Chairman Tony Radford
NZOG AGM, Intercontinental, Wellington
10.30am Wednesday 28 October 2009
I am very pleased to give an overview of what has been another successful year for the company. After that, you will hear from our CEO David Salisbury who will talk to you about our activities in greater detail.
Annual Profit
NZOG’s profit after tax for the year ended 30 June 2009 was NZ$53.2 million, from operating revenues of $138.7 million.
Given this healthy result, and consistent with the Board’s policy to distribute a reasonable portion of profits, an annual dividend for 2009 of 5 cents per ordinary share was paid out on 2 October 2009.
As with the previous year, the favourable profit result for 2008/09 was largely attributable to the benefits flowing from the Tui area oil fields.
NZOG also introduced a Dividend Reinvestment Plan in response to shareholder requests, and a third of you took up that opportunity to reinvest all or part of your dividends in additional NZOG shares.
Financial
Our cash position remained healthy throughout the year, which gave the company a lot of strength and stability at a time when world financial markets were in “panic mode”.
During the year, the company made substantial ongoing cash contributions to the Kupe project development and also supported a share issue by Pike River Coal, without straining our cash reserves, which currently approximate NZ$128 million (net of Kupe project loan).
Share Price
The recovery from last year’s global economic crisis, while not universal, has occurred more rapidly than generally anticipated and this has led to a rebound in prices for many commodities, including oil and coking coal.
NZOG’s share price has also recovered in line with this trend, and is now nicely back above the $1.50 that was paid by investors in June 2008 when they exercised share options to the tune of NZ$191 million.
Pike River Coal
NZOG’s interest in Pike River Coal was converted into a listed share investment upon the public float of Pike River Coal in 2007. Pike is a valuable investment.
Since Pike’s listing, NZOG has been a key and very supportive shareholder as the Pike Mine has moved from development into production, which should see the mine achieve its full potential by mid 2010.
NZOG is and will continue to be an oil and gas exploration and production business and in this context, the NZOG Board continues to review the investment in Pike and any and all opportunities to realise its maximum value for NZOG shareholders.
Broader Earnings Base in 2009/2010
Kupe
Looking to the current financial year, I’m pleased to advise that NZOG’s earnings base will be expanded when gas begins to flow from Kupe in a few weeks time. That event will broaden NZOG’s earning base, from Tui alone, by adding production of Kupe gas, light oil and LPG, for the next 15 years.
So, after a long period, and the investment by NZOG of around NZ$200 million to bring this major development to fruition, the rewards from Kupe will soon be with us.
Business Growth Exposure – Back to the drill bit
Tui
Another near term event relates to Tui. After a lot of planning and review work, the potential to expand the oil reserves within the Tui permit area is to be appraised with drilling early in the New Year, when two wells will be drilled. If the appraisal drilling is successful, then a new producing well could probably be brought on stream within 18 months and have the effect of bolstering the rates of production and profitability from the Tui fields overall.
Exploration Drilling
Another important event is that the hiatus on drilling of the past 15 months, as we have focused on developments, is about to end, not only through the drilling at Tui, which I have just mentioned, but also by drilling of exploration targets , Albacore and Hoki.
Albacore is to be drilled with a jack-up rig, which should be on location early in November. The Hoki prospect will be drilled by a semi-submersible rig early in the New Year, which is the same rig which will drill the new Tui wells.
Success from our drilling campaign could of course add substantial value to the company.
Conclusion
Finally, the management and board continue to work on building the company. I think we can all feel very optimistic and have a very interesting year ahead of us.
Thank you for your support.
Tony Radford
Chairman
2009 AGM Chairman's Address [691kB]
