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3 December 1984

News release

Horizon Oil Exploration No Liability

The Chairman of the Securities Commission, Mr Colin Patterson, announced today that the Commission had completed its investigation into the trading of shares in the listed company, Horizon Oil Exploration No Liability, on the New Zealand Stock Exchange.

Acting pursuant to its general authority under the Securities Act the Securities Commission had initiated this investigation in July last following the announcement of a dry hole at the Kongahu I oil exploration well in the area of petroleum prospecting licence 38058.

Mr Patterson said that the Commission had observed the tendency for share prices in listed oil exploration companies to fall in advance of a report to the New Zealand Stock Exchange of the results of drilling in the recent programme (generally unsuccessful) of oil exploration drilling off the New Zealand coast. This was especially marked in the case of Horizon which had an interest in the Kongahu I well. It was decided to investigate trading in Horizon shares prior to the announcement of the dry hole.

The Commission's investigations, Mr Patterson said, indicated that some shareholders had received information in advance of the Stock Exchange and the general public and had used this information in making their investment decision to quit Horizon shares. No transaction was particularly large and no investor would appear to have profited in a substantial way from this insider trading. Equally no new investor appears to have acquired a substantial holding in Horizon in the critical period.

Under the Stock Exchange Listing Manual each listed company agrees to supply information to the Exchange so as to ensure that the market is at all times properly informed. To minimise the incidence of insider trading of this type the Commission has recommended to the New Zealand Stock Exchange that the Listing Manual be amended to impose on listed oil exploration companies an obligation to report more regularly to the Exchange. Specifically the Commission has recommended that daily reports should be required during the period of drilling of an oil exploration well.

Mr Patterson said that the Commission had discussed this recommendation with industry representatives. Listed oil exploration companies are expected to welcome an increased reporting requirement as proposed.