December 2001 decisions

Swift Energy (U.S.A.) buys Southern Petroleum and TAWN gas fields from Shell

Soper Group of U.S.A. buys further 1,189 ha. at Clutha, Otago

Part of Remarkable Station, Queenstown, sold for “world class golfing resort”

U.S. investors buy land near Mohaka River for forestry and fishing lodge

Swift Energy (U.S.A.) buys Southern Petroleum and TAWN gas fields from Shell

Swift Energy New Zealand Ltd, owned by Swift Energy Company of the U.S.A., has approval to acquire Southern Petroleum (New Zealand) Exploration Ltd from Shell New Zealand for $131,749,000. The sale was forced on Shell by the Commerce Commission when Shell acquired Fletcher Challenge Energy Group (for the full story, see our commentary on the October 2000 OIC decisions).

The purchase includes

· 96.76% of the Tariki, Ahuroa, Ngaere and Waihapa (TAWN) gas and oil fields, and petroleum mining licenses associated with these fields; and

· the Waihapa Production facilities (including 50 hectares of land), and the gas export pipeline from these fields to the port at New Plymouth.

“The TAWN fields are located approximately 30 kilometres from the Applicant’s existing fields. The proposed acquisition adds proven oil and gas producing facilities to the Applicant’s asset portfolio, providing significant facilities and infrastructure which can add value to its existing fields. As part of the proposed transaction the Applicant has access to Shell’s Omata tank farm to utilise the blending, storage and export of McKee blend crude oil capability of this facility, and a one year marketing arrangement with Shell for the Applicant’s crude oil produced from existing fields and proposed fields.”

The mechanics of the sale were through a Shell Overseas Holdings Group subsidiary, Southern Petroleum No Liability. Shell is ultimately owned 60% by Royal Dutch Petroleum Company (N.V. Koninklijke Nederlansche Petroleum Maatschappij) of the Netherlands, and 40% by Shell Transport and Trading Company of the U.K.

Soper Group of U.S.A. buys further 1,189 ha. at Clutha, Otago

JPS, ultimately owned by the Soper and Wheeler Families of the U.S.A., has approval to acquire 1,189 hectares at 2066 Switzers Road, Clutha District, Otago for $3,150,000 from Greenvale Ltd of Aotearoa. In August 2001, it bought 1,278 ha. in Hokonui, Southland, declaring this was the start of an acquisition programme.

“JPS is a New Zealand unlimited liability company which is wholly owned by Soper Pacific LLC. Soper Pacific LLC is a United States company. The shares in Soper Pacific LLC are owned by two other companies, Soper LLC and Soper Company…

The Soper Group has been part of the California forest management scene since early in the 20th century. It currently manages 40,000 hectares in California. The Soper Group’s principal activity is the harvesting and management of trees for sale in the forest products industry.

This purchase is the second acquisition in a forestry programme. The Applicant proposes to acquire approximately 10,000 hectares in the lower South Island and convert the land to forestry plantations. JPS intends to own and manage the properties that it acquires. A feature of the JPS investment strategy is the intention to invest in a range of species other than radiata pine. The Soper Group has long experience with a diverse range of commercial species in California including Douglas Fir, Californian Redwood, Ponderosa Pine, Incense Cedar and White Fir. The Applicant claims that these species grow well in New Zealand and command values many times higher than equivalent grades of radiata pine.”

Other land for forestry

· Three investors from Taiwan have approval to acquire blocks of land near Ngaruawahia, Waikato, from the New Zealand Forestry Group Ltd, which is owned 76% by Wesley Garratt of Aotearoa, and 24% by J. Hong of Taiwan. Two of the purchasers are members of the Brooklands Forest Group, which has “entered into an arrangement with New Zealand Forestry Group to develop approximately 1,200 hectares of land at Ngaruawahia”. These sales are like many in this and other regions organised by New Zealand Forestry Group, the last such sale being in November 2001, also in Ngaruawahia, with investors in the Brooklands Forest Group. The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. The third transaction is unusual for New Zealand Forestry Group arrangements: it is a considerably larger block of land, apparently separate from the rest, and includes a deer hunting operation. The details are:

· Hsin-Yuan Sun is acquiring 14.6 hectares at State Highway 22, Te Akau Road for $93,440;

· The Liao Family Trust is acquiring 22.5 hectares at State Highway 22, Te Akau Road for $144,000; and

· the Kuo Trading Trust, owned by S.H. and S.H. Huo, is acquiring 328 hectares at Waingaro Ngaruawahia Road for $1,125,000. Here, the investor “also proposes to establish a small deer hunting operation on 60 hectares of the property which is unplantable and comprises scrub/native bush and market this in conjunction with the nearby Brooklands Country Estate, an exclusive private hotel”.

· Matai Pacific Ltd, owned 75% by the Lennox Hannay 1992 Trust and 25% by W.L. Hanny, both of the U.K., has approval to acquire 159 hectares at Te Matai Road, Te Puke, Bay of Plenty for $3,712,500. “Mr Hannay has significant farming experience. The Applicant wishes to broaden its portfolio of investments by developing the property which is currently used for growing feed for local dairy farmers into a kiwifruit orchard and forestry plantation. The forestry operation is to be established on 75 hectares being the steep sidlings [sic] and gullies on the property. It is to be a short rotation eucalyptus crop. Hardwood Management Limited, a New Zealand forestry management company is to provide management and expertise and maintain the forest. An area of 60 hectares of flat land that is ideal for intensive cropping is to be progressively developed into a kiwifruit orchard.”

· P.W. and D. Heller of Germany have approval to acquire 32% of The Port Levy Forestry Partnership which owns 320 hectares at Port Levy, Banks Peninsula, Canterbury, for $92,000 from another partner. The Hellers already had 24% of the shares (six shares). “The Port Levy Forestry Partnership was established in 1993 to develop a 240 hectare commercial forest at Port Levy on Banks Peninsula. … Since the formation of the Partnership it has established a 240 hectare pinus radiata forestry plantation at Port Levy at a cost of approximately $202,000. One of the existing New Zealand members of the Partnership, who holds two shares, needs to realise their investment. The shares were offered to the other New Zealand resident partners but little or no interest was received. … The Applicants have other forestry investment in New Zealand including a 50 percent interest in Tuki Tuki Forestry Limited. Tuki Tuki Forestry Limited has recently harvested a significant area of trees and the Applicants are looking to reinvest the proceeds from that harvest into the New Zealand forestry industry.”

Land for wine

· Gibbston Valley Wines Ltd, ultimately owned 51% by S. and M. Stone of Aotearoa, 24.2% by shareholders in the U.S.A., 11.5% in New Caledonia, 0.4% in the U.K., and 12.9% in minority shareholdings in Aotearoa, has approval to acquire a further ten hectares at Gibbston Highway, Gibbston Valley, Central Otago, for $1,850,000. It is being acquired from one of its suppliers, J.L. and H.L. Lane. The company “operates a vineyard and winery with associated restaurant and tourist activities in Central Otago. The Applicant is a producer of high quality wines having done well at both national and international wine competitions. The Applicant currently purchases a large percentage of the grapes it processes into wine each year from other growers. The vendor currently supplies grapes to the Applicant. By owning its own land and growing more of its own grapes the Applicant aims to exercise greater control over the vines and the supply and the quality of those grapes. The Applicant is keen to develop its position in the market as a leading maker of Pinot Noir. That grape variety grows particularly well in the Central Otago climate, where the land the subject of this application is located. All grapes grown and purchased by the Applicant are processed at the Applicant’s winery near Queenstown.” In June 2001 we reported that Gibbston Valley Wines Ltd had gained approval to acquire one hectare of land at Kawarau Gorge, State Highway 6, Otago. It adjoined five hectares already being used for a vineyard and winery. The Montagnat family of New Caledonia bought an interest in Gibbston Valley Wines in June 1999. For further details see our commentary on the June 2001 sale.

Part of Remarkable Station, Queenstown, sold for “world class golfing resort”

Jacks Point Ltd, owned 60% by SEA Holdings Ltd of Hong Kong, 30% by Pacific Resort Holdings Ltd, and 10% by Wool Shed Road Ltd, both of Aotearoa, has approval to acquire 420 hectares which is part of Remarkable Station, State Highway 6 (Frankton-Kingston), Queenstown, Otago, for a suppressed amount. The Remarkables Station covered 2,600 hectares.

“The Applicant is a joint venture that proposes a development offering a full range of facilities expected from a world class golfing resort including one and probably two international class links golf courses, a luxury lodge, resort accommodation, resort homes, clubhouse, health spa, gym, equestrian facilities, village and business centre, and related residential development.

The development will be constructed in four stages over a period of eight years… A specialist New Zealand company whose projects have included the Millbrook resort, Clearwater resort, the Formosa Club and the Omaha Beach resort will construct the golf course to a championship standard. The second course (if sufficient demand) will result in a dual competition level course unique to New Zealand.

The proposed lodge will be a five star facility operated by an experienced international hotel company and will comprise 60 bedrooms with all the facilities associated with a luxury hotel. The 300-400 resort homes will be built to quality standards and will operate on a serviced-accommodation basis. The development will also include a village (restaurant, cafe, convenience, office space), equestrian facilities, and gymnasium/spa facilities.

The total development will result in 95% of the property remaining open space, i.e. golf course, landscaping and native revegetation.”

U.S. investors buy land near Mohaka River for forestry and fishing lodge

The Barclay Family Partnership owned 50% each by R. and L.B. Barclay of the U.S.A. has approval to acquire 283 hectares at Cold Stream Downs, Waitara Road, RD 2, Te Pohue, Napier, Hawkes Bay, for $1,040,625. They are investing “for portfolio diversification” and are “regular visitors to New Zealand”.

They propose to “develop a commercial forestry operation and to establish a fishing lodge. … The property is located in an area that is a favoured location for recreational users of the Mohaka River, predominantly for rafting/fishing.” The lodge will be operated by the US-owned Poronui Ranch Ltd which owns the 6,334 hectare Poronui Station and 121 hectare “Poronui Ranch” near Taupo (see our commentary on the July 2001 decisions for the last reference to this).

“The forestry development will be planted in radiata pine, douglas fir and red-wood. Forest growth rates in the locality are high and the cool winter temperatures are ideal for douglas fir and the sheltered valleys are ideal for redwood. It is expected that planting will begin during winter 2002 and be completed in 2003.

The fishing lodge will be operated by Poronui Ranch Limited, a fishing and hunting operation based in Taupo. The present house, fishing lodge and shearing quarters on the property will be upgraded by the Applicants to a suitable standard and leased to Poronui to enable expanded fishing charters. The Applicants will also bring their own clients to use the lodge.

The Applicants’ advisers are currently investigating the possibility of growing olives on some of the better land on the property. The winter climate may be too cool for olives but if the property does have potential for olives then up to 15 hectares of the land will be converted from Redwood forest for the olive grove. The results of this investigation will not be known until early next year.”

Other rural land sales

· Valor Ideal Ltd, owned equally by Frederico and Jose Richard Chamyan of Uruguay, has approval to acquire 9.9 hectares at 246 Richardsons Line, Palmerston North, Manawatu for $450,000 from Santa Rosa Trust of Aotearoa. The company proposes “to utilise this property to expand their intensive beef fattening and calf rearing operation. The property is currently leased by the vendors for growing maize and for a small horticultural nursery propagation business.” It is adjacent to a 30 hectare property at Richardson Line and Settlers Line, Palmerston North whose acquisition was approved in June 2001. The Chamyans, who “already have established links with the New Zealand agricultural industry particularly in relation to the purchase of pelts for export to Uruguay, propose to substantially increase the productivity of the property” Their company was “also proposing to establish a centralised hub for its New Zealand business operations particularly in relation to the procurement of pelts for export to its manufacturing operations in Uruguay.” In October 2001, the company also gained approval to acquire a 33 hectare golf course at Setters Line and Railway Road, Palmerston North, Manawatu for $4,030,425. For further details, see our commentary on those months.

· Frena-Kiwi Ltd, owned by the Rosenern-Lehn Family (Fremic A/S Inc) of Denmark has approval to acquire 1,445 hectares at Ben Nevis, Owen Valley East Road, Kawatiri Junction-Murchison, Nelson for $2,300,000. Queens Farm Ltd, owned by the same family, received approval to purchase 100 hectares of land at Solly Road, Rockville, near Collingwood, Golden Bay, Nelson for $1,113,750 in October 1999. That land was a dairy farm, which would continue to be operated by a sharemilker. The Ben Nevis property is being acquired as “part of a long term strategy to diversify their farming and investment base by farming in both the Northern and Southern hemispheres and as a long-term plan for family estate planning. The Applicants believe that this New Zealand investment will produce higher returns than other locations they have considered overseas. … 200 hectares of the steep, low fertile, marginal farming land will be converted to forestry for addition to an existing 85 hectare forestry block while a further 50 hectares of the steep areas will be allowed to regenerate into native bush. Forestry is a suitable option on this land as it is close in proximity to forestry infrastructure at Nelson and Waimea and the land has also recently been cleared. The stock performance of this 250 hectares is low to marginal and as a result the forestry conversion will not greatly impact on the farming operations of the property. Approximately 100 hectares of the better flat land of the property will be utilised for the winter grazing of dairy heifers owned by the sharemilker of the Applicant’s existing property, which will lead to increased production from this dairy farm.”

· R.A. Prout of the U.K. has approval to acquire ten hectares at State Highway 6, Hawea, Otago for $235,000 from Intra-Q Ltd of Aotearoa. “The Applicant intends to apply for New Zealand permanent residency under the general skills category and proposes to acquire a lifestyle property situated at Hawea. The Applicant intends to reside on the property and construct a dwelling. The property is part of a subdivision of a larger block of scrub covered land that has not been recently used for any economic purpose. The Applicant intends to operate his computer software business from New Zealand.”

· Craig and Sally Jensen of the U.S.A. have approval to acquire 21 hectares at Roys Peninsula, Bishop Bay, Lake Wanaka, Otago from Bishops Bay Partnership for $750,000. They “propose to build a lodge on the property for which up to six visitors can be accommodated. The property is well located to promote tourism being within close proximity of Lake Wanaka and local ski fields particularly Treble Cone. The land is currently unused and was previously part of a larger block that the vendor has deemed economically marginal at best and continued farming was unsustainable due to the topography and the result of flooding that caused pasture damage in both December 1993 and January 1995.”