Mosman Oil and Gas pulls out of deal with Origin Energy

Mosman Oil and Gas has pulled out of a deal to buy the South Taranaki Energy Project (STEP) in New Zealand from Origin Energy amid weakening oil prices.

The New Zealand and Australia focused oil and gas exploration and development company said that while STEP remains a good asset with long-term development potential, it no longer meets Mosman’s investment criteria at current oil and gas prices.

As a result, the sale and purchase agreement has been cancelled and Origin has agreed to repay the deposit of NZD500,000 which will be transferred back to Mosman shortly.

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

Executive chairman John W Barr said: “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."

Mosman pointed out the current backdrop is very different to how it was when the deal was signed in September of last year, with the oil price depressed and global equity markets volatile.

At 1047 GMT, Mosman shares were down 45.3% to 1.30p.