New Zealand Energy (CVE:NZ) (OTCQX:NZERF) said that as part of its efforts to cut down on costs, it has moved the holding company for its New Zealand subsidiaries from Singapore to New Zealand, as it works to refinance the business amid the slump in oil prices.
As of January 5th, the subsidiaries' shares held by NZ Holdings Pty Ltd were sold to NZEC Holdings, while all debt obligations and assets and liabilities were transferred as well.
The transaction involved an amendment of the NZ$5 million working capital facility agreement with New Dawn Energy signed back in September, the company said, replacing NZ Holdings Pty with NZEC Holdings as the guarantor.
"Moving the holding company for our New Zealand subsidiaries from Singapore to New Zealand should reduce our audit and financial administration costs by approximately NZ$50,000 per annum and is a part of our ongoing cost reduction and rightsizing activities," said chief executive officer David Robinson.
The deal also includes an option for New Dawn Energy to accept repayment of debt by the issue of common shares in New Zealand Energy, according to the companys' release. The number of shares would be determined by on New Zealand Energy's volume weighted average share price 60 days immediately prior to the calculation date.
New Dawn is the parent company of L&M Energy, New Zealand's 50 percent partner in the Tariki, Waihapa and Ngaere (TWN) petroleum mining liceneses which were acquired from Origin Energy (ASX:ORG) in October 2013.
New Zealand Energy, like all of its oil producing peers, has had to deal with substantially declining oil prices beginning in the back half of 2014, which it said has had a significant impact on its working capital position, negating the effect of its cost savings efforts.
In late November, the company also announced that it would shut its Vancouver office as of December 31 as part of its efforts to reduce operating overheads.
"Whilst the capital constraint continues to be serious for NZEC, we are very positive about our exploration acreage and mid-stream assets and are considering a range of options to refinance the organization," said Robinson.
"As the oil price recovers we are committed to developing our acreage through drilling new wells to realise NZEC's full potential for our shareholders. This will be dependent upon our ability to put together a business combination or raise capital to achieve this goal."
The company also said Wednesday that average daily production in December was 155 barrels, lower than the previous month due to a number of factors including decline in its Copper Moki field, TWN well rotation and insufficient gas to effectively lift each of the wells.
Gas lift is a key part in recovering oil in the TWN field, it added.
Meanwhile, the Taranaki Basin-focused oil and gas producer confirmed the successful installation and operation of the Waihapa 2 jet pump project, enabling two Miocene zones to be tested individually or comingled. The well performance will be monitored over the coming weeks to determine optimum pump performance, the company said.