CHI - Channel Infrastructure Ltd (NZR)

[babymonster]

About 10% gains from Monday low. Great stuff, next resistance is 2.70. Fingers crossed

[cdonald]

Yes, at the moment margins are great. The report out this week will probably not be so pretty though as it will take a 2 month average margin for Sep/Oct. Margins at beginning of Sep were pretty low so I think it will be looking at about $6USD/BBL average for the 2 month period. My guess for November is at CAP though so could be an interesting final divi and a boost for the end of the year. International refining companies are certinally reporting good things at the moment.

Well I was way off with my estimate. Actual margin for the period was $7.49USD/bbl. I expect Nov/Dec to be over CAP as base line Sing margins are at around $5.50 (so uplift to around $9.80). The extra cap is not wasted as will boost previous months. Another excellent result NZR.

https://www.nzx.com/files/attachments/248298.pdf

[cyclist]

Well I was way off with my estimate. Actual margin for the period was $7.49USD/bbl. I expect Nov/Dec to be over CAP as base line Sing margins are at around $5.50 (so uplift to around $9.80). The extra cap is not wasted as will boost previous months. Another excellent result NZR.

https://www.nzx.com/files/attachments/248298.pdf

I was actually hoping for >$8.00, but this is probably fair since earlier in the period wasn't that great. What source do you use for Singapore Margin? I haven't found anything that is regularly updated. (The following site isn't exactly the right benchmark, but it seems like a reasonable proxy and the best I have found so far: https://www.neste.com/en/corporate-info/investors/market-data/refining-margins)

[babymonster]

this is pretty good.. so for the CY 2016, we should have processing fee >250mil.. pretty good imo...

[cdonald]

I was actually hoping for >$8.00, but this is probably fair since earlier in the period wasn't that great. What source do you use for Singapore Margin? I haven't found anything that is regularly updated. (The following site isn't exactly the right benchmark, but it seems like a reasonable proxy and the best I have found so far: https://www.neste.com/en/corporate-info/investors/market-data/refining-margins)


That chart is probably the most accessable one out there (short of going to platts etc). As a guideline I think if you deduct about $1.50/bbl off you will get fairly close to the Singapore Complex Refining Margin. Remember it is a 2 month average and to add on the fairl consistent $4.30 of uplift that NZR are now getting.

[bull....]

good announcement on their margins should stay that way rest of the year I reckon - decided to re-enter recently on the margin outlook lets hope it lasts but who knows in this volatile commodity

[cyclist]

good announcement on their margins should stay that way rest of the year I reckon - decided to re-enter recently on the margin outlook lets hope it lasts but who knows in this volatile commodity

Certainly not a set and forget stock this one. (Unless you are happy to see very wide capital fluctuations along the way - have learnt that lesson the hard way - but are above water again following the recent rise).

Thanks cdonald for the tips on making better use of that data from neste.com.

[dodgy]

Happy investing year to all.
Being a long time and enthusiastic holder of NZR, I would like to canvas other opinions as to headed direction from here. Personally, I think throughput, soon to be announced dividend, and the weakening Kiwi dollar point once again to a $3.00 share price. Comments?

[BlackPeter]

Happy investing year to all.
Being a long time and enthusiastic holder of NZR, I would like to canvas other opinions as to headed direction from here. Personally, I think throughput, soon to be announced dividend, and the weakening Kiwi dollar point once again to a $3.00 share price. Comments?

Hmm - while NZR is always good for a gamble I see them from a fundamental perspective currently quite fully priced. Expected EPS for 2016 quite low - and while 2017 is supposed to be better, analysts expect a 2017 result still ways below the outstanding 2015.

Which means - if things stay as they are (and this is a big IF in this industry), the stock looks quite fully priced to me. However - this is an industry which constantly changes, i.e. sure - we might have soon a refinery shortage if somebody blows up a number of them in the middle East or wherever, ... but than, more likely we have not.

Discl: NZR is currently not even on my "prime" watchlist - i.e. take these comments with a grain of salt :sleep:;

[dodgy]

Hmm - while NZR is always good for a gamble I see them from a fundamental perspective currently quite fully priced. Expected EPS for 2016 quite low - and while 2017 is supposed to be better, analysts expect a 2017 result still ways below the outstanding 2015.

Which means - if things stay as they are (and this is a big IF in this industry), the stock looks quite fully priced to me. However - this is an industry which constantly changes, i.e. sure - we might have soon a refinery shortage if somebody blows up a number of them in the middle East or wherever, ... but than, more likely we have not.

Discl: NZR is currently not even on my "prime" watchlist - i.e. take these comments with a grain of salt :sleep:;

Hi Blackpeter,
Thanks for your comments but I think you may be surprised by the dividend on the upside and with no major capital works on the horizon , with decreasing debt just as interest rates march north, maybe a small capital return.

[bull....]

Im still thinking 30 - 50m npat as long as nov/dec good which they could afford to pay a 10c final div? agree long term dodgy when debt is gone will be a cash cow some yrs buybacks would be my preferred option this would allow them to pay those 100c divs again - heres hoping

[dodgy]

Good morning Bull....
Totally agree with guestimate final 8.5 c div - Feb will tell. Hang in there. $3 is not out of the question by mid year .

[cdonald]

Good morning Bull....
Totally agree with guestimate final 8.5 c div - Feb will tell. Hang in there. $3 is not out of the question by mid year .

Thinking NPAT will be around 50m but might get a lift on the upside. Will be interesting to see how the RAP is performing and if the upgrades got done in 2016. 2017 will be a better year with no major shutdown so no dip in income. Singapore complex margins still sitting around $4 so with uplift we are starting 2017 pretty close to CAP. With the oil companies being the beast that they are I am sure the dividend will be as high as possible!

[dodgy]

Thinking NPAT will be around 50m but might get a lift on the upside. Will be interesting to see how the RAP is performing and if the upgrades got done in 2016. 2017 will be a better year with no major shutdown so no dip in income. Singapore complex margins still sitting around $4 so with uplift we are starting 2017 pretty close to CAP. With the oil companies being the beast that they are I am sure the dividend will be as high as possible!

Hi
Any guess at final div? Considering the dollar has been off the boil late in the year.
thanks

[golden city]

I am thinking 10c

[babymonster]

10c..... imo

[Sideshow Bob]

10c..... imo

312m shares on issue so 10c would mean $31.2m. Depends on debt reduction?

[bull....]

312m shares on issue so 10c would mean $31.2m. Depends on debt reduction?

Im thinking forex average 71.5c and GRM average 7-7.5 for the 6mths.
There matrix assumptions suggest then somewhere around 39m profit for the 6mths and debt at 231m so 10c div would be roughly 80% payout ratio

[cyclist]

There matrix assumptions suggest ... debt at 231m ...

One thing I haven't managed to work out is what those quoted debt figures are relative to, as at the half year report. e.g. is this the bank borrowings only ($131K current plus $150K non-current as at the half year), or something different. Can anyone confirm?

Nice little bounce today.

[babymonster]

looks like the refining margin is still ok... should have the update soon...

[golden city]

Looking for a jump here

[dodgy]

Looking for a jump here
Good morning all
Today or tomorrow the throughput should be confirmed and my $3.00 may once again be in sight. Roll on the March divi I say and bigger debt reduced divi's for the future.
Expectant of better things with

[bull....]

held above 2.60 resistance , break above 2.75 would look good for $3 a good margin report may provide the catalyst.

[dodgy]

held above 2.60 resistance , break above 2.75 would look good for $3 a good margin report may provide the catalyst.

Hi Bull
In case anyone thinks I am ramping I have held over 10k shares for over 10 years.

[bull....]

Hi Bull
In case anyone thinks I am ramping I have held over 10k shares for over 10 years.

10yrs a long term investor for sure, you will be hoping they walk there talk about paying nz50 sized dividends which are steady.

[dodgy]

10yrs a long term investor for sure, you will be hoping they walk there talk about paying nz50 sized dividends which are steady.

I would have to say that I am not keen on the current management but think the longer term nuts and bolts are in place .... cheaper and more efficient to run -d

[golden city]

Looking real good. Margin at max

[freddagg]

So profit for year close to 50m ?

[babymonster]

better than i expected... great stuff...

[Placemakers]

So profit for year close to 50m ?

By looking at the matrix, profit should by around 55

[golden city]

Looking even better this year

[freddagg]

By looking at the matrix, profit should by around 55

Are you sure? average exchange rate for the 2nd half about 0.71, margin 7.60. Will that not be under 50m

[Antipodean]

Exchange rate of 0.70 and margin halfway between 6 and 7 gives 31.5 mil NPAT for 2nd half based on profit matrix.

From HY NPAT of $11.6 mil, paid 312 mil shares 3c per share so 80% payout.

So if NPAT 31.5 mil for the HY, 80% would be 8c share dividend.

[babymonster]

people are taking profits...

[macduffy]

people are taking profits...

....and other people are buying.

;)

[pierre]

....and other people are buying.

;)

.....as is the case with the shares in every company every day.

No sale without a buyer - and no buy without a seller - funny thing that.

[bull....]

outstanding margin report there uplift blew my numbers so im upgrading my est of result to 55m - 60m profit so could afford a div between 10 - 15c

[dodgy]

outstanding margin report there uplift blew my numbers so im upgrading my est of result to 55m - 60m profit so could afford a div between 10 - 15c

Morning
Current exuburance apart I tend towards your 10c - maybe a bit lower, but think the end of March $3.00 still is achievable. Until Trump has been sworn in Sat (NZ time) with all the demonstrating and rabble rousing it will entail, the US (and our) market will probably drift lower, so any turn up may be closer to release of declared divi. -d

[sb9]

Morning
Current exuburance apart I tend towards your 10c - maybe a bit lower, but think the end of March $3.00 still is achievable. Until Trump has been sworn in Sat (NZ time) with all the demonstrating and rabble rousing it will entail, the US (and our) market will probably drift lower, so any turn up may be closer to release of declared divi. -d

Agree, think at current price level its fairly/fully priced and might move up closer to results time to that $3 mark...

[Sideshow Bob]

Results last year about the 24th of February - so approx. 5 weeks to wait...

[hogiela]

Was loving riding the NZR wave until is came crashing back yesterday! Hopefully it rises again ... I expect it to coming up to divvy time :)

[dodgy]

Was loving riding the NZR wave until is came crashing back yesterday! Hopefully it rises again ... I expect it to coming up to divvy time :)

Hang in there. The only downside on the medium horizon is the strengthening NZ US cross rate . What do you guys think. GC ?

[sb9]

Hang in there. The only downside on the medium horizon is the strengthening NZ US cross rate . What do you guys think. GC ?

With NZD at .73us as I type, guess one has to think about how future GRM going to be affected. The way things are developing in US a strong USD is in play for this year I reckon. From that angle NZR as an investment may not provide as good a return as one hopes in the medium term. Hence I believe the current price level is fairly priced.

[golden city]

With the usd going strong in medium term. And good Singapore margins at around 6 dollar. It is all look healthier

[Lewylewylewy]

If Trump invades oil countries to steal oil, as he's said he will (from ISIS - which as we know could be anywhere with American geographic understanding of countries beyond their shores)... How will this effect NZR, I wonder? Does anyone recall what happened when Bush invaded Iraq for oil... err, I mean because the twin towers were knocked over... :) Also, would it be the same, if Trump has getting the oil as a directive, without any need to hide it, there could be a lot more oil taken and pushed through different channels.

[BlackPeter]

If Trump invades oil countries to steal oil, as he's said he will (from ISIS - which as we know could be anywhere with American geographic understanding of countries beyond their shores)... How will this effect NZR, I wonder? Does anyone recall what happened when Bush invaded Iraq for oil... err, I mean because the twin towers were knocked over... :) Also, would it be the same, if Trump has getting the oil as a directive, without any need to hide it, there could be a lot more oil taken and pushed through different channels.

Good question. I guess if Trump really decides to steal the oil from the oil producing countries (and he might - maybe he comes re the Middle East with Putin to a similar agreement than Hitler once had with Stalin over Poland), than the immediate outcome would probably be less certainty and more terror attacks and sabotage on oil drilling and transportation gear (like pipelines), particularly in the middle East. I'd see the potential for huge environmental disasters and PoO likely to go up (given that supply likely to become less certain).

However - not sure I see a direct link to refinery capacities and refinery margins - unless somebody decides to attack oil refineries in the Middle East. There is otherwise no correlation between oil price and refinery margin. If however refinery capacity is reduced (by somebody blowing up some oil refineries), than NZR probably would go up - otherwise it should be for them in my view business as usual.

[Antipodean]

Some interest picking up over the last week, could be a few chasing the next dividend.

[dodgy]

Some interest picking up over the last week, could be a few chasing the next dividend.

There is still a little gas left to my $3 before end March. 10-15c div. imputed to come?

[Antipodean]

I'd say closer to 10c than 15c but that would still be 3.5% of $2.85.

[bull....]

anyone know date for results announcement ? maybe company could release date if they havent

[Sideshow Bob]

anyone know date for results announcement ? maybe company could release date if they havent

If last year is a guide, think it was the 24th or 25th of February.

[Antipodean]

24/02/2016 Last Wednesday of the Month
20/02/2015 2nd to Last Friday of the Month
27/02/2014 Last Thursday of the Month
27/02/2013 Last Wednesday of the Month

So maybe between 17th and 23rd of February if previous timing patterns hold. Not too far off.

[dodgy]

24/02/2016 Last Wednesday of the Month
20/02/2015 2nd to Last Friday of the Month
27/02/2014 Last Thursday of the Month
27/02/2013 Last Wednesday of the Month

So maybe between 17th and 23rd of February if previous timing patterns hold. Not too far off.

28th it is. Payout by end of March. I think my $3 per share before 31st may come pretty close. GC?

[golden city]

All depend how the forecast look like. Before crack over 3 With 10c dividend

[bull....]

I think with a good crack jan/feb should be good oops meant it is good

[dodgy]

Do I see the $3 creeping closer OR... ? Before market results are unusual for this company, where as late day announcing usually smells?

[Sideshow Bob]

Do I see the $3 creeping closer OR... ? Before market results are unusual for this company, where as late day announcing usually smells?

Seems to be in a holding pattern at the moment, awaiting Tuesday......

[bull....]

:pbig Tuesday tomorrow way the price is behaving must be good

[dodgy]

:pbig Tuesday tomorrow way the price is behaving must be good

No Bull !! Or. Yes bull - it can only be 1 or the other . I have 32 days to realise my $3.00/ share and a 12c divi. Hope springs eternal.

[cdonald]

6c final, what are they thinking.....

[dodgy]

6c final, what are they thinking.....

Plenty of platitudes but disappointing. Dodgy was WRONG - $3 a distant dream this result.

[trader_jackson]

Below Forsyth estimate of 50.6m, and dividend also below by 1 cent.

Although I don't follow NZR closely, it doesn't look like a great result

[bull....]

results in line but div was less than they could have paid, debt focus this time I think down today we go on div disappointment.:(

[Antipodean]

6c final, what are they thinking.....
Paying down debt according to the announcement.

[littletramp]

This result was pretty much as forecast back in July 2016 in this forum based on their matrix results. The forecast was approx $50m NPAT from which they used $8m on capex and a 50% distribution for dividend allowed 6cps.

[sb9]

6c final, what are they thinking.....

Hmmm...pretty disappointing isn't it?? Was thinking of dipping my toes on this one over past few days but for some reason the trading pattern hasn't given me enough confidence over that period. I think have dodged a bullet on this one, relief.....

[bull....]

This result was pretty much as forecast back in July 2016 in this forum based on their matrix results. The forecast was approx $50m NPAT from which they used $8m on capex and a 50% distribution for dividend allowed 6cps.

payout ratio was way at the low end just goes to show last yrs div was probably elbowed out of them.

lucky I sold 50% holding at the recent highs

[golden city]

It is in line with forecast. Just see how well this year

[sb9]

https://nzx.com/companies/NZR/announcements/298381

BP Sell Down

Refining NZ advises that BP New Zealand Holdings Limited and Europa Oil NZ Limited (together “BP”) contacted it after the market closed yesterday advising that BP was conducting a process overnight to reduce its shareholding in Refining NZ by selling up to 11.1% of the 21.19% it initially held.
The trading halt will remain in place until BP files a substantial product holder notice confirming that it has sold shares. If the full parcel of 11.1% of the shares is sold, BP would be left with 10.09% of the shares in Refining NZ.
BP’s reduction in shareholding does not affect the existing contractual arrangements between Refining NZ and BP, including the processing agreement which remains on foot.

[bull....]

https://nzx.com/companies/NZR/announcements/298381

BP Sell Down

Refining NZ advises that BP New Zealand Holdings Limited and Europa Oil NZ Limited (together “BP”) contacted it after the market closed yesterday advising that BP was conducting a process overnight to reduce its shareholding in Refining NZ by selling up to 11.1% of the 21.19% it initially held.
The trading halt will remain in place until BP files a substantial product holder notice confirming that it has sold shares. If the full parcel of 11.1% of the shares is sold, BP would be left with 10.09% of the shares in Refining NZ.
BP’s reduction in shareholding does not affect the existing contractual arrangements between Refining NZ and BP, including the processing agreement which remains on foot.

can I buy some?

[sb9]

can I buy some?

Depends on "at what price"

[bull....]

I see it mentioned yesterday they were selling thru Deutsche Craigs

[Joshuatree]

Depends on "at what price"

Yes. Not looking good chart wise ,s/p going down through all M/A .PE 16.5 and D/Y 5.02% (NZX). Any fundamental thoughts?

[couta1]

can I buy some? You could have bought mine pre divvy for $2.64, sold my holding for a substantial loss, didn't like where it looked to be heading post divvy and too many variables affecting this stock for my liking. At least I collected a couple of good divvies along the way as a consolation prize.

[Mickey]

You could have bought mine pre divvy for $2.64, sold my holding for a substantial loss, didn't like where it looked to be heading post divvy and too many variables affecting this stock for my liking. At least I collected a couple of good divvies along the way as a consolation prize.

Yep, I also pulled out pre div at 2.65 and took a $12K hit but I felt I could probably claw back the loss by re-investing elsewhere rather than waiting for this puppy to get back up to my initial buy-in price.

[sb9]

I think it was 2.38 or so when Caltex sold down their stake thro' Craigs (from memory) couple of years back I think. However, it was turnaround time for NZR at that time when things were pointing for brighter outlook, not sure this time around though....

BP may have picked their timing wrong on this one...

[Xerof]

Those with connections would have sold down some holdings to 'make room' for some cheaper from BP. Happens all the time with loose-lipped brokers/financiers

[couta1]

I think it was 2.38 or so when Caltex sold down their stake thro' Craigs (from memory) couple of years back I think. However, it was turnaround time for NZR at that time when things were pointing for brighter outlook, not sure this time around though....

BP may have picked their timing wrong on this one... Trading halt ended, sale price $2.32 so less than last time, glad I got out at $2.64.

[macduffy]

I think it was 2.38 or so when Caltex sold down their stake thro' Craigs (from memory) couple of years back I think. However, it was turnaround time for NZR at that time when things were pointing for brighter outlook, not sure this time around though....

BP may have picked their timing wrong on this one...

If so, then BP have done well to reduce their exposure.

[bull....]

Pursuant to that agreement, 10,667,367 Ordinary Shares held by BP New Zealand Holdings Limited and 24,000,014 Ordinary Shares held by Europa Oil NZ Limited have been allocated to investors, at a sale price of NZ$2.32 per Ordinary Share, with settlement expected to occur on 21 March 2017

https://www.nzx.com/companies/NZR/announcements/298429

so have a overhang next week on the share price?

[Leftfield]

https://www.nzx.com/companies/NZR/announcements/298429

so have a overhang next week on the share price?

Who knows where this is heading now..... I'm glad to have gotten out. Re thinking my portfolio back in Feb I decided this wasn't for me so out of NZR and averaged up my ATM. Happy I made the switch. Good luck to holders.

[golden city]

Any feedback people on today's margin of 6.58

[bull....]

Any feedback people on today's margin of 6.58

bit disappointing was expecting more, uplift wasn't good and with the march shutdown coming next period maybe affected to like last yr. strong dollar doenst help either also the bp share overhang.

[golden city]

A bit short of what I expected too was expecting over 7

[golden city]

Is the shut down repeat each year

[freddagg]

Any feedback people on today's margin of 6.58

It doesn't enthuse me.
I think giving away 30% of our turnover is just an exercise in screwing the non-oil company shareholders

[waikare]

Remits for AGM 3 May 2017

There are a couple of resolutions put forward by B Halliwell and H Waite, if I can recall correctly I think they (or similar) proposals were also tabled at the last AGM. Can someone with a greater insight into what has been proposed let us know what this really means to a average punter.

I think I abstained last time, but for them to be table these again raises the question, these guys must be sincere in what they are proposing.

I note the independent directors do not support the remits.

[BlackPeter]

Remits for AGM 3 May 2017

There are a couple of resolutions put forward by B Halliwell and H Waite, if I can recall correctly I think they (or similar) proposals were also tabled at the last AGM. Can someone with a greater insight into what has been proposed let us know what this really means to a average punter.

I think I abstained last time, but for them to be table these again raises the question, these guys must be sincere in what they are proposing.

I note the independent directors do not support the remits.

They never do, and Mr Halliwell is submitting for years. I didn't check this years submission (currently not a holder), but he previously highlighted that the system to calculate the refining fee is unfair to small shareholders (indeed to all shareholders but the oil companies). Obviously - the board always finds experts with a view that Mr Halliwell is wrong, the system fair and the board right.

He very well might have a point, but given that NZR is majority owned by the oil companies it does not matter. The big will always trump the small holders. Better get used to it or sell out.

[waikare]

They never do, and Mr Halliwell is submitting for years. I didn't check this years submission (currently not a holder), but he previously highlighted that the system to calculate the refining fee is unfair to small shareholders (indeed to all shareholders but the oil companies). Obviously - the board always finds experts with a view that Mr Halliwell is wrong, the system fair and the board right.

He very well might have a point, but given that NZR is majority owned by the oil companies it does not matter. The big will always trump the small holders. Better get used to it or sell out.

Perhaps I should give them my vote, as some sort of protest against the oil companies, just to show what Helliwell and Waite are trying to achieve is not a totally lost cause.

[cdonald]

bit disappointing was expecting more, uplift wasn't good and with the march shutdown coming next period maybe affected to like last yr. strong dollar doenst help either also the bp share overhang.

Different units of the refinery get shut down every year. Last year was the hydrocracker (known as the money unit). this years shut down was the A block which is the Crude Distillers. So less thruput but not less margin.

Singapore complex margins are high so Mar/Apr could be a good set of results.

[Joshuatree]

Appreciate that sort of detail cdonald, thanks.

[bull....]

Different units of the refinery get shut down every year. Last year was the hydrocracker (known as the money unit). this years shut down was the A block which is the Crude Distillers. So less thruput but not less margin.

Singapore complex margins are high so Mar/Apr could be a good set of results.

agreed, margins are looking good at the moment.

[cdonald]

9.35USD/bbl was even outside of my optimistic range. Nice uplift over Singapore complex. will no doubt head down to about a $4 uplift for the next period. Looking like a strong year.

[golden city]

Looking good

[cyclist]

9.35USD/bbl was even outside of my optimistic range. Nice uplift over Singapore complex. will no doubt head down to about a $4 uplift for the next period. Looking like a strong year.

Yes, very happy with that. Surprised at Singapore complex being only around $3 though. Seems out of kilter with the information on Neste (after downwards adjustment of $1.50 I was expecting closer to $4). (As a side note, is the Neste data stuck on 27/4 as the latest for others viewing it?)

[bull....]

there uplift was exceptional must be nearly the best ever achieved? wow done to the team.

[golden city]

Share price finally react

[bull....]

Share price finally react

another good margin next time and i think they will look a little cheap

[golden city]

I guess after next report. Might crack 3

[bull....]

dodgy would be pleased, hasnt said much since his last call,,, where are you dodgy we need you to start the $3 dollar call

[dodgy]

dodgy would be pleased, hasnt said much since his last call,,, where are you dodgy we need you to start the $3 dollar call

Well Bull,
Having attended both recent shareholders meetings I must say that I consider the current management not up to the task of increasing shareholder value. It appears from where I sit that until management stop having what appears a safe, comfortable life with a lower growth attitude this company will not recover past my now infamous $3.00 mark and must be viewed as a low capital growth and average dividend stock. Promises made in the last few years include higher dividend (capital appreciation stimulation), as debt burden decreases, and even a possible capital return - this is yet to happen despite (if I recall correctly) reasonable advocacy by Z's Bennett - a person I have very high regard for. Maybe confidence in the public float (as apposed to the Oil company holdings) would improve if the directors had decent "skin in the game".
All that aside current values appear far too low and upside should continue. All things being equal. $3 by ??
Regards to all
-dodgy
Discl: currently hold north of 50k shares.

[Justin]

why dropped 8 cents today？any news updated？

[bull....]

why dropped 8 cents today？any news updated？

very small volumes , nzd/usd gone up a little but oil had a big fall last night price will always swing on these variables you can check out there profit matrix in there anaylst presentation.
NZR should be valued not on daily movements but on what you think there worth over the course of a cycle.

[cdonald]

Great result out again today from NZR. Should be a cracking year (pardon the pun). Great to see the increase in volume thru the RAP too, one of the unsung heros of NZR.

[pierre]

The market was a bit slow to react but catching on to the good news now.

[Sideshow Bob]

Generally the price has been a bit lackluster of late and down from $2.60 at the start of the year, despite the very solid margins.

Profit announcement scheduled for the 22nd of August, so hopefully an uplift in half-year divvy would be nice.

[bull....]

Generally the price has been a bit lackluster of late and down from $2.60 at the start of the year, despite the very solid margins.

Profit announcement scheduled for the 22nd of August, so hopefully an uplift in half-year divvy would be nice.

price probably held back by the NZD once that falls back under 70c it be up an away anyway great margins july looks good too at the moment.

[bull....]

The crack spread widened to the biggest it has been in 2 yrs in the us last night looking good for us

[cyclist]

The crack spread widened to the biggest it has been in 2 yrs in the us last night looking good for us

What is your source bull...? I use https://www.neste.com/en/corporate-info/investors/market-data/refining-margins to keep an eye on the general trend, but a second source would be useful as a cross reference.

[bull....]

What is your source bull...? I use https://www.neste.com/en/corporate-info/investors/market-data/refining-margins to keep an eye on the general trend, but a second source would be useful as a cross reference.

oh yes a forgot i should have said i read it on reuters news feed not newspaper

[cyclist]

Hopefully a bit of love for this stock from tomorrow. Certainly largely unwanted at the moment. I'm expecting a pretty solid result (especially compared to H1 last year). The key to getting some traction will be a less stingy dividend. Fingers crossed.

[cyclist]

Quite happy with the result. 6c fully imputed dividend, paid off a bit of their debt, a bit extra money in the bank. Combined with what is starting to look like a fairly solid uptrend in refining margins, might be a decent year.

Can't help but thinking we would be better off though if they stopped playing around with their pet projects to add $0.10 to the already opaque refining margin calculation here and there.

[bull....]

Quite happy with the result. 6c fully imputed dividend, paid off a bit of their debt, a bit extra money in the bank. Combined with what is starting to look like a fairly solid uptrend in refining margins, might be a decent year.

Can't help but thinking we would be better off though if they stopped playing around with their pet projects to add $0.10 to the already opaque refining margin calculation here and there.

at this stage on track for a good year

[Justin]

why only up 1 cent with more than triples profit？ :confused:

[cyclist]

why only up 1 cent with more than triples profit？ :confused:

I guess it was largely expected, since we had already seen the margin reports. But early days. Often not much happens for a couple of days after an announcement, and then things start to move. I think it is likely to be higher before it goes ex divi.

[bull....]

why only up 1 cent with more than triples profit？ :confused:

nz dollar higher than last half

[cyclist]

Looking increasingly likely that cyclone Harvey will have an impact on refining margins. I assume that will eventually spill over into the Singapore margin that NZR uses as reference: https://www.cnbc.com/2017/08/30/harveys-wrath-to-be-felt-globally-as-us-energy-industry-hunkers-down.html

A spike already showing in the Neste data, on top of what looks like a nice wee uptrend over the last 12 months or so.

Still no love out there for this stock, but things looking pretty positive I think. (NZD still not great though).

[cdonald]

Looking increasingly likely that cyclone Harvey will have an impact on refining margins. I assume that will eventually spill over into the Singapore margin that NZR uses as reference: https://www.cnbc.com/2017/08/30/harveys-wrath-to-be-felt-globally-as-us-energy-industry-hunkers-down.html

A spike already showing in the Neste data, on top of what looks like a nice wee uptrend over the last 12 months or so.

Still no love out there for this stock, but things looking pretty positive I think. (NZD still not great though).

The uplift for the last couple of days of the month has quite an effect as it will lift the refining fee for the whole of Jul/Aug (NZR use a 2 month average fee). The refining margins were already quite healthy without the increase of 20% over the last few days. I have a feeling that CAP will be hit this month which will then boost previous months income (as CAP is based on 12 months). Might be a very big year for profits.

[cyclist]

The uplift for the last couple of days of the month has quite an effect as it will lift the refining fee for the whole of Jul/Aug (NZR use a 2 month average fee). The refining margins were already quite healthy without the increase of 20% over the last few days. I have a feeling that CAP will be hit this month which will then boost previous months income (as CAP is based on 12 months). Might be a very big year for profits.

I think you are right about reaching cap. The whole period has been pretty good. Unfortunately I need to sell some shares at the moment (within the next week or so) to put towards a property purchase (small amounts - I'm a very little fish in this sea). I have to choose between NZR and SUM, both of which I think are undervalued at the moment. I am leaning towards selling SUM, as in the short term I think NZR has a very solid outlook.

[Justin]

Up to 2.54 Well done last Friday

[cdonald]

for those who want a bit of excitment in their day it might be cool to type "Singapore Complex Refining Margin" into google. If you are looking at the 5 day rolling average graph from Neste add another $2 per bbl onto it and it will be pretty close to what NZR will be getting.

[cyclist]

for those who want a bit of excitment in their day it might be cool to type "Singapore Complex Refining Margin" into google. If you are looking at the 5 day rolling average graph from Neste add another $2 per bbl onto it and it will be pretty close to what NZR will be getting.

Subtract $2? (rather than add?). That seems to have been the pattern in the last few months. But yes, exciting times.

Have read a number of articles warning that these spikes don't tend to last that long, but enjoying it while it lasts.

[cdonald]

Subtract $2? (rather than add?). That seems to have been the pattern in the last few months. But yes, exciting times.

Have read a number of articles warning that these spikes don't tend to last that long, but enjoying it while it lasts.

Subtract $2 to get to the Singapore complex refining margin then add $4 for NZR uplift over Singapore complex. Just thought it was easier to add $2 instead. Yes, these are spikes but every spike or dip effects the income that NZR gets for 2 months as its the average margin for 2 months rather than the daily spikes. The base level is not that bad before the spike (base level is basically at cap already). If fees are over CAP then they will be effectively spread back over previous months until the CAP for the year is reached.

[cyclist]

Thanks for the clarification cd. A much more direct way of thinking about NZR's margin.

[winner69]

That pipeline to Auckland getting broken is a bit of a disaster




Hope the digger driver has a decent insurance cover

[golden city]

Disappointed

[winner69]

Might be a bit of panic buying from motorists up North tomorrow ...petrol that is not NZR shares

[horus1]

The NZ govt ,SImon Bridges ,made a disastrous decision in 2012. I bet that gets covered up. They were told of the risk and ignored it

[Oliver Mander]

From memory, its actually NZR that own the RAP ( refinery to Auckland Pipeline), not the oilcos. Will be interesting to see whether any claims are made for compensation, and whether NZR holds any liability.

[bull....]

10 - 15m hit yuk , lucky margins are high so might not look to bad overall and if they pump the throughput up could easily make back.

wonder if business interruption insurance covers the 10 - 15m?

[cyclist]

10 - 15m hit yuk , lucky margins are high so might not look to bad overall and if they pump the throughput up could easily make back.

wonder if business interruption insurance covers the 10 - 15m?

And it was all going so well ..... Grrrrr.

[cdonald]

yup, the slow down in units is not the best when the margin is so high. I think their report should say that the impact is threefold rather than twofold being that they have just put in resource consent for bringing in larger ships. An environmental disaster on their doorstep is not going to help that process much. I wonder if the guy digging out swamp kauri has got his public liability insurance up to date.

[BlackPeter]

10 - 15m hit yuk , lucky margins are high so might not look to bad overall and if they pump the throughput up could easily make back.

wonder if business interruption insurance covers the 10 - 15m?

Won't be that cheap. Cleaning up diesel spillages is expensive and always costs more than you hope. As well - we probably should ask the question whether it is responsible to run an old and rusty pipeline though 170 km of pristine "clean and green" NZ without sufficient monitoring and maintenance. Having an oil pipeline leaking for days before they notice and do something about is unacceptable.

Expect operating costs of the pipeline to go North ...

[cyclist]

Won't be that cheap. Cleaning up diesel spillages is expensive and always costs more than you hope. As well - we probably should ask the question whether it is responsible to run an old and rusty pipeline though 170 km of pristine "clean and green" NZ without sufficient monitoring and maintenance. Having an oil pipeline leaking for days before they notice and do something about is unacceptable.

Expect operating costs of the pipeline to go North ...

Don't let facts get in the way of a good rant BP. Nothing to do with being old and rusty. More to do with munter men and their diggers.

[BlackPeter]

Don't let facts get in the way of a good rant BP. Nothing to do with being old and rusty. More to do with munter men and their diggers.

That's not how I read it.

https://www.stuff.co.nz/business/96941407/digger-scraped-and-cut-crucial-jet-fuel-pipeline-affecting-thousands-of-auckland-airport-travellers

Sure - apparently a digger started it by "scratching" the pipe some time ago. However - the leak was apparently caused by corrosion started by these scratches.


The damage had caused corrosion and ultimately "a small tear" on the pipeline, McNeill said.

Not noticing a damaged pipeline and waiting for corrosion to create a leak is clearly irresponsible ... or how would you call that?

Now - how is something like that going unnoticed on a well maintained pipeline?

[bull....]

anyway i read nz refining are not responsible for maintenance on the pipeline a third party is that is contracted

[BlackPeter]

anyway i read nz refining are not responsible for maintenance on the pipeline a third party is that is contracted

Better check the contracts who is carrying ultimate responsibility if there are environmental issues. Unlikely the owner can weasel out of that unless the contractor did not fulfill its contracted obligations.

And looking into the future would this only mean that NZR needs to pay more to any contractor for outsourcing the maintenance of the pipeline.

[bull....]

Better check the contracts who is carrying ultimate responsibility if their are environmental issues. Unlikely the owner can weasel out of that unless the contractor did not fulfill its contracted obligations.

And looking into the future would this only mean that NZR needs to pay more to any contractor for outsourcing the maintenance of the pipeline.

im sure insurance comes into play somewhere, someone from loyds is flying over now

[BlackPeter]

im sure insurance comes into play somewhere, someone from loyds is flying over now

And you sure they will pay for everything including the increased maintenance cost?

Sounds like wishful thinking to me ... this will be dear for NZR ...

[bull....]

And you sure they will pay for everything including the increased maintenance cost?

Sounds like wishful thinking to me ... this will be dear for NZR ...

10 - 15m not chump change for sure 4% revenue but if insurance covers some and extra throughput in coming mths would easliy make it back , definately not the end of the world

[Xerof]

A listen to the podcast of RNZ Morning Reports' discussion with NZR CEO is more instructive and constructive than the unsubstantiated fear mongering on here

[BlackPeter]

A listen to the podcast of RNZ Morning Reports' discussion with NZR CEO is more instructive and constructive than the unsubstantiated fear mongering on here

Absolutely - great stuff. Worthwhile as well to read the associated article:

http://www.radionz.co.nz/news/national/339611/government-warned-of-fuel-risk-five-years-ago

Apparently there is a government report from 2012 saying that a short outage would cost the NZ economy close to $100m and a long outage up to $500m.

Government says as well that an outage of more than a week or 10 days would risk international tourism and exports, while NZ Refining said it would take 10 to 15 days to repair the pipe.

No need to worry - all hunky dory.

Just wondering who is going to pay for this mess?

[RTM]

The NZ govt ,SImon Bridges ,made a disastrous decision in 2012. I bet that gets covered up. They were told of the risk and ignored it

Interested in this Horus, can you point me to the background behind your statement please.
Thanks,
RTM.

[horus1]

It was in the papers at the time. The OECD I think said that NZ should hold greater reserves to meet international standards and Bridges announced we would use ofshore contracts. It has also been ibn the papers that there was a cabinet paper in 2012? that looked at greater fuel reserves at Wiri , advocated by AirNZ, and it was turned down. It would have cost $57m

[Joshuatree]

reports in 2012 (http://www.mbie.govt.nz/info-services/sectors-industries/energy/energy-security/oil-security/oil-security-review-2012)

[winner69]

reports in 2012 (http://www.mbie.govt.nz/info-services/sectors-industries/energy/energy-security/oil-security/oil-security-review-2012)

That was the 2005 reviewed and updated .....much the same conclusions



just saying in case you bring politics into it

[Tweak]

I would say the pipeline is monitored enough. They send a 'pig' down that takes readings of the pipeline condition (I'm sure RefiningNZ PR would love to tell anyone interested about it). The only reason this occurred was due to outside input (scraping the pipeline). Corrosion is a nasty disease. This is also not to do with not having enough reserves. There is plenty of fuel. It's a matter of transport.

What was it 70000 ltrs in the ground. 0.77% of what they send down the pipeline daily. It does suck for the environment but that's the price to pay for all our luxuries. I'd say no one is more upset then the NZR and the shareholders. That pipeline is their bread and butter.

Just my half a cents worth.

Don't worry old HMNZS Endeavour to the rescue.

[Justin]

In the otherside, during this crisis, the market will be known how important the NZR means to New Zealand economy，and better understand its monopoly position.:cool:

[Scrunch]

10 - 15m not chump change for sure 4% revenue but if insurance covers some and extra throughput in coming mths would easliy make it back , definately not the end of the world

But what happens if some political party decided in the run-up to the election that it must fix the problem and to paraphrase Trump build a second pipeline and NZR will pay for it. Disc don't hold and no inside knowledge of this as any parties policy

[Justin]

But what happens if some political party decided in the run-up to the election that it must fix the problem and to paraphrase Trump build a second pipeline and NZR will pay for it. Disc don't hold and no inside knowledge of this as any parties policy

Why NZR have to pay for it, not taxpayer?

[winner69]

Why NZR have to pay for it, not taxpayer?

Because they make zillions of profit ...and should have 'invested' earlier to mitigate events like the current crisis. Shareholders can afford it.

Anyway they'll pass the cost on which means the end consumers end up paying anyway.

[winner69]

Why NZR have to pay for it, not taxpayer?

,..maybe nationalise the whole industry instead

[peat]

perhaps a bit too much fancy going on in this thread

A 2nd pipe isnt economic, perhaps the best solution is to expand the Wiri storage , because there is no problem with supply in the medium term, ships can do it if necessary , its more about the time it takes to reconfigure the delivery schedule and the initial delay in achieving that.

I must say I'm amazed they can have different liquids in the pipeline and then monitor the 'interface'.

[Rep]

perhaps I must say I'm amazed they can have different liquids in the pipeline and then monitor the 'interface'.

The different fuels used to separated by an interface of water and there is a manifold at each end, when the fuel load changes, the manifold is channeled so the interface liquid is put into a separate tank and then the successive fuel then directed to the appropriate storage tank - A1, Diesel, 91 octane... those are refined at Marsden Point but I lost track a while ago if 95/98 PULP is refined at Marsden Point as for some time it wasn't and mainly imported from refineries either in Australia or SE Asia

[Joshuatree]

reports in 2012 (http://www.mbie.govt.nz/info-services/sectors-industries/energy/energy-security/oil-security/oil-security-review-2012) Under nationals drifting fiddling 9 year watch.

Minor refinery outage19
Outage scenario and expected response under status quo


A minor refinery outage is an incident that disrupts the refinery for three weeks. Supply fromthe refinery will be re-established before supply could be fully re-established via imports.

The following assumptions are made about the response to the incident:




file:///page25image6504 ••
•••

refinery tankage and the RAP will be available within three days
a number of oil companies will divert cargoes destined for other countries to NewZealand (two within the three week outage), and government will relax fuelspecifications if appropriate
oil companies will draw down on normal buffer stock and safety stock in terminalsairline flight schedules will be rationalised
airlines will bunker fuel into New Zealand.


Q14. Are there other factors that can be addressed to enable industry to betterrespond to a major refinery outage?


83. It is
period, and thus that there may be brief stock outs in certain areas for short periods.


estimated that two percent of normal petrol and diesel demand cannot be met over this


84. While 24 percent of normal jet demand cannot be met over this period, it is assumed thatairlines would manage this shortfall by rationalising flights and bunkering

[winner69]

That 2012 report was an updated version of a 2005 report ...with much the same conclusions

What happened after 2005 mate?

Couldn't have greedy ol companies and shareholders spending too much on infrastructure could we.

[Rep]

That 2012 report was an updated version of a 2005 report ...with much the same conclusions

What happened after 2005 mate?

Couldn't have greedy ol companies and shareholders spending too much on infrastructure could we.

The pipeline was constructed in the 80s and it's been operating out of sight, out of mind for 30 odd years. There are many examples of single point failures in infrastructure - South Australia had only one HT electricity interconnect with Victoria which failed completely with the loss of several transmission towers in a storm, this would have been less of an issue but SA had shut down most of the coal powered thermal stations and relied significantly on wind farms that had to be shut down in the storm.

The Centennial Highway coming out of Wellington is another example where the capital could be cut off... the Cook Strait Power Cable, Southern Cross Cable, Auckland Harbour Bridge are infrastructure with high reliance and limited alternatives. We rely on critical infrastructure everyday - we can build resilience but try to explain to a consumer, ratepayer or taxpayer that they have to pay for it for surety of supply...

[stoploss]

The pipeline was constructed in the 80s and it's been operating out of sight, out of mind for 30 odd years. There are many examples of single point failures in infrastructure - South Australia had only one HT electricity interconnect with Victoria which failed completely with the loss of several transmission towers in a storm, this would have been less of an issue but SA had shut down most of the coal powered thermal stations and relied significantly on wind farms that had to be shut down in the storm.

The Centennial Highway coming out of Wellington is another example where the capital could be cut off... the Cook Strait Power Cable, Southern Cross Cable, Auckland Harbour Bridge are infrastructure with high reliance and limited alternatives. We rely on critical infrastructure everyday - we can build resilience but try to explain to a consumer, ratepayer or taxpayer that they have to pay for it for surety of supply...

They have upgraded the Cook Strait cables over the years ..not just one cable ....



Five new power and telecommunication cables were laidin 1991, and a further two telecommunication cableswere laid in 2002. They lie unburied on the seabedacross Cook Strait.

https://www.transpower.co.nz/sites/default/files/publications/resources/Cook-Strait-Cable-Protection%202013.pdf

[freddagg]

Everyone seems to only be worrying about another pipeline failure. I would think a failure in the refinery itself would be many times more likely.

[Snow Leopard]

...South Australia had only one HT electricity interconnect with Victoria which failed completely with the loss of several transmission towers in a storm...

You are definitely treading on my turf here and I can say quite categorically that you are completely wrong with that statement.


this would have been less of an issue but SA had shut down most of the coal powered thermal stations and relied significantly on wind farms that had to be shut down in the storm...

The wind farms, disconnected themselves from the grid, as a self protection measure, because of the high number of voltage dips in a short space of time.

The interconnect was then forced to self protect and disconnect as well.

Read the report here: https://www.aemo.com.au/-/media/Files/Electricity/NEM/Market_Notices_and_Events/Power_System_Incident_Reports/2017/Integrated-Final-Report-SA-Black-System-28-September-2016.pdf

Best Wishes
Paper Tiger

[Rep]

You are definitely treading on my turf here and I can say quite categorically that you are completely wrong with that statement.



The wind farms, disconnected themselves from the grid, as a self protection measure, because of the high number of voltage dips in a short space of time.

The interconnect was then forced to self protect and disconnect as well.

Read the report here: https://www.aemo.com.au/-/media/Files/Electricity/NEM/Market_Notices_and_Events/Power_System_Incident_Reports/2017/Integrated-Final-Report-SA-Black-System-28-September-2016.pdf

Best Wishes
Paper Tiger

I stand corrected

[cdonald]

All they probably need is a couple of extra tanks at Wiri so they can hold more jet fuel down there. There used to be the back up option of Wynyard tank farm but that stopped in 2011 so the same Aucklanders who are complaining now could have a prettier water front. The back up used to be delivery to the wharf there by coastal tanker.

Tanks at Wiri hold upto 12 days supply from what I understand, pipeline break to repair is about 9 days so not really a major issue. Media and politrix have got hold of this like they own it. Its funny how Collins is beating up the oil coys in regards to fuel prices and then beating up the refinery in regards to not having multiple pipelines.

Cheapest solution would be to bung an extra tank in at Wiri and slap a massive tank on the Auckland waterfront so the sniveling jaffas can have something to complain about.

Ruakaka local.

[cyclist]

NZR are giving twice daily updates (press releases) on their website. The latest here (http://www.refiningnz.com/media/110191/refining_nz_media_release_23_september__am__2017.p df) sounds to me like they are on track for being at the earlier end of their Sunday to Tuesday completion timeframe. Fingers crossed. Hard to imagine it is only a little over a week since this happened. Feels like an eternity when watching it in slow motion.

They are playing hard to get with the op stats. I suspect they don't want to draw too much attention to a profitable couple of months.

[cdonald]

NZR are giving twice daily updates (press releases) on their website. The latest here (http://www.refiningnz.com/media/110191/refining_nz_media_release_23_september__am__2017.p df) sounds to me like they are on track for being at the earlier end of their Sunday to Tuesday completion timeframe. Fingers crossed. Hard to imagine it is only a little over a week since this happened. Feels like an eternity when watching it in slow motion.

They are playing hard to get with the op stats. I suspect they don't want to draw too much attention to a profitable couple of months.

I wonder if they are obliged to give the margin report every couple of months, I don't know of many other companies who report revenue every 2 months. This whole pipeline thing has been a bit of an election drama which has been managed exceptionally well by the refinery. Having product back down the tube a little over a week after breakage is pretty good and shows that the system works. It will be interesting to see if and when they get the pipe back up to the full pressure that they were doing before it broke. Hopefully not too many other deaf digger drivers out there.

[cyclist]

Don't imagine they are obliged to, but hopefully they will still publish this period's once the dust has settled. Interestingly, if stuff.co.nz is any guide, then this incident seems to have completely faded into the background already.

Great work getting it up an running so quickly.

[bull....]

good margin achieved, share price hasnt moved much for ages im guessing its because of big mainteneace next year?

[peat]

"We are hopeful that the higher throughput will assist our customers establishing robust stock levels at Wiri."

:p

[Beagle]

Jascinda Ardern not at all happy about our vulnerable fuel supply as clearly articulated on TV3's Breakfast interview with Duncan Garner this morning. Not good enough and is apparently encouraging her energy minister to speed up the fuel supply security review process. Back-up pipeline requirement to be forthcoming ?

[Sideshow Bob]

Update for Nov/Dec should be through by the end of the week. Should hopefully give a little further steer to the 2017 result......

[hogie]

Shareholder day at NZR Masden Point tomorrow ... should be an awesome day! =D

Will be good to see the refinery firsthand ... I know a lot of people who have worked there but never actually seen it for myself ...

[bull....]

Shareholder day at NZR Masden Point tomorrow ... should be an awesome day! =D

Will be good to see the refinery firsthand ... I know a lot of people who have worked there but never actually seen it for myself ...

bummer i missed the announcement been away and so busy i would have definately been a starter ..... hoping they do another one next year

[hogie]

bummer i missed the announcement been away and so busy i would have definately been a starter ..... hoping they do another one next year

Turned out to be an amazing day ... they offered free parking at several Auckland locations and had busses organised to take Shareholders to the Refinery ... we got to see the Refinery firsthand, talk to the management staff, and they talked a lot about the issues that have plagued NZR for the past few months (pipeline rupture, sulpher in the fuel, etc) ... amazing food spread ... they treated us all very well! Was a bit weird being less than half the age of most of the people who attended however =P

All in all I'm very encouraged from this visit and will continue to invest in NZR ... a solid company that does things right ... and they have a lot of great plans for growth in the future as demand increases.

[lawson]

Thanks for the write-up Hogie. Glad you enjoyed the day. I'm happy to hold long term as they pay a good divi. Nice to hear they have plans for growth.

[Sideshow Bob]

Little comment around here in the last month, ahead of Wednesday's announcement. Margins were pretty good for most of last year, and overall processing fee $52m better than 2016. Surely a good chunk of this must fall to the bottom line?

From early January, Craigs were forecasting $97m Net Profit (from $47m 2016 so most of the increased margin following through), $0.31 EPS, $0.21 divvy and price target of $3.81. Since this time price has drifted down about 10%.....

[JoeGrogan]

Little comment around here in the last month, ahead of Wednesday's announcement. Margins were pretty good for most of last year, and overall processing fee $52m better than 2016. Surely a good chunk of this must fall to the bottom line?

From early January, Craigs were forecasting $97m Net Profit (from $47m 2016 so most of the increased margin following through), $0.31 EPS, $0.21 divvy and price target of $3.81. Since this time price has drifted down about 10%.....

That would be spectacular considering the Auckland pipeline incident

[traineeinvestor]

They have major maintenance/improvement projects scheduled for this year. Combined with concerns over the pipeline incident, I would be massively surprised if the dividend was anything remotely close to 21 cents. That said, in my search for value I intend to have another look at this company.

Disc: small shareholding

[Sideshow Bob]

Dividend policy is basically 40-60% of net profit in periods of major capital expenditure, about 60% when no major capex projects on - at the board's discretion.

The pipeline issue was largely dealt with and is a known - perhaps except for their insurance payout. Presumably (maybe/hopefully) Craigs took this into account.

Regardless 2 days to wait. Needs something to stop the drift in the share price.

https://www.nzx.com/announcements/307788

Repairs to the Refinery to Auckland pipeline were completed and operations restored, over the weekend. The first batch of jet fuel starting arriving into Wiri at 10.09 am on Sunday, 24 September 2017 – around two hours ahead of the earliest planned delivery.
CEO, Sjoerd Post commented: “Our thanks go to those agencies who responded to the pipeline leak, to the Government and others for their offers of support, and to our staff and contractors who worked tirelessly to complete the repairs and successfully restore supply into Auckland”.

Based on the actual repair time we have revised down the revenue impact from the initial announcement of $ 10 – 15 million to $ 8 – 9 million. Our first estimation of costs associated with the repairs, recovery and remediation will be in the range of $ 4- 5 million. Therefore, based on our current best estimates, the impact of the incident on the Company’s full year 2017 net profit after tax will be in the range of NZ$ 9 – 11 million.
The Company has insurance cover for business interruption, property and environmental damage amongst others. However, given the limited extent of the currently expected losses and the excesses that apply to these policies, only a limited amount of the losses is expected to be recovered.

[dodgy]

Little comment around here in the last month, ahead of Wednesday's announcement. Margins were pretty good for most of last year, and overall processing fee $52m better than 2016. Surely a good chunk of this must fall to the bottom line?

From early January, Craigs were forecasting $97m Net Profit (from $47m 2016 so most of the increased margin following through), $0.31 EPS, $0.21 divvy and price target of $3.81. Since this time price has drifted down about 10%.....

Hi SSB
I am happy to punt for a 7-10c divi - imputed and would be surprised if it was north of that.
Discl. Have considerable holding and adding.
-dodgy

[Sideshow Bob]

Hi SSB
I am happy to punt for a 7-10c divi - imputed and would be surprised if it was north of that.
Discl. Have considerable holding and adding.
-dodgy

Last year was 9c in total, so 7-10c would give 13-16c for the year. My pick (FWIW) is 12c final, 18c for the year.

[sb9]

Resignation of the Chief Executive Officer



https://www.nzx.com/announcements/314798

[dodgy]

Resignation of the Chief Executive Officer



https://www.nzx.com/announcements/314798

Hi sb9
The CEO's only last about 5 years and are sourced from oil companies ranks. Bring on the replacement as fresh energy is needed.
-dodgy

[macduffy]

It seems to a "convention" that the major oil company shaeholders of NZR take turns to second a senior exec as CEO of NZR. Sjoerd Post is a Shell man. Someone else's turn now.

[barleeni]

Any concern that the CEO resigns the day before half year results?

[dodgy]

Any concern that the CEO resigns the day before half year results?

Hi barleeni,
No....................."like candles in the wind" . Tomorrow will accurately answer your question. The only thing of real interest is the divi.
Regards
-dodgy.

[dodgy]

Hi SSB
I am happy to punt for a 7-10c divi - imputed and would be surprised if it was north of that.
Discl. Have considerable holding and adding.
-dodgy

Hi SSB
Dodgy eats humble pie - 12c imputed announced - happy holder.
Regards
-dodgy

[bull....]

very happy with the div and nice result

[Sideshow Bob]

Hi SSB
Dodgy eats humble pie - 12c imputed announced - happy holder.
Regards
-dodgy

Haha Dodgy - absolutely no humble pie to be eaten!

We are both happy!

[golden city]

Not too bad at all with steady dividends

[traineeinvestor]

Better than expected dividend + good clarity on 2018 capex and the pipeline issue.

Purchased a few more today.

[see weed]

Better than expected dividend + good clarity on 2018 capex and the pipeline issue.

Purchased a few more today.
Same here, got a whole lot @ 2.44 this morning for a quick div strip. Pretty good div at 12c.

[JoeGrogan]

Same here, got a whole lot @ 2.44 this morning for a quick div strip. Pretty good div at 12c.

Yeah can't complain with 12c, been accumulating a few over the past week myself.

[couta1]

Same here, got a whole lot @ 2.44 this morning for a quick div strip. Pretty good div at 12c. Bought some for the divvy but weary of going too big after having been skunked severely after the last big divvy in March 2016(Bought at $3.50 and sold at $2.60) Less risk now with a lower PE and being more toward the bottom of it's cycle rather than the top.

[see weed]

Bought some for the divvy but weary of going too big after having been skunked severely after the last big divvy in March 2016(Bought at $3.50 and sold at $2.60) Less risk now with a lower PE and being more toward the bottom of it's cycle rather than the top.
Don't mind if sp goes down, cause am trying to make a loss. Got 9 companies lined up this month for a Tranprodiv= transfer profit for dividend and make a loss the same amount as the div gain. eg If got $10,000 div then try and make $10,000 loss to get my overall yearly profit down, so pay less tax at end of financial year. AIR was very hard to make a loss last week, from a 15k div could only make a loss of 6k and had to keep 30,000 bought the week before at 2.91 cause don't want to make any more profit before 31/3/18;).

[couta1]

Don't mind if sp goes down, cause am trying to make a loss. Got 9 companies lined up this month for a Tranprodiv= transfer profit for dividend and make a loss the same amount as the div gain. eg If got $10,000 div then try and make $10,000 loss to get my overall yearly profit down, so pay less tax at end of financial year. AIR was very hard to make a loss last week, from a 15k div could only make a loss of 6k and had to keep 30,000 bought the week before at 3.91 cause don't want to make any more profit before 31/3/18;). I think you mean $2.91 for Air see weed. In my case I gained an 8k divvy and then sold out for a 30k loss eventually so a bit more drastic as I wasn't looking to lose any money, unlike yourself. PS-I can help you to make a loss on those Air shares, I'll take them off your hands below $2.91,via an off market transfer.:)

[see weed]

I think you mean $2.91 for Air see weed. In my case I gained an 8k divvy and then sold out for a 30k loss eventually so a bit more drastic as I wasn't looking to lose any money, unlike yourself. PS-I can help you to make a loss on those Air shares, I'll take them off your hands below $2.91,via an off market transfer.:)
Thanks, correction made to 2.91. Not in a hurry to sell the other 30k. Will keep them until the new financial year...... Am wrong again, just checked and noticed that I payed 2.965 for them, so if I sold them at todays price of 3.275 then would make $9300. If you could pay me $9300 div, then you could take them off my hands tomorrow for $2.965:).

[cdonald]

Margins pushing higher again for the period Mar/Apr. Should be well over CAP for the months. Shutdown kicking in Late Apr and all of May. Total plant shutdown so should be an expensive one!

[Sideshow Bob]

Shutdown seemed to go all hunky-dory, with an effect of $5-$7m on NPAT, and 500k barrels throughput.

Share price has been slowly tickling upwards over the last month. Is this the market looking for a pace to park some funds, with 7.06% yield, based on a fully-imputed dividend?

[cdonald]

Shutdown seemed to go all hunky-dory, with an effect of $5-$7m on NPAT, and 500k barrels throughput.

Share price has been slowly tickling upwards over the last month. Is this the market looking for a pace to park some funds, with 7.06% yield, based on a fully-imputed dividend?

The effect of 5 to 7m was for the extra work that they found around the hydrocraker. So the total impact of the shutdown on revenue will be significantly higher than that.

[Sideshow Bob]

The effect of 5 to 7m was for the extra work that they found around the hydrocraker. So the total impact of the shutdown on revenue will be significantly higher than that.

Yes, quite correct. Thanks.

[Sideshow Bob]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZR/319869/281640.pdf

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12077334

[traineeinvestor]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZR/319869/281640.pdf

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12077334

The cost overrun was not good news, but as they are now recommencing processing, presumably there should be no more bad news to come. Looking forward to higher dividends from 2019 onwards.

[Sideshow Bob]

The cost overrun was not good news, but as they are now recommencing processing, presumably there should be no more bad news to come. Looking forward to higher dividends from 2019 onwards.

Share price has responded well enough this afternoon - back to Fridays close. Essentially the highest its been since late January.

[traineeinvestor]

You don't think higher pump prices will have any ( even if only short term ) effect on demand?

ps It's nearly July, and regional taxes are coming. :t_down:

I would expect little impact (if any) – people still have to drive to get from A to B and public transport in NZ is not a realistic option for many people. In the longer term, ICEs will continue to get more efficient and there will likely be some substitution from electric engines and biofuels, but higher demand as the population grows and becomes more affluent (in spite of the best efforts of our glorious political leaders) will offset this to a greater or lesser extent.

Then there's the refining spread - have a look at the 2018 analyst presentation which includes a slide showing expected regional demand for refined product outstripping expected capacity growth by a huge margin in the years ahead.

[RTM]

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4761626

Not ideal. I guess a few hiccups might be expected after a major shutdown like this. But I would have thought that welds in a critical piece of kit like this would be tested before recommissioning?

[Sideshow Bob]

Half year tomorrow - should be interesting....... ;)

[Bobdn]

I wasn't expecting any dividend, so really happy with 3 cents! Outlook looks ok (um is that right?)

[traineeinvestor]

Likewise, the 3 cps dividend was a pleasant surprise not so much for the $$ hitting my bank account but for what it says about the second half of the year.

Slightly puzzled by the reference to bio-feuls and climate change in the investor presentation.

[traineeinvestor]

I wasn't expecting any dividend, so really happy with 3 cents! Outlook looks ok (um is that right?)

Hope so - I added a few more to the portfolio today.

[Bobdn]

Good for you. I bought high at around 2.60 and have been averaging down ever since, now have an average price of 2.46.

My guess is that oil will be in high demand until well past 2050. Electric cars won't become significant in my life time. Refining: one of the few industries that Amazon won't disrupt/own...at least at this stage.

[couta1]

Good for you. I bought high at around 2.60 and have been averaging down ever since, now have an average price of 2.46.

My guess is that oil will be in high demand until well past 2050. Electric cars won't become significant in my life time. Refining: one of the few industries that Amazon won't disrupt/own...at least at this stage. I wouldn't touch this company again with the length of an oil tanker, got skunked a couple of years ago by buying in at $3.50 for the big divvy at the time. Too many variables and when I saw none of the directors or management have any real skin in the game, I was out.

[Bobdn]

I remember when it was that high and that dividend. I was influenced by the 1 in 15 year maintenance event coming to an end. Hopefully good times will roll from here.

I wonder what the ideal profit conditions are? Is it high USD and high refining margin rate? Don't really know.

[Joshuatree]

Does anyone know if they can make low sulpha fuel for ships with the reconditioned/figured cracka unit?. Ships have to phase out of the high sulpha extreme polluting bunker fuel sh*t by around 2020

[Bobdn]

That's a good question...

[Joshuatree]

Analyst Presentation HY18 (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZR/322650/285106.pdf)

I cant access the webcast conference on the 23rd. Anyone know how, appreciated.
Theres a slide about bunker fuel with sulphur having to be reduced from 3.5 to 0.5%. Im guessing they have the equipment to produce low sulphur bunker fuel. they actually sell sulpher by product now."Sulphur forming rephrased"

they mention ability to supply all oils to ships
I remember vaguely that bunker fuel is the treacly rubbishy leftover oil from the refining process full of pollutants.

Some mind-blowing pollution facts about ships (link at bottom)!


Hydrogen making unit too.And biofuels
120,000 tonnes a year CO2 reduction, great stuff


How 16 ships create as much pollution as all the cars in the world ... (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=2ahUKEwjWwsbK04XdAhXCc94KHRygCzcQFjAAegQIBRAB&url=http%3A%2F%2Fwww.dailymail.co.uk%2Fsciencetech %2Farticle-1229857%2FHow-16-ships-create-pollution-cars-world.html&usg=AOvVaw1oqW_EHG4ay6t0sp434Hft)

[Bobdn]

Yes, I have just been reading the presentation in bed on my phone. The "golden age" references - what does that mean? Obviously I know nothing about this company. I just liked the idea of owning an oil refining company.

I wanted some z energy because they seem like a good company and I fill up my scooter at the local z. But I missed out. Then I thought, well the fuel comes from Marsden Point, so buy some NZR, so I did.

That was my strategy there. I'll move everything to index funds one day before I come a cropper.

[Joshuatree]

I like your drift Bob. Ive bought new listing VEA it is similar to ZEL but in Aus, worth a look imo,but as always DYOR.
Golden Age , im guessing is when margins were at their best?
I like the green inclusions NZR are doing.More than token.

[Tweak]

Hey Joshua, the refinery is already equipped with the ability to remove sulphur to below what the current and probably next maximum allowable sulphur content is.
The HCU doesn't really influence how much sulphur's in the fuel, it is more the quality of the crude that comes in. Which the large energy companies love to send the cheapest crude they can find. Good thing the refinery is pretty robust.

[Joshuatree]

3 million barrels a day switch to low sulphur fuel. an op for NZR

IMO 2020: What's next? - Shell Global (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=13&cad=rja&uact=8&ved=2ahUKEwjGr52H4obdAhXN62EKHa_nAeMQFjAMegQICBAC&url=https%3A%2F%2Fwww.shell.com%2Fbusiness-customers%2Fmarine%2Ffuel%2Fmarine-network%2F_jcr_content%2Fpar%2Ftextimage_125334755 6.stream%2F1497626896370%2F1f511fb11dae6ae91ba293a 525c0cedb92e68946e70d24adc747f0c91f98a969%2Fshell-marine-imo-brochure.pdf&usg=AOvVaw3-qVFutjnJMu73dL9jrkx5)

[Joshuatree]

Hey Joshua, the refinery is already equipped with the ability to remove sulphur to below what the current and probably next maximum allowable sulphur content is.
The HCU doesn't really influence how much sulphur's in the fuel, it is more the quality of the crude that comes in. Which the large energy companies love to send the cheapest crude they can find. Good thing the refinery is pretty robust.

Great ,thanks Tweak.Did you hear the webcast? Still havnt found it atp.

[Tweak]

Great ,thanks Tweak.Did you hear the webcast? Still havnt found it atp.

Nah haven't seen the webcast. Just a bit of informed info I've heard through the grapevine.

[macduffy]

New independent director for NZR.

http://news.iguana2.com/macquaries/NZSE/NZR/325864

Not sure that being Chair of NZX helps! Not that it will matter much, given that the oil co's call the tune at NZR.

[bull....]

crack spread is looking good at the moment

[macduffy]

Record second half throughput for Marsden Point.

http://www.sharechat.co.nz/article/aac41beb/record-second-half-throughput-for-marsden-point.html

[hogie]

Mr Market really hasn't been too kind to this one ... unfortunately I put a large amount into this because of the attractive dividends they used to pay out ... hopefully the next year will be a solid one for NZR (thinking I might have to top up my holdings at this price!)

[Bobdn]

Yeah, not good for me either. It's the Kraft Heinz of my portfolio at the moment.

[couta1]

Has been a damn ugly hold for quite a while now, took a big hit on this one a couple of years ago and not going there again.

[bull....]

really big divs dont look like coming until there debt is down , going off the matrix looks like in 2 - 3 yrs

[johndoe123]

Will open $2.08, NTA sitting at $2.42

[Sideshow Bob]

Will open $2.08, NTA sitting at $2.42

All based on cashflows and profits - a refinery at Marsden Point is a pretty specialized asset, worth something to a very limited amount of people.

[bull....]

new lows , are we heading for a test of the 1.60 lows from 2015

[bull....]

thats why the price collapsed in the last mth , crap margins

http://www.sharechat.co.nz/article/04460a12/asian-refining-margins-rebound-refining-nz.html

[Joshuatree]

NEW ZEALAND REFINING : RNZ Solar Farm media release (https://www.marketscreener.com/NEW-ZEALAND-REFINING-COMP-6492074/news/New-Zealand-Refining-RNZ-Solar-Farm-media-release-28864327/)

[Sideshow Bob]

NEW ZEALAND REFINING : RNZ Solar Farm media release (https://www.marketscreener.com/NEW-ZEALAND-REFINING-COMP-6492074/news/New-Zealand-Refining-RNZ-Solar-Farm-media-release-28864327/)

Its in Northland - I'm sure Shane will be good for some.

[Joshuatree]

Yes grasshopper thats where the refinery is. Probably a good bet that there are some shareholders named Shane too.;)

[macduffy]

Is it anything more than a green gesture from the oil industry - or is a meaningful contribution to the renewables portfolio?

[horus1]

The cost of solar is below the cost paid by consumers today especially domestic

[SilverBack]

Consumer pricing is not relevant when NZR is a large industrial consumer. There is no detail in the announcement that lets anyone draw conclusions on cost effectiveness and so shareholders just have to trust the Board decision. Nor is there is a reference to subsidisation in anyway. Solar installation has been decreasing in cost over the past few years and the power generation efficiency has been increasing. Again, there was no reference to the technology assumed in the cost-benefit analysis. The other factor to take into account is the amount of solar energy available throughout a 12 month period at the proposed site. Northland is not the highest region for sunshine hours but then solar intensity is also a factor.
With regard to NZR margins, I note that Asian refining has been under strong competitive pressure of late, with too much production in the region and hence low margins, but I also note that NZR had an extended shutdown period last FY and so the question is whether the lower margins outweigh this year's increased production or not.

[Joshuatree]

Is it anything more than a green gesture from the oil industry - or is a meaningful contribution to the renewables portfolio?

Meaningful, leading by example and cost saving although they are still iresearching this.

Read more » (https://sendy.tarawera.co.nz/l/QQMrKma8h6MjbHw96gBRew/wk6KnMndXl9MYKokvVJ8Gw/3mMXh1s763mgRX8R2ZFAVXXg)

[SilverBack]

https://www.reuters.com/article/us-gasoline-asia-demand/gasoline-profit-margins-jump-over-150-in-asia-but-surge-may-not-last-idUSKCN1U40EE

Mixed messages for refining profitability here. Expect high margins with recent production but further out the Asian over capacity threatens Singapore refining margins. NZR follows Singapore margins.

[cyclist]

I think allowing for NZR's uplift and the present value of NZD:USD, that the in-progress year is looking pretty positive (especially relative to the present share price). The article linked below indicates Singapore complex margin of US$3.50 for the quarter just completed, which should hopefully translate to an NZR margin of around US$8 in the upcoming two monthly update. And any spike like is presently happening may get them briefly over cap. Without a shutdown this year, cashflow should be pretty tidy.

Had to roll my eyes at the solar farm though. I wish they would just stick to their knitting.

https://en.yna.co.kr/view/AEN20190617005100320

[RTM]

While I'm not an expert..... this doesn't seem to contain any surprises.
SP 220....up a wee bit over the last few days. Pleasing

https://www.nzx.com/announcements/337889

Disc: As a good Northland citizen. Holding.

[cyclist]

... The article linked below indicates Singapore complex margin of US$3.50 for the quarter just completed, which should hopefully translate to an NZR margin of around US$8 in the upcoming two monthly update .....

https://en.yna.co.kr/view/AEN20190617005100320

Well, got that spectacularly wrong! I do wonder where NZR get their Singapore complex figure from sometimes. It never seems to be close to anything I can find on-line. Very frustrating.

[cdonald]

I think allowing for NZR's uplift and the present value of NZD:USD, that the in-progress year is looking pretty positive (especially relative to the present share price). The article linked below indicates Singapore complex margin of US$3.50 for the quarter just completed, which should hopefully translate to an NZR margin of around US$8 in the upcoming two monthly update. And any spike like is presently happening may get them briefly over cap. Without a shutdown this year, cashflow should be pretty tidy.

Had to roll my eyes at the solar farm though. I wish they would just stick to their knitting.




https://en.yna.co.kr/view/AEN20190617005100320

New GM has got a background in renewables. This could be his version of putting up new wallpaper. Very expensive wallpaper at that. I hope they build oppourtunity cost into their calculations as when the railway line heads to the port (another of shanes projects) I am pretty sure that the substaintial land holding that the refinery wants to turn into a solar farm will be worth a lot more that it currently is.

[bull....]

cracks all over the place , and poor uplift for them

havnt been in the stock for a while , got out when realised they are not paying down there debt quick enough when they said they would with the end result being higher dividends. but watching still for possible re entry.

[couta1]

cracks all over the place , and poor uplift for them

havnt been in the stock for a while , got out when realised they are not paying down there debt quick enough when they said they would with the end result being higher dividends. but watching still for possible re entry. A no touch stock but I guess it depends where it falls to, lost enough already on this pup. PS-Few buyers but lots of sellers.

[Joshuatree]

Refining NZ Operational Update for September/October 2019 (https://www.nzx.com/announcements/344708)

• The Company earned NZD 49.3 million in Processing Fees for September/October. Year to date Processing Fee income is NZD 222.8 million versus NZD 209.5 million for the same period in 2018•

The RAP achieved throughput of 3.4 million barrels earning income of NZD 6.1 million, 5% higher than the same period last year.

Operational availability on the pipeline was high except for a planned short statutory inspectionhe higher freight rates are estimated to impact the cost of crude processed by Refining NZ during November and December in the order of USD -1.00 per barrel as the Refining NZ GRM has a two month lag in the freight rates that are applied.

[SailorRob]

CEO is fixated on EBITDA when they are stuck firmly on the CAPEX wheel. Capital projects blowing out by huge amounts, CEO leaving after a very short time and didn't bother learning the name of the company he is supposed to be leading. Always refers to them as Refining New Zealand rather than their actual name Refining NZ. While this may seem pedantic it's anything but. No Directors or management own any shares to speak of and never have.

[hogie]

Kinda regret buying into this one heavily a few years ago ... still making a profit but only because of the reasonable dividends ... was hoping this puppy would go up to $3 at one point ... oops

[macduffy]

CEO is fixated on EBITDA when they are stuck firmly on the CAPEX wheel. Capital projects blowing out by huge amounts, CEO leaving after a very short time and didn't bother learning the name of the company he is supposed to be leading. Always refers to them as Refining New Zealand rather than their actual name Refining NZ. While this may seem pedantic it's anything but. No Directors or management own any shares to speak of and never have.

This name business is more complicated than that. Their registered name is The New Zealand Refining Co. Ltd!

:confused:

[SailorRob]

Yes that's right, and it was always called The New Zealand Refining Company until about 6 years ago when they went through an expensive re-branding and ever since has been Refining NZ with the official trading name of New Zealand Refining Company. In a CAPEX intensive business like this how on Earth can the acronym EBITDA be mentioned? The Depreciation is often 100 million! As Munger says Bullsh*t earnings...