OG Oil & Gas makes new tilt at NZOG

Eyal Offer’s Singapore-based OG Oil & Gas (OGOG) has made a new bid to acquire all the 30% of New Zealand Oil & Gas (NZOG) shares that it does not already own.

Jul 10th, 2019

Eyal Offer’s Singapore-based OG Oil & Gas (OGOG) has made a new bid to acquire all the 30% of New Zealand Oil & Gas (NZOG) shares that it does not already own.

The two companies have entered a scheme implementation agreement under which OGOG will acquire the remaining shares in NZOG for 62¢ (NZ)/share. This price is a 25% premium to NZOG’s closing share price on July 9.

NZOG’s board has formed a committee of the company’s independent directors to consider OGOG’s proposal and has subsequently unanimously recommended that NZOG shareholders vote in favor of the transaction, provided the scheme price is within or above the valuation range specified by an independent advisor, and in the absence of a superior offer.

Auckland-based investment banker and corporate advisor Northington Partners has been commissioned to prepare the independent adviser’s report.

In agreeing to recommend the transaction the independent directors have considered the compelling premium offered to NZOG shareholders. They also have taken note of the changed operating environment for oil and gas investment in New Zealand since the government’s decision in April 2018 not to award new offshore exploration acreage.

As a result of this move, the directors feel there is now a difficulty in raising equity capital as a publicly listed company on the New Zealand stock exchange. They also point to the substantial price decline in NZOG shares following the government’s announcement.

Overall, the directors believe the recent policy changes have had a dramatic impact on the perception of New Zealand as an appealing place to invest in the oil and gas industry.

The deal with OGOG will be implemented via a scheme of arrangement which is a court-supervised process under which a meeting of shareholders will be called and the transaction will be voted on. No date has yet been set for the meeting, but directors anticipate it will be held during September 2019 with implementation of the scheme by the end of November.

NZOG’s assets include the highly thought of offshore Barque prospect in about 800 m of water in the Canterbury basin off Christchurch in the South Island.

NZOG also has a 15% interest in the Ironbark prospect in permit WA-359-P off Western Australia operated by BP and a 40% interest in Beach Energy’s offshore Otway basin assets in western Victoria.

The company also has cash reserves of about $98 million (NZ).

During the scheme of arrangement NZOG is being advised by Clare Capital on the financial side and Simpson Grierson on the legal aspects.

More in Companies