By Neil Ritchie

BY LATE March, all the signs were that New Zealand Oil & Gas (NZOG) had already achieved its goal of taking over Todd Energy’s minority stake in Cue Energy Resources – and thereby gaining a strategic stake in the Maari-Manaia field, its second offshore Taranaki oil asset.

NZOG’s full takeover bid for the Australia-listed junior came after it had earlier purchased 19.99% of Cue from Todd at 10 cents per share in an off-market transaction.

NZOG then bid for all of Cue, as it is required to do to increase its stake above 20%, at the same price, terms and conditions.

By late March it had gained the rest of Todd’s stake, of just over 7%, plus a few small shareholdings, saying it would be “comfortable” if it acquired only about 30% of Cue.

But NZOG has also increased its stake in Melbourne-based Cue beyond 40% by picking up the 12% of Cue owned by ASX-listed investor Zeta Resources, a vehicle associated with NZOG director Duncan Saville.

So NZOG now owns a significant part of Cue’s 5% interest in Maari-Mania, as well as Cue’s 15% interest in the Medura Strait Oyang and Wortel fields in Indonesia where NZOG already participates in four production sharing contracts.

The Cue board of directors had recommended shareholders reject the NZOG offer based on the independent report of Grant Samuel, which considered the A10 cents per share offer to be neither fair nor reasonable, although it had offered a modest premium relative to recent Cue share prices. Grant Samuel indicated Cue had a value range between 11.7 cents and 15.2 cents per share, including a “premium for control”.

But both NZOG and noted New Zealand energy analyst John Kidd said the report materially overstated Cue’s value, with Mr Kidd valuing Cue shares at between 5 cents and 9.5 cents.

This was primarily because Grant Samuel excluded most corporate/head office costs (of $6.5 million) that it said would disappear if NZOG gained total control.

However, these overheads now remain as NZOG has acquired a lot less than 100% of Cue.