Share of Petrocorp to be sold to public

Press, 4 June 1984, Page 1

Share of Petrocorp to be sold to public

PA Wellington New Zealanders will be able to buy a part of “think big” under plans to “privatise" the State-owned Petroleum Corporation of New Zealand announced by the Minister of Energy, Mr Birch, at the week-end. Shares in the giant gas and oil company would be sold to private investors. But the Government would maintain at least 51 per cent of the company, Mr Birch said at the Young Nationals annual conference at the Chateau. However, he gave no details of the number of shares which would be available to the public. Petrocorp’s fixed assets at $1.2 billion are greater than Fletcher Challenge's New Zealand assets, and so the sale could be worth hundreds of millions of dollars. This would make up one of the largest issues on the New Zealand Stock Exchange. Mr Birch said he was

confident that a very firm policy for the privatisation of the Petrocorp group of companies would be announced later this year. Petrocorp’s major interests are in Maui gas, natural gas distribution, methanol, ammonia-urea production, and oil exploration. “It is now generating very substantial income and assets, and it is time therefore to consider privatisation,” Mr Birch said. “By that I mean the opportunity for the private investor to buy, at current market value, an interest in Petrocorp." Mr Birch also announced that Petrocorp had been asked to declare its first dividend this year, to go to the sole shareholders, the Government. The chairman of Petrocorp, Mr F. W. Orr, said from Auckland yesterday that since the formation of the company the Government had said it wanted at least a partial privatisation of the company. Mr Orr said he believed

the Government would release more details in two weeks. He said the Government also had to decide if the shares sold to the public would represent the whole group, or just parts, such as the ammonia-urea plant or the methanol plant. Petrocorp has risen within its short six-year existence to become one of the biggest companies in New Zealand and a dominant force in the gas and oil industry. With its initial projects coming on stream the copany is expected to show a rapid expansion of profits which will draw widespread interest among potential shareholders. The sheer size of the State-controlled company is usually not appreciated by people outside the oil industry. Petrocorp's fixed assets in March, 1983, of $1.2 billion, compares with Fletcher Challenge’s fixed assets in New Zealand of $906 million in 1983. The State-owned con-

glomerate's major asset is a 50 per cent interest in the offshore Maui gas well. Petrocorp’s Maui assets were listed in the 1983 annual report at $759 million, well over half of the total worth of the company. It has been this upstream ownership of the Maui resource which has provided the basis for the expansion into the downstream petrochemical processing and distribution of natural gas, liquid petroleum gas, and compressed natural gas. The company’s half-share of the Maui gas and condensate reserves was estimated at $4.5 billion before extraction costs at March 31, 1983. In addition, Petrocorp has taken a leading role in gas and oil exploration since it was formed in 1978. It found the first substantial onshore oil field at McKee and a number of other small wells just south of the major “think big" plants at Waitara.

The latest profit for Petrocorp was $27 million for 1983. more than double the $l2 million earned in the previous year. Although Petrocorp officials would not disclose yesterday the 1984 profit, industry sources said they expected the profit to continue climbing. The increased draw-off of gas because of the opening of the ammonia-urea complex and the chemical methanol plant during the year would add to earnings this year Any increase in gas use means that production of the valuable condensate component drawn up with the gas increases Petrocorp’s profitability. When the huge Synthetic Fuels Corporation’s gas-to-gasoline plant comes into production about September next year, the gas draw-off is expected to increase vastly the earnings for the Maui partners. Besides the Maui interests, Petrecorp also owns 100 per cent of the Kapuni ammonia-urea plant. 51 per cent of the Waitara chemical methanol plant, and all of Natural Gas Corporation which distributes natural gas throughout the North Island. The Petrocorp Exploration subsidiary is now developing the 5000-barrel-a-day McKee crude oil production station and has a large share of the recent offshore oil exploration.