TAG Oil is selling its New Zealand assets and operations for US$30 million to an Australian oil and gas company, already established in New Zealand.
The Canadian-based company, founded in 2002 to explore untapped potential in New Zealand, is one of the smaller oil and gas producers in New Zealand.
The agreed sale of its assets and operations to Tamarind Resources includes its interests in seven permits in onshore Taranaki.
Tamarind’s New Zealand operations are in offshore Taranaki. These include three oil reservoirs – Tui, Amokura, and Pateke in the Tui Area oil field.
TAG’s CEO Toby Pierce says: “We are very pleased to announce this transaction for TAG’s New Zealand assets, which presents an attractive premium to the current market value of the assets for TAG shareholders.”
Under the sale and purchase agreement, TAG will also receive a 2.5% royalty on future production from the assets in New Zealand and up to US$5 million in “event specific payments” when certain milestones with the assets/operations are reached.
Pierce says these “provide continued exposure to future upside from the assets and Tamarind’s aggressive capital program”.
TAG says once the transaction gets all the necessary regulatory approvals to go through (likely in the first quarter of 2019) it will be in a better position to pursue its exploration prospects in Australia.
The company’s production revenue from New Zealand remained at C$23 million from the year to March 2017 to the year to March 2018.
However its share price on the Toronto Stock Exchange plummeted between 2012 and 2014 and has failed to recover since. TAG has a market capitalisation of C$35 million.
The sale agreement follows Shell in March announcing its agreement to sell its New Zealand assets to Austrian giant, OMV, for US$578 million.
TAG doesn’t in its announcement mention the New Zealand Government’s move to ban all new offshore oil and gas exploration and limit onshore exploration to Taranaki until at least 2020.
The Crown Minerals (Petroleum) Amendment Bill is expected to have its third reading in Parliament today (Wednesday).