Shell NZ narrows FY loss, OMV's NZ unit moves back into profit

Shell New Zealand is keen to find suitors for its remaining New Zealand assets after the sale of its Kapuni onshore field helped narrow its loss in the year to December while Austrian oil and gas producer OMV AG's New Zealand unit moved back into profit after achieving a lower cost of sales.

Shell New Zealand said its total comprehensive loss attributable to its equity holders was $21.1 million versus a loss of $226.7 million in the prior year. Revenue fell 4.6 percent to $767.6 million but its position was bolstered by a $203.4 million gain on "disposal of property, plant and equipment." Earlier this year, Shell sold the 60-year-old Kapuni onshore oil and gas field to its joint venture partner in the field, locally owned Todd Energy. The value of the Kapuni deal, which includes the processing station for the oil field, was confidential at the time.

At the time, it said it would also look to offload its other assets, including an 83.75 percent stake in Maui and a 48 percent stake in Pohokura. Both fields are operated by Shell Todd Oil Services, a company that is now owned by Shell after Todd relinquished its 50 percent interest in the umbrella company.

A spokesperson for Shell New Zealand confirmed the company has started engaging with potential interested parties on the company's remaining assets in New Zealand with the help of JP Morgan. "Any discussions with potentially interested parties are confidential," the spokesperson said. Late last week Bloomberg quoted unnamed people with knowledge of the matter as saying the sale had drawn interest from OMV AG and other companies, including Greymouth Petroleum. According to Bloomberg, the assets could draw as much as $1 billion. Officials at OMV New Zealand and Greymouth Petroleum declined to comment.

OMV AG already holds 10 percent of Maui and 26 percent of Pohokura.

OMV's New Zealand unit said its net profit for the year to Dec 31 was $73.9 million versus a loss of $210.8 million in the prior period. Total revenue was $367.6 million versus $503.5 million in the prior year, largely due to weaker oil prices. The Brent crude average was US$43.7 a barrel in 2016 compared to US$52.4 in 2015. This impacted OMV NZ's oil and condensate pricings. Gas revenues were more stable as long-term contracts are in place, the company said.

However, its cost of sales was $250.2 million versus $801.3 million in the prior year.  Royalties were slightly lower with the company paying $42 million versus $49 million in the prior 12 months. It also said there was an $406 million impairment in 2015 (following the oil price drop in early 2015; which is not there in 2016). In addition, depreciation charges were around $125 million lower in 2016, it said.

(BusinessDesk)