NZOG resumes dividend after costs clamp-down; annual loss widens

New Zealand Oil & Gas [NZX: NZO] will resume dividend payments after clamping down on costs in response to the slump in global energy prices, which led to a writedown in the value of its shareholding in Cue Energy Resources to produce a wider annual loss.

The Wellington-based company declared a fully imputed final dividend of 4 cents per share, payable on October 25 to shareholders on the register on October 11, it said in a statement. NZOG didn't pay dividends in the 2015 financial year when it wasn't generating imputation credits.

The shares rose 4.1% to 51c, having increased 15% this year.

The energy exploration firm reported a net loss attributable to shareholders of $29.8 million, or 8.6c  per share, in the 12 months ended June 30, more than doubling from a loss of $14.4 million, or 3.5c, a year earlier. The bottom line was hit by a $29.8 million impairment charge on the value of Cue Energy, and NZOG's own cost-cutting measures will be taken up by the Australian business.

"The company is able to reinstate dividends because we have tightly controlled costs in a period when lower oil prices drove asset valuations lower," said chief executive Andrew Knight, who leaves the company at the end of this week.

Revenue increased 2.4% to $119 million, bolstered by a full year of contributions from Cue Energy, in which NZOG took a 48.1% shareholding in 2015.

Operating and investment cash flow more than tripled to $21.1 million, leaving NZOG with cash and equivalents of $96.8 million at the June 30 balance date. The company will pay about $14.1 million in dividends.

Operating costs rose 31% to $48.3 million, largely due to increased production and sales marketing spending.Mr  Knight said the company has started to manage its exposure to oil prices and carbon emission costs through modest hedging and spent $1.5 million on carbon emissions in the year.

Exploration and evaluation expenditure fell 11% to $21.5 million and the company is scaling back spending in Indonesia where it plans to realise returns from its investment. Knight said the company is still talking to the New Zealand government about changing conditions in the Clipper permit east of the South Island.

"The company has received new geological data relevant to the region, and Barque in particular," Knight said. "This information is being analysed against our previous understanding of the region's properties and we remain engaged with potential partners who have the scale and expertise to develop the prospect."

Other expenses were up 27% to $17.6 million, most of which was from increased employee costs.

(BusinessDesk)

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