NZ Petroleum in strong position

Press, 21 July 1988, Page 24

NZ Petroleum in strong position

New Zealand Petroleum Company is in a strong financial position, with shareholders’ funds of $10.4 million and sufficient reserves to undertake new exploration opportunities, the annual report for the year ended May 31 shows.

The year under review saw the drilling of two exploratory wells in the Southland licencing area. These wells were abandoned as dry holes, but the information obtained will be useful in the planning of future exploration programmes, the chairman, Mr Peter Meikle, says.

“The directors would like to continue exploration in the Southland Etrea, and in other parts of New Zealand, if additional licences can be secured.”

Major features of the financial results and operations of the company were:

© A net loss of $143,559 compared with a net loss of $91,137 for the previous year.

© A gain on overseas exchange of $685,368 (1987 unrealised gain $98,422).

® Extraordinary items included a loss of $294,185 on the revaluation of the New Zealand Refining Company shares and expenses of $630,091 incurred on the postponed public offerings.

© Accumulated exploration expenditure at balance date

was $2,105,388 (last year $833,687). 0 Issued and paid-up capital increased from $3,656,422 to $4,800,172. Shareholders at the 1986 and 1987 annual general meetings gave directors discretionary authority to make a public share offering. The directors proceeded to prepare for simultaneous public offerings in New Zealand and the U.S.A, in November, 1987. Because of the offerings being made in two countries, considerable expense was incurred in these preparations and in complying with the statutory and security requirements of both countries.

On October 28, 1987, the company announced the postponement of the proposed public offerings of up to 14,000,000 ordinary shares in New Zealand and 4,000,000 American Depositary shares (each representing one ordinary share) in the United States of America.

The company had previously filed with the Securities and Exchange Commission in Washington a registration statement relating to the proposed United States offering but such statement had not been effective and was subsequently withdrawn. The New Zealand prospectus was also in an advanced stage of preparation at the date of the postponement. On December 1, 1987, concurrently with one of the Southland farm-out agreements, Petroleum Corporation of New Zealand (Exploration), now known as Petrocorp Exploration, subscribed for 1,450,000 ordinary shares of SNZI.6O a share.

After an Extraordinary general meeting held on January 29, Triton Energy Corporation of Dallas, Texas, U.S.A, was offered and allotted 3,125,000 ordinary shares at an issued price of SNZI.6O a share. The proceeds of such offering and allotment were used exclusively for the repayment in part of the company’s indebtedness to Triton Energy Corporation. On June 12, 1987 the company regained 100 per cent ownership of the exploration rights of PPL 38074, an area in which New Zealand Petroleum has been exploring since 1962. Two wells were drilled. The first well, Upukerora-1, was spudded on November 25, 1987. Unfortunately, no significant signs of hydrocarbons were encountered during the drilling operations and the well was plugged and abandoned on December 17 at the target depth of 2009 metres. The information obtained ■from this well will aid in a further evaluation of the prospectivity of the Te Anau Basin.

The second well, Happy Valley-1, in the Waiau Basin, was spudded on December 24. Here too, the objective was to test the Eocene and Late Cretaceous sandstones.

Drilling difficulties caused by an overpressured shale formation hindered the drilling of this well and the operations were terminated at 3270 metres drilled depth instead of the projected total vertical depth of 3300 metres. There were no' shows of hydrocarbons and the well was logged, plugged and abandoned and the rig released on March 29.