New Zealand Oil & Gas Second-Half Profit Surges on Tui Output

By Gavin Evans

Aug. 29 (Bloomberg) -- New Zealand Oil & Gas Ltd., the country's biggest publicly traded explorer, posted an eightfold gain in second-half profit because of production from a new field and record prices.

Net income rose to NZ$55.8 million ($39 million) in the six months ended June 30, from NZ$6.3 million a year earlier. The profit was derived from full-year earnings of NZ$97.2 million the Wellington-based company reported today.

New Zealand Oil & Gas owns 12.5 percent of the Tui oil field, drilled last July as the country's first offshore project in 11 years. Tui pumped 14.2 million barrels of oil in the 12 months ended June 30 and has produced a further 2 million barrels since then. Benchmark New York oil prices averaged 79 percent higher in the half than a year earlier.

New Zealand Oil & Gas was unchanged at NZ$1.62 at 10:30 a.m. in Wellington trading. The oil producer reported a 50-fold increase in sales in July.

Tui, a 15 percent stake in the offshore Kupe gas project and a 30 percent stake in Pike River Coal Ltd. are the company's major assets.

Rising costs and a decision by the Kupe partners to build their own storage for condensate, or light oil, will increase the project's completion cost by about 10 percent to NZ$1.2 billion, Chief Executive Officer David Salisbury told journalists on a conference call. The Origin Energy Ltd.-led project is on schedule for gas production mid-2009, he said.

Investors will receive a special 5 cent-a-share dividend on Oct. 1, the company said today. Full-year profit of NZ$104 million was expected, based on the average of four analyst estimates compiled by Bloomberg News.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net