The Houston-headquartered company said today that it now viewed all of its New Zealand assets as “discontinued operations”, given the pending Origin-Contact sale.
The company’s 2007 production results, released today, show why it is leaving New Zealand. Total production continues to fall and Swift is not finding enough replacement reserves.
Fourth quarter 2007 production totaled about 3.1 million barrels of oil equivalent (MMboe), with Swift’s US production increasing by 7% to 2.8MMboe, compared to fourth quarter 2006 levels. Its New Zealand production declined by 38%, to only 0.3MMboe.
Swift’s total 2007 production increased by 3% over the year, to a record 12MMboe. However, New Zealand accounted for only 1.4MMboe of that, which was a 37.7% drop on the 2.25MMboe produced in 2006 and a 49% drop on the 2.75MMboe of 2005.
The company’s total year-end 2007 reserves were 133.8MMboe of domestic reserves and 16.3MMboe of New Zealand reserves. This compared to 2006 year-end reserves of 118.4MMboe domestically and 17.7MMboe in New Zealand.
Swift Energy announced it was selling almost all of its New Zealand assets to Origin and Contact, New Zealand’s largest listed integrated energy company, just before Christmas.
These assets include the onshore Taranaki fields Tariki, Ahuroa, Waihapa and Ngaere (Tawn); the Waihapa production station; the more southern Rimu, Kauri and Manutahi fields; the Rimu production station; separate oil and gas pipelines from Waihapa to New Plymouth; offshore exploration permits; and an inventory of equipment and supplies.
Swift’s 80% stake in onshore Taranaki licence PEP 38742, along the Pohokura-Mangahewa-Turangi trend, is not included. This was due to expire last July but Crown Minerals still lists it as an active permit.
In addition, Contact, under a separate arrangement between it and Origin, will contribute about $NZ54 million ($A47 million) to the total purchase price for the right to own and develop the Ahuroa field as an underground gas storage facility and to purchase the Ahuroa reservoir’s remaining gas and LPG reserves.
Today Swift Energy said it expected to realise total cash proceeds of between $US100 and $US110 million (about $A112 million and $A123 million) from the sale of all of its New Zealand assets.
Any additional proceeds beyond the initial $US87.8 million ($A98 million) would be reflected as a gain from its discontinued New Zealand operations, Swift said.
The asset sale would result in a non-cash charge of $US131 million ($A146 million) net of tax for the fourth 2007 quarter, based on the difference between the recorded value of the New Zealand assets and the expected total proceeds, the company said.
