strong progress in building a portfolio of interests in onshore
Sumatra, Indonesia.

NZOG established a strategic relationship with Bukit Energy, a new company
put together by experienced oil industry professionals with a deep
understanding of Indonesia, strong local knowledge, and expertise in both
conventional and unconventional activities.

Subsequently NZOG secured a 22.5% interest in the Kisaran permit. Six
prospects within the permit block have been identified and assessed. Plans
are at an advanced stage to drill two wells late in 2012 and early 2013. One
is to appraise an undeveloped oil discovery made in 2006; the other to test a
prospect with dual targets up-dip of strong oil indications in the same well.

NZOG and its partners were the successful bidder for the Bohorok Block in the
North Sumatra Basin following encouraging results from a Joint Study
Agreement undertaken by an Indonesian university team. During the next three
years 200 sq km of 2D seismic data will be acquired to better delineate and
evaluate the leads and prospects identified during the pre-bid study.

Tunisia

As previously reported, Tunisia provides a combination of good prospectivity,
established and continuous exploration and production activity, reasonable
fiscal terms, and relative ease of doing business.

In 2011 NZOG was granted the Diodore permit in the Gulf of Gabes. The 1,200
sq km permit is surrounded by discovered and producing oil and gas fields.

This year a 467 km 2D seismic survey was conducted over the Diodore permit.
Data from that survey has been processed and is being integrated with
existing 3D and 2D seismic data (being reprocessed) to define and evaluate
prospects. A decision will be made by mid 2013 whether to advance to a
Production Sharing Contract which would involve drilling an exploration well
during its first four-year term.

NZOG has also secured 40% of the Cosmos concession, located in the Gulf of
Hammamet.

The concession contains an offshore oil discovery, Cosmos, which is being
assessed for development. An independent review of field reserves has been
undertaken by Netherland Sewell Associates Inc and front-end engineering
design studies are ongoing. A final investment decision is expected in the
last quarter of 2012 and if positive, the Cosmos field will be developed in
2014.

Pike River Coal Ltd (in Receivership)

The sale of Pike River Coal to Solid Energy was completed, with the state
coal miner agreeing to pay $7.5 million and a further $25 million by
installment after mining resumes and production thresholds are reached.

Through the year the company had continued to fund the Pike River Coal
receiver to continue with the sales process, insurance recovery and stabilise
the mine.

Returns for Shareholders

Building shareholder wealth remains the priority for both senior management
team and the Board.

NZOG's dividend policy since 2008 has been to pay a reasonable portion of
profits as an annual dividend. The board has resolved that there will be a
fully imputed final dividend of 6 cents per ordinary share. The determination
of entitlements for the dividend will be taken from the close of the share
register on 14 September 2012. The dividend will be paid on 28 September
2012.

A Dividend Reinvestment Plan (DRP) is available to New Zealand and Australian
resident shareholders who wish to take all or part of their dividend in
additional shares. New shares issued under the DRP do not incur brokerage
charges and are offered at a discount. The number of shares will be
calculated at a 2.5% discount to the weighted average sale price for shares
sold on each of the first five business days immediately following the
dividend record date (14 September 2012).

Approximately one third of NZOG shareholders are currently enrolled in the
DRP. Shareholders wishing to join or leave the Plan before the record date of
14 September 2012 need to advise the share registry, Computershare on 0800
467 335 (NZ) or 1 800 501 366 (Aust).

ENDS

For further information please contact:
Andrew Knight, CEO
Telephone: +64 4 495 2424
Toll Free: 0800 000 594 (NZ)
End CA:00226290 For:NZO    Type:FLLYR      Time:2012-08-22 11:42:18