• Media release
  • 15 Dec 2017
  • 3 min read

Acquisition of NZOG share of Kupe Joint Venture

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Genesis Energy is pleased to announce the acquisition of New Zealand Oil & Gas' ("NZOG") 15% share of the Kupe Joint Venture ("Kupe") for cash consideration of $168 million. The acquisition strengthens Genesis Energy's integrated fuels strategy, creating  greater flexibility of  fuel supply, increased influence in the Joint Venture, and complements Genesis Energy's existing 31% stake.

"This acquisition builds on Genesis Energy's strategy to create value by linking upstream fuel supply with electricity generation and consumer energy needs. The Kupe field is a world class asset producing oil, piped gas and bottled gas. The increased stake enables Genesis Energy to access and manage more flexible fuel supply well into the next decade. The strong cash flows will also provide headroom to invest in organic growth areas aligned to Genesis Energy's strategy, such as technology enabled home energy management," Marc England, CEO Genesis.

"In addition to the strategic merits of the transaction, shareholders will benefit from the additional cash flows that will support our progressive dividend policy. This transaction also supports a continuation of imputing dividends at the current 80% level with the potential to increase imputation levels in the medium term," Dame Jenny Shipley, Chairman.

The acquisition will involve the purchase of 100% of the shares in three subsidiaries of NZOG that are the holding companies for its 15% stake, plus 100% of a subsidiary that has rights to royalty payments associated with the Kupe field.

The transaction is subject to approval by special resolution of NZOG's shareholders. NZOG is planning to convene a special meeting of its shareholders on 16 December 2016 for the purposes of seeking that approval. The Board of Directors of NZOG recommends shareholders approve the transaction at that meeting and directors intend to vote shares they control in favour of the transaction.

The increase in ownership will give Genesis Energy access to approximately 160,000 extra barrels of oil and 13,000 additional tonnes of LPG per annum. Genesis Energy currently purchases 100% of the gas offtake from Kupe. The increased equity stake will also give Genesis Energy ownership of an additional 26PJ (+48%) of uncontracted gas beyond 2020.

As a result of the acquisition, FY2016 annual EBITDAF would have been approximately $39 million higher on a full year equivalent earnings basis. Genesis Energy's FY2017 EBITDAF is estimated to increase by approximately $15 million. FY2017 NPAT is estimated to increase by approximately $2 million after taking into account the transaction and funding costs, hence the transaction is immediately earnings accretive.

The acquisition will be funded by existing debt facilities and is effective on 1 January 2017.

Media contact

Name

Richard Gordon

Role

Public Affairs Manager

Company

Genesis

Investor contact

Name

Rodney Deacon

Role

Group Manager Strategy and Investor Relations

Company

Genesis Energy

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