Ann: HALFYR: NZO: New Zealand Oil & Gas result for six months to...

• Release Date: 29/02/16 09:00
• Summary: HALFYR: NZO: New Zealand Oil & Gas result for six months to 31 December
• Price Sensitive: No
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					NZO
29/02/2016 09:00
HALFYR
PRICE SENSITIVE
REL: 0900 HRS New Zealand Oil and Gas Limited

HALFYR: NZO: New Zealand Oil & Gas result for six months to 31 December

o Loss of $45.2 million.
o Change in accounting policy for the treatment of exploration assets.
o Operating cashflow surplus of $31.7 million, up by $9.0 million.
o Corporate strategy adjusted to account for oil prices in $30 range.

New Zealand Oil & Gas has announced a loss for the six months to 31 December
2015 of NZD$45.2 million.

Asset revaluations caused by the lower oil price, and changes in the
capitalised value of exploration assets as a result of a change to accounting
policy, were the main factors in the interim financial results. The result
compares with a loss of $7.7 million a year ago.

Cashflows into the business remain strong in the current financial year
despite the loss, with a cash surplus from operations of $31.7 million, up by
$9.0 million from a year ago.

During the half year the company upgraded reserves in the producing Kupe gas,
LPG and light oil field by 34.7 per cent; Prospective resources of 530
million barrels were disclosed in the operated Barque prospect off the east
coast of New Zealand's South Island (unrisked, New Zealand Oil & Gas share
265 million); and the Pateke-4H well in the Tui oil fields is continuing to
produce ahead of operator estimates after coming into production in 2015.

On 16 February New Zealand Oil & Gas appointed a new chairman, Mr Rodger
Finlay. He noted the company intends to make significant corporate cost
savings in response to the current oil price environment as oil prices are
now in the low $30 range, down from $50 oil when the company last reported.

"The Board is intensifying its focus on minimising cash burn. Corporate costs
will be reduced.

"The Board intends to lead by example. The outgoing chairman will not be
replaced on the Board and Directors' fees will be reduced, providing a cost
reduction of around 30 per cent as a demonstration of the Board's
determination to restructure corporate costs.

"Exploration costs have been minimised, with no intention to spend further on
exploration beyond our contractual obligations.

"The company is looking to extract more value from existing assets and
continues to screen opportunities actively to grow through acquisition. The
Board intends to manage capital carefully and retain only capital needed for
the company's strategy.

"Despite write downs of asset valuations the underlying business is
performing well, and is cash positive with a strong balance sheet. I expect
to see improved performance as costs are cut and growth through acquisition
as assets come to market at value."
Mr Finlay paid tribute to outgoing chairman Peter Griffiths.

"The Board unanimously thanked Mr Griffiths for his long service and
stewardship through a period of substantial strategic change in an
extraordinary macroeconomic environment," Mr Finlay said.

Chief executive Andrew Knight said the first half of the financial year had
seen consistent operational performance despite the lower oil price, and
continues to produce enough cash to sustain it despite low oil prices.

"During the year the average oil price achieved was NZ$60 per barrel. At
contracted gas prices the Kupe asset has positive cash flow even if oil and
LPG prices were nil. Kupe gas revenues alone are more than double the
operating cost of the asset," Mr Knight said.

Operating costs were down by $0.9 million in the half year.

EBITDA (earnings before interest, tax, depreciation and amortisation) was a
loss of $19.6 million, compared to a profit of $7.3 million in the comparable
previous period.

Net group revenue was up by $11.3 million, including $28.5 million revenue
contribution from Cue Energy and a $3.4 million gain on foreign exchange,
offset by a negative oil price impact of $14.5 million and a negative $6.1
million from lower sales as shipments were deferred to exploit the potential
for some recovery in prices.

The value of the 27.5 per cent New Zealand Oil & Gas interest in the Tui oil
fields has been written down by $8.7 million owing to the lower global oil
price. As a result of expected lower forward oil prices the company now
forecasts the field's economic life will end in the first quarter of 2018.
Tui will then be abandoned, assuming current oil prices.

Exploration activity is now accounted for using the 'successful efforts'
method, where exploration costs are expensed as they are incurred. In the
past, exploration costs were carried as a capitalised asset and written down
only at the point when the company considered there would be no prospect of
success. Either accounting method is appropriate, and Directors believe the
change provides an improved picture of the company's position. Some costs
will continue to be capitalised, including the cost of acquiring a permit,
maintaining licences and successful drilling.

New Zealand Oil & Gas has restated prior interim comparative figures and 2015
full year results as a consequence of the change in accounting policy.
Details of the restatement's impact on specific lines are included in Note 2
of the financial statements.

All dollar amounts in NZD.

Further information is available in the condensed financial statements.

New Zealand Oil & Gas has more than 13,000 shareholders on the NZX and ASX.
It has interests in three producing fields in New Zealand, and production in
Indonesia and the United States. Its Clipper permit off New Zealand's South
Island East Coast contains New Zealand's largest announced hydrocarbon
prospect. More information can be found at nzog.com

John Pagani
External Relations Manager
+64 21 570 872
End CA:00278471 For:NZO    Type:HALFYR     Time:2016-02-29 09:00:39