Tui Oil Transforms NZOG's Financial Position in Six Months

New Zealand Oil & Gas Ltd's financial position has "quite literally been transformed" in just six months with the start-up of the Tui oil field, the company says in its half year report to 31 December 2007.

NZOG recorded a net surplus of $41.4 million from total revenue of $95.5 million in the six month period. This compares to a surplus of $0.5 million and revenue of $92,000 in the corresponding period a year earlier.

Tui oil began flowing at the end of July with prices rising at times to over US$100 a barrel giving NZOG an average price, net of quality and freight differentials, of just under US$89 a barrel.

While revenues are up, costs per barrel have been substantially below the forecast cost of US$10 a barrel.

Field performance also has been better than forecast. By the end of December, Tui had produced almost 6.4 million barrels of oil with NZOG's share coming to 798,000 barrels.

The capital cost of bringing the fields into production was US$274m with NZOG's share US$34m.

By mid December NZOG achieved project payback -- recovery of all Tui exploration and development costs.

By the end of February total production had reached 9.1 mmbbls, with NZOG's share 1.14 mmbbls.

NZOG announced it is to pay shareholders its first dividend of 5 cents per share "to recognise an outstanding period and provides shareholders with an immediate share of that success."

The company says it has approximately $85 million of accumulated tax losses available for use in the 2007/08 year. In the expectation that all of these losses will be utilised, the company has paid provisional tax.