NEW ZEALAND Oil & Gas (NZOG) will not spend more money on exploration beyond its contractual obligations while oil prices are at current lows, company chairman Roger Finlay has said.

In NZOG’s interim report, Mr Finlay said the company had shifted its strategy since his appointment in February, adding that it was now pursuing “considerable cost savings”.

“The board intends to manage the company’s capital carefully,” he said. “We will retain only that capital needed for the company’s strategy.”

NZOG recorded a loss of NZ$45 million for the half year, though net group revenue was up by NZ$11.3 million including a NZ$28.5 million contribution from Cue Energy, company chief executive Andrew Knight said.

The company also took a write down on the value of its oil producing assets such as its 27.5 per cent stake in the Tui field, which was written down by a further NZ$8.7 million.

Mr Knight said NZOG predicted the field’s economic life, subject to current oil prices, would come to an end in the first quarter of 2018, leading it to abandon the project.

“Looking ahead, we have enough cash from long term gas contracts to sustain the business through the oil price downturn,” he said.

“That creates opportunities for us to grow through acquisition as other companies with weaker balance sheets and higher costs have to exit quality assets in markets we understand.”

“Although costs are being trimmed out of the business, we intend to achieve savings without affecting our focus on safe operating.”

“Going forward we expect further cost savings and the full value of this year’s savings to be realised,” he said.