Mosman Decides Against Acquiring New Zealand Oil, Gas Project Citing Low Energy Prices

Mosman Oil and Gas Limited announced Monday it has decided not to acquire South Taranaki Energy Project (STEP) in New Zealand from Origin Energy Limited.

“In relation to the STEP acquisition, the Board has determined that while STEP remains a good asset with long term development potential, the STEP acquisition no longer meets Mosman’s investment criteria at current oil and gas prices and the Sale and Purchase Agreement (SPA) has been cancelled,” the Australia and New Zealand focused company said in a press note.

Origin has agreed to repay the deposit of NZ$500,000 (approx. $323,500).

Mosman also stated that the joint venture arrangement with High Peak Royalties Limited will be terminated; and the Ridge Royalty Limited royalty agreement will not proceed.

John W Barr, Executive Chairman of Mosman commented: “After months of work by the Board, staff and consultants on STEP, it is extremely disappointing that the state of the global economy and specifically the oil price has led to this outcome. Mosman intends to minimise expenditure to preserve cash and asset values, with the immediate priority now being to focus on our other projects and continue to evaluate new opportunities.”

The company added that the oil price remains depressed and volatile and there is a diverse range of opinions as to the short-term and medium-term oil price predictions from market commentators. “In addition, global equity markets remain impacted by ongoing uncertainties. These circumstances are materially different to those in place when the SPA was signed and announced on 3 September 2015.”

The results of negotiations with Origin did not lead to a change of purchase price nor conditions, Mosman said.