Ann: HALFYR: NZO: NZOG half year results

• Release Date: 22/02/12 11:32
• Summary: HALFYR: NZO: NZOG half year results
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NZO
22/02/2012 09:32
HALFYR

REL: 0932 HRS New Zealand Oil and Gas Limited

HALFYR: NZO: NZOG half year results

NZOG (New Zealand Oil & Gas Ltd) has delivered another strong result with the
Tui and Kupe fields contributing to a net operating cash flow of $26.5
million in the first half of the financial year.

For the 6 months ended 31 December 2011, NZOG recorded total operating
revenue of $54.6 million, compared to operating revenue of $40.5 million in
the corresponding six month period a year earlier.

NZOG has reported a net profit after tax of $2.3 million, compared to a loss
of $99.0 million for the corresponding period a year earlier.

The profit was acheived despite taking a further $22.2 million impairment
against remaining Pike River Coal Ltd (PRCL) debt.

NZOG had a total cash balance at 31 December 2011 of $191.5 million and a net
cash position of $136.7 million.

Operating Performance
NZOG's operating revenue comes from two producing fields in the offshore
Taranaki Basin.

The Kupe gas and oil field is NZOG's primary revenue source, contributing
$37.1 million in revenue in the six month period.

With a 15% stake, NZOG's share of Kupe production for the period was 1.45 PJ
of sales gas; 6,300 tonnes of LPG; and 139,000 barrels of light oil.

The Tui area oil fields, while now in the decline phase, continue to make a
valuable contribution, earning NZOG $17.5 million in the six month period.

With a 12.5% stake, NZOG's share of Tui production for the period was just
under 148,000 barrels of oil.

The contribution to earnings from each field was as follows:

NZD millions Kupe     Tui   Total
Revenue  37.1  17.5 54.6
EBITDAX* 24.7   12.2 36.9
EBIT**        14.4  9.4 23.8
* Earnings before interest, tax, depreciation, amortisation and exploration.

** Earnings before interest and tax.

During the period, NZOG received a total of $41.0 million from the Receivers
for Pike River Coal Limited (PRCL) following a settlement with PRCL insurers.
NZOG advanced $4.6 million to the Receivers to fund ongoing mine
stabilisation efforts and the mine sales process.

Abnormal Items
As announced on 26 January 2012, NZOG has taken an impairment provision for
all remaining secured PRCL debt. This impairment provision of $22.2 million
(which includes related currency movements) was made after an assessment of
the expected future cash recoveries from PRCL. The provision reflects the
ongoing cost of the receivership, the highly conditional nature of further
receipts and uncertainty regarding timing.

The other abnormal item during the period was a foreign currency gain of $4.8
million on the company's US dollar cash holdings.

Portfolio Development
During the six month period NZOG took further steps to establish new core
areas of business with investments in Tunisia and Indonesia, while continuing
to focus on its long standing presence in New Zealand.

In the southern offshore Taranaki basin, NZOG is looking to secure an
additional joint venture partner ahead of drilling the Kakapo prospect, which
subject to rig availability could take place next summer. NZOG is also
working on behalf of the Barque joint venture to secure an additional partner
for this prospect in the offshore Canterbury Basin. Both permits have 'drill
or drop' commitment deadlines later this year.

In Tunisia, a 470km 2D seismic survey was conducted earlier this month over
the Diodore permit. The data will be processed and then analysed to firm up
already identified drilling prospects. NZOG and its partners in the Cosmos
concession, which NZOG joined in December, are undertaking the detailed work
required ahead of a final investment decision later this year on whether to
proceed with a development of the oil discovery.

In Indonesia, as well as several study agreements, NZOG has a stake in an
exploration permit in central Sumatra where a well is to be drilled in the
coming months.

NZOG Chief Executive Andrew Knight says further opportunities need to be
identified and secured.

"In the year ahead there is the prospect of exploration drilling in Taranaki
and Indonesia and a potential commitment to develop an oil field in Tunisia.
Further out, there are other drilling prospects. However, NZOG has the
resources and capability to do significantly more.

"We are very actively pursuing further opportunities in all three of our core
areas - New Zealand, South-East Asia and North Africa - ranging from study
and permit applications through to drilling, asset deals and corporate
acquisitions.

"Kupe and Tui are expected to provide ongoing cash flows and we intend to
invest a sensible portion of those cash flows in new investments in order to
grow the business and provide long-term value for our shareholders."
End CA:00219838 For:NZO    Type:HALFYR     Time:2012-02-22 09:32:18