NZOG shares leapt almost 30% yesterday on the news, briefly hitting 68c per share before easing back, after having traded in a 39c-57c range for most of this year.
Kupe has been the largest cash contributor to NZOG, meaning the company will be more reliant than ever on developing new oil and gas prospects, which includes permits for the deepwater Clipper and Barque permits off the coast from Oamaru.
Genesis' increasing stake in Kupe, from 31% to 46%, gives it more boardroom control, including a veto, over Kupe's future development.
Origin Energy is the 50% shareholder and field operator of Kupe, while Mitsui E&P holds the 4% balance.
While the sale is subject to approval at a special shareholder meeting on December 16, NZOG acting chief executive Andrew Jefferies said $100 million of the $168 million would be returned to shareholders.
Forsyth Barr broker Damian Foster said the sale was a ''surprise'', and questioned the valuation and sale price of Kupe, which was discovered in 1986 and has been producing since 2009.
''The deal is a surprise to the extent that NZOG is selling its core cash generating asset and will effectively become a shell company with cash and exploration assets, but little else,'' Mr Foster said.
While Mr Jefferies said the Genesis offer ''represents a premium'', Mr Foster said Forsyth Barr had valued the 15% stake in Kupe at $206 million.
''The acquisition price appears to be a good one for Genesis ... the $168 million price represents a 21% discount,'' Mr Foster said.
However, Mr Jefferies said the Genesis offer was ''fully priced'' and was at the higher end of NZOG's own Kupe valuation, prompting the board to recommend shareholders approve the transaction at the December meeting.
NZOG gave no update on its exploration assets elsewhere in the world, other than to say the sale would ''provide a springboard'' for new investments
Excluding a Cue Energy Resources asset write-down of $22 million for its full year result, NZOG booked a $29.8 million loss, but increased its cash in hand 15.6% to $98.6 million.
For its quarter to September NZOG's cash balance declined by $5 million to $91.8 million.
For the quarter to September, Kupe produced in total 6.78 petajoules of gas, 18,500 tonnes of LPG and 345,5000 barrels of light oil.
''Our acquisition activities will be re-energised with an enhanced financial capability that allows us to better diversify,'' Mr Jefferies said.
NZOG's remaining assets include a 27.5% stake in the Tui oilfield, while subsidiary Cue Energy has a 5% stake in the Maari oilfield and 15% in the Sampang production sharing contract in Indonesia. NZOG has prospects in the US, Australia and Indonesia, plus in the Canterbury and Great South Basins.
