Infratil said the $9 million stake was its first upstream investment but would be complementary to its existing energy portfolio. Infratil is a long-term investor in the energy and transport sectors principally through TrustPower in New Zealand and Energy Developments in Australia, worth about $500 million.
Austral Pacific will provide Infratill with some exposure to New Zealand's tight gas supply market. However total upstream exposure, as a proportion of its energy investments, was expected to remain modest. The Austral Pacific shares will be held through subsidiary Infratil Gas Ltd.
Infratil said it would look to support Austral Pacific should it require capital to maintain its interests in successful discoveries, as these move from exploration to more long term production infrastructure investments.
Infratil paid US$2.50 (NZ$3.60) a share for 2.45 million shares. Infratil will receive 1.228 million warrants entitling it to buy additional shares within the next year at US$3.50 (NZ$5.10) each.
Infratil said that its chairman David Newman, who is also chairman of Austral Pacific, was excluded from Infratil's consideration of this investment.
Infratil said prospects for junior explorers in onshore Taranaki were positive. The recent lift in gas prices is likely to be sustained, allowing profitable development of smaller onshore gas fields.
The company said it also believes the Government will increasingly pressure permit holders to meet their indicated exploration plans. This will result in smaller exploration companies seeking additional capital, providing acceptable entry pricing for investors.
The total Austral Pacific placement of 4 million shares to New Zealand and North American shareholders raised US$10 million (NZ$14.5 million).
The placement was oversubscribed, and New Zealand investors were scaled down.
The onshore Cheal oil reserves support around half of Austral Pacific's current value, with the nearby Cardiff deep gas well being material to short term reserves.
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