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New Zealand Refining Falls After Report Exxon to Sell Its Stake

Bloomberg

By Gavin Evans

July 23 (Bloomberg) — New Zealand Refining Co., operator of the nation’s sole oil refinery, fell in Wellington trading after reports Exxon Mobil Corp. will become the second major shareholder to put its stake in the company up for sale.

The stock dropped for the first time in six days after the Independent newspaper said Exxon hired Goldman Sachs JB Were Ltd. to find a buyer for its 19 percent stake in the plant, related storage facilities and 183 New Zealand petrol stations. Exxon spokesman, Alan Bailey, declined to comment, as did Andrew Barclay of Goldman’s investment banking unit in Auckland.

Royal Dutch Shell Plc is already seeking a buyer for its 17 percent holding in New Zealand Refining at a time when new capacity in Asia is forecast to depress margins in the region for the next two years. Investments in existing plants are profitable again after sellers lowered prices, Valero Energy Corp., the largest U.S. refiner, said last month.

“It’s unfortunate for the company that they have an overhang of stock,” said Rickey Ward, who helps manage the equivalent of $2.3 billion at Tyndall Investment Management in Auckland. “There’s no guarantee that it will come to a capital market. There’s clearly other potential buyers of these assets whether they are from Asia or further afield.”

New Zealand Refining fell 5 cents to NZ$7 at 3 p.m. in Wellington, valuing Exxon’s stake at NZ$322 million ($213 million). The stock has dropped 4 percent since Shell said in February it was reviewing the asset and its filling stations as part of a global focus on exploration and production.

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The refinery at Marsden Point north of Auckland provides about 70 percent of the nation’s oil products and is controlled by the country’s four major fuel retailers.

Under New Zealand securities law, anyone buying more than 20 percent of its shares must make an offer for the whole company or get shareholder approval to hold a lesser amount.

Earnings at the plant have held up better than expected with the lower local dollar helping offset weaker margins, the company said last month. Shell’s plan to sell its assets as a package was a benefit, New Zealand Refinery said June 16.

The refinery has had no information from Exxon on its plans, company secretary Dennis Martin said today.

“We’ve heard the same rumor,” he said. “We don’t know for sure.”

Exxon runs or supplies about 20 percent of the nation’s fuel outlets. In May, it agreed to sell its 302 metropolitan filling stations in Australia to Chevron Corp.’s local unit for A$300 million ($245 million), citing tough competition and the company’s “relatively small” position in the market.

Shell, which has New Zealand’s largest company-owned filling station network and uses about 30 percent of the refinery’s capacity, wouldn’t comment on its smaller rival’s plans. The company hopes to complete a sale by the end of the year and may be able to say more in August, Jackie Maitland, a spokeswoman said today.

Global oil refining capacity will increase by 7.6 million barrels a day between 2008 and 2014, with 54 percent of the new capability in Asia, the International Energy Agency said June 29.

To contact the reporter on this story: Gavin Evans in Wellington at [email protected].

Last Updated: July 23, 2009 00:33 EDT

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