NZ Oil & Gas (NZO)

[duncan macgregor]

OK i have slep on it and regarding a share buy back have remembered that in decision making we should never make what would be a permanent decision based on short term considerations.With respect to money this is especially most important.So lets all cool it and wait this thing out.Perhaps rather than trying to guess the bottom we should delay action until the powers that be stabilise the situation.
I would like to give my support to the company at this stressful time reminding them that the buying power of our cash currently increasing daily and that the nil action decision at this moment in time may well turn out to be the best path forward.
Cheers Digger DIGGER depends on the bank staying viable dont you think?. I would expect some of you at least to question where they are placing all this money. The really smart ones might even ask at what interest rate. Macdunk

[Corporate]

this is an expensive delay for Maari or Ensco


Maari drilling still waiting on weather
(Wednesday, 8 October 2008)


THE sometimes wild New Zealand weather is still preventing the start of development drilling of the Maari oil project off Taranaki – two months after Kupe operator Origin Energy released the Ensco 107 jack-up rig to Maari operator OMV.
Full Story...

machine - where can i see the rest of this article?

[keepitsimple]

Buying back shares in own company,no matter how cheap,dos'ent increase long term income for the company .Buying a company with high income no dept and loads in the bank will increase long term shareholder wealth.ppp seems to fit.

[Unicorn]

I am glad you posted this thread as i didnt agree with your prior one about nzo conduxcting a share buy back.

IMO, a share buy back will of course help very short term but not when the dust settles should the markets continue their overall decline. The share buy back is to help create value to the shareholders. If nzo were to buy back say 30m shares it could effectively be gobbled up by instos looking for an exist. In the mean time mum and dad investors may end up dragging the price down. Many permentations but until economic fundamentals improve i i would be dead against a share buy back at present.

NZO market cap is $453M
Cash is perhaps $285M
PRC holding about $125M

So Tui, Kupe, Tax Credits, and all the rest are valued by the market at $43M.
That is $10 a barrel for remaining Tui in ground oil, and nothing for Kupe. Not a bad investment, and quite a safe one. Buy while prices are low, don't wait until economic fundamentals improve and prices rise.

NZO is down 10% this week. With about two thirds of the assets being cash, that indicates the rest has been marked down by 30% in three days. PRC is down rather less than that, so NZO oil assets have effectively been marked down over 50% this week - which makes it a good time to buy them back at current panic selling prices.

NZO return to shareholders over the last year is now looking rather slim. A couple more days of declines and there will have been very little return to shareholders over the year. This was a year of exceptional oil prices, fantastic production levels, and "finding" a whole lot more oil. If the company can't deliver much of a return to shareholders in those circumstances, it seems totally illogical to embark on new investment in a much riskier environment.

The share price needs to be strengthened before shareholders can have confidence that the board is achieving good results for them. No action is not a good policy. At some point management need to do something. I think that point has arrived - in ground oil at $10 and Kupe for free!

[CAM]

NZO return to shareholders over the last year is now looking rather slim. A couple more days of declines and there will have been very little return to shareholders over the year. This was a year of exceptional oil prices, fantastic production levels, and "finding" a whole lot more oil. If the company can't deliver much of a return to shareholders in those circumstances, it seems totally illogical to embark on new investment in a much riskier environment.

How do you measure your return?
Some would argue that with the fall the environment has become less risky




The share price needs to be strengthened before shareholders can have confidence that the board is achieving good results for them. No action is not a good policy. At some point management need to do something. I think that point has arrived - in ground oil at $10 and Kupe for free!

Why does the share price need to be strengthened?
I can see oil coming out of the ground and money going into the bank. I received a dividend. Seems like the management is doing OK to me.
Their job is to run the company not manage the share price. The market sets the price. If the market is miss pricing then so be it. That is the way the market works.

[Xerof]

Uni,

You can hardly blame management for the falling shareprice.....we are facing deleveraging of positions everywhere, and selling in those circumstances is usually indiscriminate - in fact shares that are still showing a paper profit can end up being hit the hardest.

Let management get on with running the operational side of the business, and continue to sift through the potential opportunities that must be getting more attractive by the day.

[CAM]

machine - where can i see the rest of this article?

There is this useful tool called google

http://www.petroleumnews.net/storyview.asp?storyid=270645

but you need to sign up to see it

[Rif-Raf]

Buying back shares in own company,no matter how cheap,dos'ent increase long term income for the company .

True, but it increases Earnings Per Share which is what ultimately drives share price.



Buying a company with high income no dept and loads in the bank will increase long term shareholder wealth.ppp seems to fit.

Agree, NZO appears to fit that criteria too

[fish]

[QUOTE=CAM;227225]How do you measure your return?
Some would argue that with the fall the environment has become less risky

So the board spends the $300million buying overseas assets-it turns to custard-like air nz and ansett-tui is destoyed in a storm-nzo is worthless in a world economy that has collapsed .

[CAM]

[quote=CAM;227225]How do you measure your return?
Some would argue that with the fall the environment has become less risky

So the board spends the $300million buying overseas assets-it turns to custard-like air nz and ansett-tui is destoyed in a storm-nzo is worthless in a world economy that has collapsed .


If the world economy has collapsed what might you think the $300 million in paper money might get you?. I would be concerned about how I was going to feed my family than be concerned about the NZO shareprice.

At the moment I am quite happy with what NZO are doing. I am not advocating rushing out and spending $300 million.

[fabs]

Yes as i stated in an previous post, it becomes increasingly important where the money is parked and Shareholders should be informed.Also no point in looking at b/b until s/p drops well below $ 1.00 quite possible in the present continuing meltdown, the effects of wich may last for years.
One benefit of b/b is .that further down the track nzo could always have another option issue if cash is needed.

ps:Depositing in so called big banks is no garantie for safety.

[digger]

[quote=fish;227229]


If the world economy has collapsed what might you think the $300 million in paper money might get you?. I would be concerned about how I was going to feed my family than be concerned about the NZO shareprice.

At the moment I am quite happy with what NZO are doing. I am not advocating rushing out and spending $300 million.

Agree 100% Cam. As an exercise let say NZO 6 weeks ago rushed out and committed all our earning for the next two years.For 5 mins that would have looked like a team doing something,in hindsight it would have been a very foolish thing.It was bad enought for thoses of us that exercised the OD's without now losing that money a second time through hasty decisions just to seem to be doing something.
In mathmatics the last number to be discovered and put into general use was ZERO.Nothing seems to be for the human brain a concept somewhat hard to understand. Here we are devaluing the zero alternative as somehow inferior to taking action,any action.
I am somewhat in favor of buying into PPP and AWE as already mentioned as we certainly would not be running off overseas as FISH points out and engaging into committments that could have hidden faults.We certainly know where we stand in Taranaki.But again i do not know all the options in front of the directors at this time.
Digger

[upside_umop]

How do you measure your return?
Some would argue that with the fall the environment has become less risky

I thought this would have been a self answering question...your return is capital gains + dividends. If you bought in around Hector you would have made nothing over the last year.



Why does the share price need to be strengthened?
I can see oil coming out of the ground and money going into the bank. I received a dividend. Seems like the management is doing OK to me.
Their job is to run the company not manage the share price. The market sets the price. If the market is miss pricing then so be it. That is the way the market works.

Everybody likes to see a bit more bottom line on their portfolio...? Depends what your investment horizon is, if you can accept the dividends and accept a volatile share price, then good. Some others might like a bit of certainty. Keeping money in the bank has no/little risk and you will still get a good return with peace of mind.

The managements job is maximize shareholder wealth. Finance 101. If they see opportunity to increase long term shareholder wealth, take it. By investing in themselves (sharebuyback) there is no due dilligence needed, less risk and a very good portfolio. As Unicorn has pointed out, $10 a barrel is all Tui is worth, and Kupe nothing. I would argue however, that the shareholding of PRC will not be fully realised in NZO until it is liquidated into cash...

Digger, you say dont make decisions based on short term etc...BUT enough people were looking into the long term and paying $1.50. Oil markets have come down a bit, but has the long term story changed? Maybe a few PUT options wouldnt go a miss. This may be a short/medium term blip and an opportunity to increase shareholder wealth. It doesnt mean spending their whole war chest on it, just a proportion, which would still leave room for potential acquistion and committments. I wish PPP would do a BB instead of management buying up themselves! Greedy!

Also, after reading some posts, some people think a BB is just to stimulate shareprice short term? As Rif-Raf says, it reduces the number of shares on issue, therefore increasing future Earnings Per Share...this means greater return per share.

[bermuda]

[QUOTE=CAM;227232]

Agree 100% Cam. As an exercise let say NZO 6 weeks ago rushed out and committed all our earning for the next two years.For 5 mins that would have looked like a team doing something,in hindsight it would have been a very foolish thing.It was bad enought for thoses of us that exercised the OD's without now losing that money a second time through hasty decisions just to seem to be doing something.
In mathmatics the last number to be discovered and put into general use was ZERO.Nothing seems to be for the human brain a concept somewhat hard to understand. Here we are devaluing the zero alternative as somehow inferior to taking action,any action.
I am somewhat in favor of buying into PPP and AWE as already mentioned as we certainly would not be running off overseas as FISH points out and engaging into committments that could have hidden faults.We certainly know where we stand in Taranaki.But again i do not know all the options in front of the directors at this time.
Digger

Hi Digger,

As you said you dont know all the options in front of the directors at this time.

Surely the best option is to take out PPP and remain Taranaki focussed.

[Casa del Energia]

Digger,

Agree on the theme of your last few posts. Don't rush, don't panic. Don't thrash about. Let the management team keep their eye on the ball.

[duncan macgregor]

Digger,

Agree on the theme of your last few posts. Don't rush, don't panic. Don't thrash about. Let the management team keep their eye on the ball. Who wouldnt panic after watching the sp tumble 25% in a few short weeks. Some of you dont even ask the question of where is the money being placed, and at what interest. Blind faith is a very foolish thing to advacate. Direct answers to direct questions unless something untoward is going on.. Do they stack it all in the one bank or do they spread it about?. NZO have a great habit of keeping the shareholders in the dark. macdunk

[upside_umop]

Who wouldnt panic after watching the sp tumble 25% in a few short weeks. Some of you dont even ask the question of where is the money being placed, and at what interest. Blind faith is a very foolish thing to advacate. Direct answers to direct questions unless something untoward is going on.. Do they stack it all in the one bank or do they spread it about?. NZO have a great habit of keeping the shareholders in the dark. macdunk

They've said they spread it about in high rated financial institutions. The interest rate will be in line with whats on offer, but still not beating inflation. That AUD is geting low, huh?

[Bob C]

re. the cash funds, to quote from the recent shareholder review:

"In the interim, our sizeable cash "war chest" has been invested in short-term facilities with the major banks"..

Bob C

Still holding and adding on the lows.

[Casa del Energia]

Who wouldnt panic after watching the sp tumble 25% in a few short weeks. Some of you dont even ask the question of where is the money being placed, and at what interest. Blind faith is a very foolish thing to advacate. Direct answers to direct questions unless something untoward is going on.. Do they stack it all in the one bank or do they spread it about?. NZO have a great habit of keeping the shareholders in the dark. macdunk

They've stated that the cash is farmed out in a number of places (sounds ok to me). BUT I'm not a director of that firm, Equally, I'm not a manager - therefore I (as a share holder) don't get involved with (e.g.) the detail of the placement of cash reserves because general share holders don't have management responsibility. The directors ask those questions of the management - as with any company - this is a director's responsibility; companies can't work any other way. Otherwise - - why have company directors (?). Blind faith is a bit strong - but in any company, there must be 'trust' in the directors to perform their responsibilities. (But surely, this is teaching grandmothers to suck eggs - you know this already).

[the machine]

machine - where can i see the rest of this article?


energyreview.net - but one has to subscribe and we do not - thus only read the headlines


M

[Dr_Who]

I am actually very surprise oil has held up so well when the world global economy and market crashing down.

[sideline]

.............. That AUD is geting low, huh?

So is the NZD vs USD, now nearing 60cents. --> more NZD for the oil

[Bilo]

Nita, I think it was one of your posts that provoked me to post these thoughts.

The price of oil has been going up in NZD terms over the past few days. The price is uncertain but oil has many things going for it.The NZD/USD will probably go much lower when the rate cuts come. If Maari and Kupe were pumping Bollard would be much happier.

Two days ago there was (another) chap out of the US saying that the marginal cost of oil production was about USD80 per barrel and that price could retreat to that. With the immense risks taken and technology applied it has to be a very profitable industry or it will not exist.
The POO could spike lower (besides that being potentially more disruptive than the recent spike to USD147) but:

· BHP’s cost of production last year was about USD80. A large established player – most new players’ costs will be much higher. The accounting surrounding the calculation of marginal costs is also doubtful. It is also historical.

· The marginal cost producers of oil are not in OPEC. Try oil sands, ethanol, deep water oil etc. The marginal costs of energy of all forms continue to increase. Liquid fuels more than most, because they are so convenient.

· Oil is no longer a commodity. This is another erroneous American accounting assumption that suits their manipulation of the world economy with derivative markets for everything. Nationalistic interests have taken control of access to oil fields. The big oil companies are not able to guarantee supply.

· Yesterday, OPEC in response to the US call for lower prices stated clearly that they intended to turn off the tap first. I could not find the Bloomberg quote again – one assumes that it was removed /edited out (only the Chinese censor LOL )– perhaps it wasn’t an official position just a Saudi saying that Iran and Iraq were still recovering from wars and needed the money. It was better for Saudis to leave the oil in the ground if the price wasn’t USD100. Now we don’t know what currency hedging in use so there will be some variation. They are determined not to flood the market with oil no matter how far demand declines – but they will try to meet demand at their price. OPEC has been talking to Russia lately as well.

· These actions around the world to ease the credit crisis are inflationary. Gold is going up. The new gold – oil will go up as soon as OPEC stop being Mr Nice guys to these *****.

· The Americans need petro dollars to remain USD and to help them out of their credit crisis. They will have to ensure that OPEC’s price for oil is supported in the new economy.

· The same US commentator above said “who knows what the Arabs will do”. I think he will be shown that the Arabs mean to be good citizens of the world – more than can be said of Americans under Bush.

The world needs to figure out how to live with a high oil price and that means using less - a low price doesn't help anyone.

[upside_umop]

So is the NZD vs USD, now nearing 60cents. --> more NZD for the oil

Yes, I've noticed that too. I was more referring to fact of how AUD was the currency to be in according to a few people...I thought it would hold up a little better myself! Australia was near parity with the states only months ago and now below 70cents!

Oil price is still declining in NZD terms and production costs rising.

FPH is looking attractive again...

[macduffy]

AUD is more exposed to volatile commodity prices than NZD, despite the drop in dairy prices!


;)

[Chris Roberts]

Who wouldnt panic after watching the sp tumble 25% in a few short weeks. Some of you dont even ask the question of where is the money being placed, and at what interest. Blind faith is a very foolish thing to advacate. Direct answers to direct questions unless something untoward is going on.. Do they stack it all in the one bank or do they spread it about?. NZO have a great habit of keeping the shareholders in the dark. macdunk

I'm not sure who is in the dark, but if you were a shareholder or had visited our website, you would know that in our June Quarterly Report we stated that:
"The funds... have been invested in short-term banking facilities with a number of S&P AA or better rated institutions. We are not in the business of financial speculation with shareholder funds".

For further clarification, our cash holdings are spread across a number of accounts with half a dozen of the major banks, and we are receiving appropriate rates of interest.

Our September Quarterly Report due out in late October and our AGM on 29 October will provided shareholders with more information on the company's performance and current strategy.

[sideline]

Nita, I think it was one of your posts that provoked me to post these thoughts.

The price of oil has been going up in NZD terms over the past few days. The price is uncertain but oil has many things going for it.The NZD/USD will probably go much lower when the rate cuts come. If Maari and Kupe were pumping Bollard would be much happier.

Two days ago there was (another) chap out of the US saying that the marginal cost of oil production was about USD80 per barrel and that price could retreat to that. With the immense risks taken and technology applied it has to be a very profitable industry or it will not exist.
The POO could spike lower (besides that being potentially more disruptive than the recent spike to USD147) but:

· BHP’s cost of production last year was about USD80. A large established player – most new players’ costs will be much higher. The accounting surrounding the calculation of marginal costs is also doubtful. It is also historical.

· The marginal cost producers of oil are not in OPEC. Try oil sands, ethanol, deep water oil etc. The marginal costs of energy of all forms continue to increase. Liquid fuels more than most, because they are so convenient.

· Oil is no longer a commodity. This is another erroneous American accounting assumption that suits their manipulation of the world economy with derivative markets for everything. Nationalistic interests have taken control of access to oil fields. The big oil companies are not able to guarantee supply.

· Yesterday, OPEC in response to the US call for lower prices stated clearly that they intended to turn off the tap first. I could not find the Bloomberg quote again – one assumes that it was removed /edited out (only the Chinese censor LOL )– perhaps it wasn’t an official position just a Saudi saying that Iran and Iraq were still recovering from wars and needed the money. It was better for Saudis to leave the oil in the ground if the price wasn’t USD100. Now we don’t know what currency hedging in use so there will be some variation. They are determined not to flood the market with oil no matter how far demand declines – but they will try to meet demand at their price. OPEC has been talking to Russia lately as well.

· These actions around the world to ease the credit crisis are inflationary. Gold is going up. The new gold – oil will go up as soon as OPEC stop being Mr Nice guys to these *****.

· The Americans need petro dollars to remain USD and to help them out of their credit crisis. They will have to ensure that OPEC’s price for oil is supported in the new economy.

· The same US commentator above said “who knows what the Arabs will do”. I think he will be shown that the Arabs mean to be good citizens of the world – more than can be said of Americans under Bush.

The world needs to figure out how to live with a high oil price and that means using less - a low price doesn't help anyone.

Excellent post Bilo! Couldn't agree more.

[duncan macgregor]

I'm not sure who is in the dark, but if you were a shareholder or had visited our website, you would know that in our June Quarterly Report we stated that:
"The funds... have been invested in short-term banking facilities with a number of S&P AA or better rated institutions. We are not in the business of financial speculation with shareholder funds".

For further clarification, our cash holdings are spread across a number of accounts with half a dozen of the major banks, and we are receiving appropriate rates of interest.

Our September Quarterly Report due out in late October and our AGM on 29 October will provided shareholders with more information on the company's performance and current strategy. Its nice to know that you do pay attention to what goes on in these forums. The point that i was raising is that with all the fundamental analysis being discussed over the last 400 pages on this thread nobody has spoken about the interest or what banks are involved. Banks are crashing in some parts of the world you can at least tell us which countries the share holders money sits in. The very volatile exchange rates are another consideration. Macdunk

[sideline]

......
Oil price is still declining in NZD terms and production costs rising.
...


Oil price in USD / EXCHRATE = NZD/barrel

yesterday 88.95 / .63 = 141.19
today 88.52 / .60 = 147.53
Where is this price decline you are speaking of???
Why would production costs be rising??????

NZD/USD now at 59.80c, below 60!!! Better go down to the petrol
station to fill up the car now!

[Nitaa]

I'm not sure who is in the dark, but if you were a shareholder or had visited our website, you would know that in our June Quarterly Report we stated that:
"The funds... have been invested in short-term banking facilities with a number of S&P AA or better rated institutions. We are not in the business of financial speculation with shareholder funds".

For further clarification, our cash holdings are spread across a number of accounts with half a dozen of the major banks, and we are receiving appropriate rates of interest.

Our September Quarterly Report due out in late October and our AGM on 29 October will provided shareholders with more information on the company's performance and current strategy.Duncan. I think you should thank Chris for the post to ease any fears you have about where the poor shareholders money is being keep. Time for you to apologies i think.

[duncan macgregor]

Duncan. I think you should thank Chris for the post to ease any fears you have about where the poor shareholders money is being keep. Time for you to apologies i think. NITA asking the question is not something you should apologize for. I will ask you the question what countries have they invested your funds in and why. It should not be a big secret surely. I have had enough trouble working out banks for my funds in this economic collapse. There will be banks at high risk as there is countries i would have thought that a long term fundamental investor like yourself would be gratefull for all the information rather than condemn a person for asking. Look at the prices lately of some of our well known banks. Macdunk

[Nitaa]

NITA asking the question is not something you should apologize for. I will ask you the question what countries have they invested your funds in and why. It should not be a big secret surely. I have had enough trouble working out banks for my funds in this economic collapse. There will be banks at high risk as there is countries i would have thought that a long term fundamental investor like yourself would be gratefull for all the information rather than condemn a person for asking. Look at the prices lately of some of our well known banks. Macdunk
Its ok to ask questions but your tone (my perception) is questioning the integrity of the nzo management and their decisions how how to protect their investments especially in these new economic conditions. Personally i dont think Chris from nzo needed to defend himself or the company by your earlier post. As Chris mentioned, perhaps next time when you want information from nzo you should at least dyor first. I am sure others value questions that may or should be asked to a company as you suggested however as i said, the tone of your comments suggest that managements intergrity is under question. ie. how safe is their money etc etc.

Remember, the shareholders are the ones that have entrusted the management in doing their job. If they dont have confidence then they will not be a shareholder.

For the record, i currently invest in Malaysia (property and private business) , NZ and Aus sharemarkets. Why? i live and do buasiness in Malaysia. By all accounts thecurrent econic conditions in Malaysia is very strong although it will not be immune to the global credit crunch but is currently better positioned than NZ and Aus. Why have i invested in oil companies in nz and Aus? Medium to long term my view is these companies, now with strong balance sheets will be in a better position to survive and take opportunites of future economic conditions. Not sure why my views are imporytant to you but here they are

[friedegg]

id like to invest in a malaysian:)

[duncan macgregor]

NITA there you go again twisting every thing i say all over again. I dont care where your own money is invested. I asked you where NZO have your money [being a shareholder] invested, and at what interest. I also asked in what country or countries. Surely you being a staunch fundamentalist, that would be of some interest to you. Perhaps with your head in the sand approach to reality, you take every logical question as being an insult. How dare i question anything silly me. I know that lately i have given some considerable thought to that question with my own investments. Macdunk

[Bixbite]

id like to invest in a malaysian:)

.

Have you ever heard “Gong Tau “ or “Tame Head”?

.

[friedegg]

[QUOTE=duncan macgregor;227315]NITA there you go again twisting every thing i say all over again. I dont care where your own money is invested. I asked you where NZO have your money [being a shareholder] invested, and at what interest. I also asked in what country or countries. Surely you being a staunch fundamentalist, that would be of some interest to you. Perhaps with your head in the sand approach to reality, you take every logical question as being an insult. How dare i question anything silly me. I know that lately i have given some considerable thought to that question with my own investments. Macdunk[/QUOTE
yes i agree,in todays mess where shareholders cash is placed should be made public,they might be aa+ but that doesnt stand for much atm,would you be happy mcdunk if it was all beneath the directors pillow?

[friedegg]

.

Have you ever heard “Gong Tau “ or “Tame Head”?

.

no i havnt but ive heard of lulu and cindy

[Nitaa]

Duncan. If you read Chris's post then that has satisfiend you enough. As to the specific details of which bank and in what country i am personally not too concrned. I do not think they will have their bank tied up with AIG, Iceland banks etc. You know there is risk with any bank going under. The simple answer is they are exposed but have diverisifed their risk. They have money in US and local currency. They have money on call in in term deposits. remember BNZ were on the brink some years ago and got bailed out by the goverment. If the whole banking system falls over then you cannot protect your investment anywhere. im sure if you stuff your money under your pillow you run a higher risk of being robbed.

Since you are not an investor i really think you should concentrate on your own investments without taking on all the shareholders problems and being mother teresa. If one can afford to invest then i am sure they cann afford to take their own responsibility. Welcome your pro and against views about stocks etc but you are overstepping the line by telling people what they should do and what the company should inform the holders. compare nzo to most other listed companies here and abroad before still seeking revenge for your loss on this company a couple of years ago

Now the good news. the sun will still shine and business will survive and grow.

[Casa del Energia]

Probably a good point in time to drop the fist-fight and get on with business.

By they way - NZO finished up 3c....if anyone noticed.

[dsurf]

The most important reason to do a buyback is to stop a partial or full takeover at a time when panic has depressed the SP. It will stop the transfer of some or all of the company to opportunistic predators. This is essential insurance in this environment & far more important than eps, shareholder returns etc.

I hope the company management are capable of appreciating that SP & market cap are essential to the SURVIVAL of NZO in it's present form & shareholding structure.

For example I would not be surprised if 50% of NZO could be grabbed for $1.50 per share.

Why wouldn't a company protect itself and ensure survival if they had the cash on board - I think $20m would get the SP up to $1.50 and then any bid would have to be $1.80 or so but would likely fail since the number of acceptors would fall dramatically if the SP was rising. Also they make a profit as other posters have pointed out, ie sold options for $1.50 & buy back for less than that.

[friedegg]

hey the sp has fallen but look at the aussie shares and everyone who is losing money is looking to blame someone,yes should have sold in july but didnt and hey life goes on...
nzo only needs to get income from kupe and prc to top off the tui income,they are doing this very well to date and its not all bad as the market is saying on nzo,sit tight like i have and your sure to be rewarded,but hang on ive recieved over 20 grand in dividends so far this year

[digger]

Thought i would try to guage what NZO holders most wish to do with the company cash pile.
If interested in this survey please select from three options.
1/ Stay inside our comfort zone. Buy only what we fully have experience with in Taranaki or NZ. Just do what we are doing for the next few years.
2/On Buybacks or others that will lift the SP
3/ Just completely leave it to the directors which will include overseas acquistions


Also rate your holding as A,B,or C with A being less than 100000,B less than one million and C greater than one million.

So my vote will be 1 C for Digger

If there is a strong and suprising leaning to one option will make sure it is passed on to directors.

[Cookie]

Digger

1A - Tight control of NZOGs capital is needed.

Cheers

[friedegg]

b and none of the above
buy into some other co which is strong fundamental wise and just as hammered as nzo in sp terms,buy nothing in africa or eastern european nations or highly muslim asian countries

[Unicorn]

B

1 is fine with me. The company has a lot of local knowledge, and a couple of very promising permits to explore.

2 is fine, but only if NZO shares are very cheap (< 140c). I can't see this using much of the available funds.

3 only if there was a compelling case, and it did not involve more than a quarter of the total NZO assets being in any one offshore investment.

I must say I am reasonably relaxed about my holding, even in these volatile times. The high cash holdings, and the business acumen of the chairman are major pluses for the company right now. The only weakness I see at present is too little attention to growing the company reputation as a stable and shareholder friendly investment.

[QOH]

1A for me......

[Snapper]

B Most comfortable with 1 or 2. If they make an acqusition in this market I would like it to be cashflow positive from day one.

[upside_umop]

(2&3)a - Theres room for both. I still think your misinterpreting what a share bb is about - its not about 'lifting the shareprice' its about maximizing future value through increased EPS.

[swissboy]

Totally for B 2.
About time the independant Directors started thinking of the desires of the shareholders and actually voting against the stranglehold of a certain large holder

[spook]

a & 2

If the directors are looking to acquire a stake in a company with excellent prospects, what better than the devil you know - NZO!

To my way of thinking, this would be just as profitable as increasing stake in PPP or buying AWE with the added bonus that no due diligence is neccessary and there are no unknown risks.

[Rif-Raf]

B

1 is fine with me. The company has a lot of local knowledge, and a couple of very promising permits to explore.

2 is fine, but only if NZO shares are very cheap (< 140c). I can't see this using much of the available funds.

3 only if there was a compelling case, and it did not involve more than a quarter of the total NZO assets being in any one offshore investment.



A

My views are as above. As long as they maintain a decent cash buffer any of those options are fine and can also include a combination.

[the machine]

digger 1A for me

but if posed same question interms of PPP would be 1B

regards

M

[zigzag]

Sure, Taranaki / NZ should be NZO's main focus, but I have no problem with them looking further afield. Not that fussed on buybacks, but it should be an option that is available ( by way of motion at the AGM ) I've been a shareholder since '95 and have built up a very high regard for TR. So put me down as a 3A.

[bwana]

saw above reference to a message which seemed to be asking where all our money is being kept . did anyone answer ? does anyone know where it is deposited , and , and , whether it is safe . this is a question i have asked before !

will someone ask it at the AGM . many fumds in uk and europs have been parked in 'fancy ' accounts abroad in banks which have gone under viz uk local councils depositing in iceland which is now on the ropes ! ! ! !

[bwana]

ps apologies for spelling above . it's late ! ! !

[brucey09]

2 questiones for Snr Roberts
1 can you please advise the average price of oil you sold last financal year converted to NZ dollars
2 can you also advise the average since then to compare
Thankyou

[bwana]

pps sorry folks that post , above , was meant for the PPP thread , but the question still stands ,. mea culpa ! ! ! !

[Chris Roberts]

2 questiones for Snr Roberts
1 can you please advise the average price of oil you sold last financal year converted to NZ dollars
2 can you also advise the average since then to compare
Thankyou

1. Can be answered by looking at our Annual Report: $222m in Tui revenue, NZOG's share of production 1.78 mmbbls. Average price per barrel approx NZ$125.
2. The average since then is considerably higher, and will be stated in our September Quarterly Report out later this month.

And for those posters continuing to ask questions about our cash holdings - all our arrangements are with NZ-based banks. Most of the funds are in NZ dollars with a portion in US denomination accounts.

NB I don't intend to make regular postings on this thread. Anyone can ask us a question at any time by emailing enquiries@nzog.com

[Corporate]

FYI from 5/10 to 8/10 tui production was 40,000 boepd!

[foolme]

Thanks Chris

[brucey09]

Snr Roberts
muchos gracias

[trackers]

2 questiones for Snr Roberts
1 can you please advise the average price of oil you sold last financal year converted to NZ dollars
2 can you also advise the average since then to compare
Thankyou

http://www.nzog.com/tui

[remy]

1B for me ...

[pietrade]

Thought i would try to guage what NZO holders most wish to do with the company cash pile.
If interested in this survey please select from three options.


I guess I'm a 2b ( or was that a 'not to be') but relly, there's
no question.

[dsurf]

2 A for the 10m or so neccessary to protect the company from predation

everything else 1

[Wilkins_Micawber]

Thought i would try to guage what NZO holders most wish to do with the company cash pile.

2B (nearly C) for me, for part of available funds, then preference for 1B at present.

My feeling is that if NZO step outside of the comfort zone (which needs to also consider shareholders' likely comfort zone) in the current environment then the SP could well get hammered even further ...

[fish]

1 c
2 c

Agree need to stay in nz and need to act soon to prevent the kind of hammering the sp is getting today .

[upside_umop]

Oil price in USD / EXCHRATE = NZD/barrel

yesterday 88.95 / .63 = 141.19
today 88.52 / .60 = 147.53
Where is this price decline you are speaking of???
Why would production costs be rising??????

NZD/USD now at 59.80c, below 60!!! Better go down to the petrol
station to fill up the car now!


I'm not sure about you, but when I look for oil price movements, I dont look for daily movements. Because if we did, you would never get the medium term/longer term view of the situation. By your calculations, now we are $84.60/0.6050 = $139.83 NZD.

All you had to do was look at the NZO website and it shows the 'peak' just after the financial year end, to what it is now. Heres a graph, Phaedrus would have a field day drawing a trend line!

http://farm4.static.flickr.com/3045/2927901808_c97297f4d5.jpg?v=0

What costs am I talking about?

As I'm sure you aware, the oil industry is usually denominated in USD, when our local currency experiences a depreciation versus USD, NZD prices will rise.

Some USD exposure that NZOG has with respect to production:

*FSPO announced in USD terms

*Shipping of oil products, in USD

Further, although not directly to production:

*Wages will have to be competitive, in USD.

*Drilling rigs, in USD - although not part of production of tui.

Some say drilling rigs will become cheaper, maybe, but remember there is a reasonable waiting list, and the marginal cost of oil that everyone talks about is with respect to the tar sands in Canada, not offshore drilling. The marginal cost is from an investment point of view, not ongoing production costs, so we cannot expect tar sand operations to close down until the cost of production is greater than the benchmark price.

[JBmurc]

so we cannot expect tar sand operations to close down until the cost of production is greater than the benchmark price.
-I'm pretty sure If oil falls below $80bbl tar sands becomes uneconomic

[flyingmariner]

I think the Canadian oil sands companies are getting very worried about the drop in the price of oil (so am I considering I just bought BHP and AWE two days ago) OPEC will not be able to make a difference in trying to reduce supply, that's been well proven in the past. Supply and demand is in charge now.

With NOG at todays price it is mighty tempting to jump in and buy more but that would mean I'm 80% in one NZ share and we all know about diversification.

Been glued to the PC screen here in the US this morning as everything gets thrown off a cliff. Bit of herd madness taken over with the selling now. (selling the stocks I own so maybe I'm biased)

[upside_umop]

I'm talking about costs of 'production' are lower than $80 JB..

Costs of an 'investment decision' maybe at $80 - this would include buying all the infrastructure, equipment etc. Production costs of already in service operations dont include buying new facilities...

So, an 'investment decision' would be uneconomic, but 'production' is economic.

All this means is that we wont see growth in output from Alberta for a while, until costs associated with investment decisions come down or oil price goes back up, but remaining production will still continue.

[Rabbi]

At the moment, just hang onto your hats. There's one hellava wind blowing and its all blowing South!:mad:

[CAM]

...... and we all know about diversification.


Yeah I think Buffet said diversification was for people who didn't know what they were doing

[flyingmariner]

Yeah I think Buffet said diversification was for people who didn't know what they were doing

And even Warren is not looking like such a genius right now.

[fabs]

B 2 for me
and def. B/B IF S/P goes south of $ 1.00 btw not far to go.
Got to be a supper op. and not just for gain in s/p but better than money in the bank.
Got to be a no brainer.
I am happy with management by and large but this is a new game for most and look overseas, where the executives with the best credentials got shot down in flames.
MR. SANDERS of Filthex springs to mind in NZ
CHEERS

[Nitaa]

Thought i would try to guage what NZO holders most wish to do with the company cash pile.
If interested in this survey please select from three options.
1/ Stay inside our comfort zone. Buy only what we fully have experience with in Taranaki or NZ. Just do what we are doing for the next few years.
2/On Buybacks or others that will lift the SP
3/ Just completely leave it to the directors which will include overseas acquistions


Also rate your holding as A,B,or C with A being less than 100000,B less than one million and C greater than one million.

So my vote will be 1 C for Digger

If there is a strong and suprising leaning to one option will make sure it is passed on to directors.Thanks Digger for the poll

I am all for the following in general but witrh some reservations
1.A
2 (primarily to prevent vultures taking over nzo. the purpose is to create value for the shareholders in my view and not just to prop up the sp short term. Who knows how many shares instos or otherwise are wanting to dump so any buy back may be very well muted at this time)
3. (ultimatately the management and board need to have their finger on the pulse so to speak There are going to be more and more opportunities for companies with strong balance sheets to take opportunities.)

[Casa del Energia]

Digger,

3.A

[Crypto Crude]

hang in there NZ oilers... last night some of the chch posters got together and we were talking about how opportune this time is, and over the next few years to buy amazing stocks...
We will survive and we will perform....
just got to wait this out for abit...
:cool:
.^sc

[Bixbite]

hang in there NZ oilers... last night some of the chch posters got together and we were talking about how opportune this time is, and over the next few years to buy amazing stocks...
We will survive and we will perform....
just got to wait this out for abit...
:cool:
.^sc

.

My dividends money is still available in the bank waiting for opportunities.
Thank you NZOG.

.

[upside_umop]

http://oilsandstruth.org/high-costs-tar-sands-slightly-slowing-production-advances

There we go...

'A new report found the break-even oil price required by new mining projects in the oil sands has jumped to $85 a barrel, an increase of $20 or 31% in barely more than a year.'

'The break-even price in May, 2007, was $65 a barrel, assuming an 8% rate of return, capital costs of $100,000 per flowing barrel and operating costs of $20.50 a barrel.'

Its the intial start up costs, ie project investment decision, that makes the $85 cost...with OPEX at $20.50 a barrel = No shutting down of operations just yet.

[Tok3n]

If oil sands are turned off

Won't that wipe out current spare capacity (based on current demand/supply)?

[upside_umop]

Hi Token,

What I'm trying to say is, that wont happen...

Operating costs are only ~$20...which means oil prices need to fall a lot further to close down tar sand operations already in production.

It will only affect the growth of new projects coming online...ie wont affect current production.

Some could shut down, if they are forced into bankruptcy from committing to projects at high oil prices and then having them tumbling down..but really, its best for them to continue as banks would get less from operations shutting down. I doubt any of them are 100% debt financed anyways....it will be the equity participants that take on all the risk.

[GR8DAY]

......get out of NZO you guys. Recession?....what recession. This is just the beginning of a TOTAL UNPRECEDENTED WORLD ECONOMIC COLLAPSE! The American bull**** economy is bankrupt as we all know and all other major economies around the world cannot escape thier own demise. Oil will be one of (if not THE) hardest hit commodoty......I'm picking sub $50 barrel in the not-too-distant future. NZO WILL NOT BE A VIABLE COMPANY!!

[Nitaa]

cdu in aus are doing a share buyback atm,thier price is soaringexcept the wrong way. they are in critical meltdown. now down to 136 cps. The only thing a sharebuy back will do at present is only assit the ones that want to exit or desperate to sell the stock imo

[Xerof]

you sound like a fearful capitulator GR8DAY

Excellent - now waiting for the key day reversal

Have a great day

[AMR]

Take a deep breathe and calm down GR8DAY. It's only money...

I'm beginning to take an interest in NZO again after selling out at 149. There is very strong support between 95c-110. NZO spent years there back when it was an explorer.

Might have to get that buy order ready.

[Drone]

NZO getting close to cash + pike value, free oil wells anyone??

NZO would still make decent money @ $50/barrel, especial with the NZD @ 50c which is where it will be shortly.

[digger]

Thanks all for voting in my poll. I have avoided making any comments on NZO while this small poll is running and boy is the world haveing some action--the wrong way.
Will end the poll at 8-00 PM on sunday so any other comments or results are still welcome.Have two phone votes.
Cheers Digger

[foodee]

3A, certainly not 2.

Thanks digger

[Dr_Who]

In this market nothing makes sense. PPP has net cash of more than 19 cents and the market is selling them at 17.5 cents. So figure that one out. NZO can go lower simply on fear alone. We may see below $1 if the world markets continue to tank.

[fish]

In this market nothing makes sense. PPP has net cash of more than 19 cents and the market is selling them at 17.5 cents. So figure that one out. NZO can go lower simply on fear alone. We may see below $1 if the world markets continue to tank.

nzo can go lower-much lower-its not fear alone-its a deadly combination of fear ,margin lending and need for liquidity .

All 3 could be combatted by a buy back programme-the sooner the better .
There is no one solution to the current financial crisis but lots of smaller remedies . If the board does not act to remedy the problem there may soon be much less value to an nzo share .
After saying that I do believe we have an experienced and brilliant board that has become shareholder friendly and will make the right decisions in this world crisis .

[Unicorn]

Interesting day today - the day that oil crossed back under where it was a year ago.

For the forseeable future I see low production cost energy (NZO) being far more lucrative than relatively high production cost steel making materials (PRC). Current very strong income streams (NZO) are much more attractive than dubious income streams that will not start in earnest for at least another 9 months (PRC). I think PRC is currently vastly overvalued compared to NZO.

Further falls in the value of the PRC stake may reduce NZO nta but will not impact on NZO earnings - which I calculate are running at about $300,000 net per day. That is about $9M a month, which is hardly the stuff of doom and gloom!

I do not see the world economic recovery being possible with significantly reduced energy consumption. I also do not see the OPEC states accepting oil below $50 - which looks like it may be around $100 NZ! NZO can live, quite happily, with that.

The NZO share price fall over the last few weeks has been disappointing, but not that unexpected given the combined impact of the NZOODs and the financial meltdown. Unfortunately the resultant volatility of the NZO share price has given the impression of a struggling junior oiler, when it is now a cashbox/producer. It would help the long term image of the company to get more stability into the share price. It would also be helpful to increase earnings per share. These are the reasons why I prefer a buyback, albeit on a limited scale, while shares are being offered cheaply. Bailing out overly leveraged shareholders is not a reason for a buyback - enhancing value for continuing shareholders is the objective.

I am remarkably relaxed about my NZO holding. The figures on paper are not particularly impressive at present, and on reflection my decision to ignore the investment for 6 months after the NZOODs to let things settle was a poor one. But I still see a lot of value in the investment, and I retain confidence in the management team.

[zorba]

Unicorn,

Surely the NZOOD cash raising is good for NZO for any shareprice under NZD1.50 ?

As share price moves downward below $1.50 the cash brought in by the NZOODs helps to buffer the shareprice by increasing the cash backing and therefore should mitigate against further downward movement.

Maybe somewhat academic given the global slaughter which is driving everything down, including PPP which as mentioned by another poster is now trading at below its cash backing.

NZO and PRC AGMs will be interesting !!

Z

[arjay]

I am also relaxed Unicorn - trying to keep a positive light on things. For many of us longer term shareholders, todays SP is still over triple what we paid for them a few years ago although I admit to being a bit dissapointed about it not being 5x more. Secondly, to people like McDunk who say NOGgers were foolish not to have got out earlier..... well, fair comment - but that would have required a willing buyer and I would not have been happy with the thought that knowing the market would crash I would then preserve my 5x advantage by selling my shares to someone who will tomorrow lose their house.

So, I remain relaxed and my lean-too at Coromandel will have to go without paint for a little while longer.

[the machine]

do nzo still have any hedging positions left to fill - if so may end up selling oil at a higher price than on the market


M

[corsairx]

I am a big fan of the way that the board has handled NZO.

As I have already posted I sold out a week or so before the dilemmas of the crisis hit. I have never denied that I see this company as fundamentally strong compared to the market. I sold out down. I am in no way gloating after this. But at the same time I need absolutely rock solid value before I reinvest. For myself, looking at NZO this is around the 93c mark. Based on pure cash in hand that I can depend upon.

[duncan macgregor]

What an amazing lot some of you are. Some even say they would rather hang on long term than sell to some one else to take the loss [BULLSH*T]. Not one of you questions in this era of crashing banks, bailouts,and volatile cross rates where and at what percentage this money sits. America is going under, i wonder if any of your money is there.
Its bad enough to be that fundamentely stupid that that you dont insure your self with a stop loss, but even i would expect you to ask the real questions. Did it ever cross your minds that this money might be sitting at risk?. Management come out with the usual trust me, we know what we are doing, which simply keeps the faithfool content. Macdunk

[Major von Tempsky]

Hmmm, I was merely going to observe that oil is down to $78.54 overnight and the DOW just 50 points so we could be getting near bottom....but I couldn't avoid reading McDunk's amazing, ignorant, lunatic rant which seemed to focus on 2 things both highly questionable and irrational

(a) he feels personally aggrieved if some shareholders choose to hold rather than sell (which would thereby actualise a theoretical loss, burning their boats and abandoning the recovery in their position and gifting it someone else)

(b) he says "America is going under" whatever that means.
If America was going to go under if would have done so in the 1930's Depression when their economy sank 50% and governments everywhere were abysmally ignorant as to what was happening and did stupid things such as heavily cutting government expenditure and trying to maintain a Budget surplus and tight money. But it didn't, it rebounded even then within 10 years.
Or during WW2. Or during the Cold War.
They will have a bit of a recession now and rebound stronger than ever within 2 to 3 years.
Look what Germany and Japan managed to do after WW2.

I think you have been at the wacky baccy McDunk and you are trying to accentuate your high.

[AMR]

Dow rallies 6% in the last half hour...could this be the bottom?

[duncan macgregor]

Hmmm, I was merely going to observe that oil is down to $78.54 overnight and the DOW just 50 points so we could be getting near bottom....but I couldn't avoid reading McDunk's amazing, ignorant, lunatic rant which seemed to focus on 2 things both highly questionable and irrational

(a) he feels personally aggrieved if some shareholders choose to hold rather than sell (which would thereby actualise a theoretical loss, burning their boats and abandoning the recovery in their position and gifting it someone else)

They will have a bit of a recession now and rebound stronger than ever within 2 to 3 years.
Look what Germany and Japan managed to do after WW2.

I think you have been at the wacky baccy McDunk and you are trying to accentuate your high. MVT to attack the person with childish sneering comments only shows you up as the irrational person that you are. The rational person sells up then comes back when the market rights itself. Your policy of holding at all costs, then averaging down buying more of downtrending stocks will lose out big time. I would imagine you will end up jumping out the window one day from a great height, shouting [THE WHOLE WORLD IS MAD EXCEPT ME]. I expect your portfolios value is down by half this year simply because of your self rightcheous attitude of never being wrong. I got this one right on the button MVT, you got it wrong, which is costing you read back the thread with an open mind and learn from it. Macdunk

[dumbass]

Gentleman please!
I guess you like to wind people up Duncan and your ability to do so rates as highly as your market predictions.i have posted the same bearish outlook (Dow Forex Thread) but have never quite had the desire to remind everyone on a daily basis of my prophetic outlook becoming reality.
i suspect your big forex gain has evaporated to zero with the appreciation of the kiwi against the aussie and possibly indicates you can hold like the next guy when the market turns against you.

with respect dumbass.

[Anubis]

Digger - my vote is 1 and I am currently in the A category. I would like to see the company "keep its powder dry" in the economic current climate for the near future - not rush out to either invest in projects overseas or start buying back shares when they just raised a whole lot of cash by selling them on good terms. NZO is well positioned to ride out the current storm and take its time to build a solid future through gradual and careful investment to extend operations around Tui and Kupe. Any precipitous actions now to use the cash in the current market and economic uncertainty would be too speculative and hasty. I'm sure management are already in discussions with AWE with regard to the next phase of drilling programs around Tui - this is good use of some of the cash. But acquisitions should wait. Assets for acquisition will come up in fire sales soon enough as weak and over-leveraged companies start going under in the next 12 months - the survivors like NZO can afford to be patient!

[sideline]

Digger - my vote is 1 and I am currently in the A category. I would like to see the company "keep its powder dry" in the economic current climate for the near future - not rush out to either invest in projects overseas or start buying back shares when they just raised a whole lot of cash by selling them on good terms. NZO is well positioned to ride out the current storm and take its time to build a solid future through gradual and careful investment to extend operations around Tui and Kupe. Any precipitous actions now to use the cash in the current market and economic uncertainty would be too speculative and hasty. I'm sure management are already in discussions with AWE with regard to the next phase of drilling programs around Tui - this is good use of some of the cash. But acquisitions should wait. Assets for acquisition will come up in fire sales soon enough as weak and over-leveraged companies start going under in the next 12 months - the survivors like NZO can afford to be patient!

Digger,
my vote is 1b. I pretty much agree with Anubis' post quoted above and would like to add just one suggestion:
I am against giving back some of the capital that was just raised in the OD conversion through buybacks -
that capital will be very valuable in a landscape of scarce credit and hard-to-get project finance.
However I find it important to continue a steady dividend policy (preferrably half-yearly) to
attract a different kind of clientele than the pump-and-dump or drill-and-thrill type speculator.
For this it is important to develop consistency and a track record of preferably rising dividends, which
should be easily achievable especially once Kupe comes on stream.
Paying a divi out of earnings also unlocks the income tax paid by NZO in the form of imputation credits.

Besides, I want to retire on my NZO divis!

[pietrade]

,
Besides, I want to retire on my NZO divis!

---- and me too.

[fish]

---- and me too.

In that case why are you against a buy back which will give you much bigger dividends .
As Unicorn says-he would favour a buyback up tp $1.40 for this very reason .

Surely buying your own share for less than the nta has to make more sense than keeping most of the $300 million in the bank -especially when interest rates are going to be falling .

I suspect that spending about 15% of the $300 m would lift the share price to a more reasonable level . This might equate to spending the daily net profit from tui over the next 3/4 months .
Vector appears to be having a very effective buyback

[Crypto Crude]

mackdunk,
did you not say that oil prices would explode to $200 per barrel crashing the market?
Oh how wrong you were...
http://www.aussiestockforums.com/forums/images/smilies/bier.gif
:cool:
.^sc

[manxman]

Until now, one of the biggest constraints on the West, as it challenges Iran, has been the danger of pushing oil prices through the roof. Without that problem, many new possibilities open.

John Leyne - BBC News - Tehran


So if oil drops to $60, Big Dick will let wee George push the button? Many new possibilities indeed. And we had hoped to get through to the election without a new war.

Mx disc: No mooses were harmed in the composition of this post.

[duncan macgregor]

mackdunk,
did you not say that oil prices would explode to $200 per barrel crashing the market?
Oh how wrong you were...
http://www.aussiestockforums.com/forums/images/smilies/bier.gif
:cool:
.^scSHREWDY I got the crash right kept right out the market. besides i said it would happen in 2009. I remember someone trying to talk me into buying CUE when it was tracking sideways at 22c raving on that it would be 45c.
YOUR OLD BUDDY KEEPING YOU HONEST macdunk

[Unicorn]

In that case why are you against a buy back which will give you much bigger dividends .
As Unicorn says-he would favour a buyback up tp $1.40 for this very reason .

Surely buying your own share for less than the nta has to make more sense than keeping most of the $300 million in the bank -especially when interest rates are going to be falling .

I suspect that spending about 15% of the $300 m would lift the share price to a more reasonable level . This might equate to spending the daily net profit from tui over the next 3/4 months .
Vector appears to be having a very effective buyback

Hi Fish

To clarify my earlier posts.

The type of buyback that I would prefer is on-market, designed to spend minimal funds, to stabilise the share price, and to mop up bargain basement shares from distressed investors in a market lacking the usual buyers. NZO needs to transition itself in the minds of the investment community from being a volatile explorer to being a stable producer with a stack of cash in the bank. A minor buyback to eliminate some of the lowest intra-day trades and to lift the closing price would help this. Simply announcing that the company is awash with cash and may buy some of its shares should in itself help price stability.

I would definitely stop this type of buyback at $1.40, as that is close enough to the NZOOD issue price to assume the market has resumed normal function. It also marks a level where the company can say it has made a good return for shareholders over the last year, so they should have confidence in supporting the growth strategy going forward. An on market buyback should not be a matter of forcing the share price against the natural market, but of countering the panic element and marketing the company as now being mature and stable.

I do not think that spending $45M on a buyback is appropriate, or is necessary to achieve these ends. I calculate current profit at around $9M a month (and by next month/week it could be anything). Spending $45M would be somewhat more than a 3/4 month profit commitment. Basing a buyback on nta is not appropriate in this case - NZO published nta is nothing more than a random number to keep the accountants happy.

A further compulsory buyback may be a good idea later on, but that is a different issue entirely. If no suitable investments can be found under the 'growth strategy', then by all means return the excess funds to shareholders. But it is far to early to make a call on that type of buyback yet. There may be some great investment opportunities ahead, and those funds may be the key to the future of NZO.

I also think the dividend policy needs to be clarified, and made appropriate to the current situation. Shareholders are more than ever looking for safety and for cashflow. Random special dividends at the whim of the board are no longer appropriate. I would like to see a solid commitment to paying 50% of net profit in dividends. But for the current year, noting that this is a 'quiet' year prior to Kupe coming on stream, 75% of the profits to be paid in dividends.

An interesting week ahead. Last week was quite tough, with the price of oil and the PRC share price being hit hard. But at the end of the week, NZO was still making fantastic money from Tui.

[Bixbite]

Hi Fish

To clarify my earlier posts.

The type of buyback that I would prefer is on-market, designed to spend minimal funds, to stabilise the share price, and to mop up bargain basement shares from distressed investors in a market lacking the usual buyers. NZO needs to transition itself in the minds of the investment community from being a volatile explorer to being a stable producer with a stack of cash in the bank. A minor buyback to eliminate some of the lowest intra-day trades and to lift the closing price would help this. Simply announcing that the company is awash with cash and may buy some of its shares should in itself help price stability.

I would definitely stop this type of buyback at $1.40, as that is close enough to the NZOOD issue price to assume the market has resumed normal function. It also marks a level where the company can say it has made a good return for shareholders over the last year, so they should have confidence in supporting the growth strategy going forward. An on market buyback should not be a matter of forcing the share price against the natural market, but of countering the panic element and marketing the company as now being mature and stable.

I do not think that spending $45M on a buyback is appropriate, or is necessary to achieve these ends. I calculate current profit at around $9M a month (and by next month/week it could be anything). Spending $45M would be somewhat more than a 3/4 month profit commitment. Basing a buyback on nta is not appropriate in this case - NZO published nta is nothing more than a random number to keep the accountants happy.

A further compulsory buyback may be a good idea later on, but that is a different issue entirely. If no suitable investments can be found under the 'growth strategy', then by all means return the excess funds to shareholders. But it is far to early to make a call on that type of buyback yet. There may be some great investment opportunities ahead, and those funds may be the key to the future of NZO.

I also think the dividend policy needs to be clarified, and made appropriate to the current situation. Shareholders are more than ever looking for safety and for cashflow. Random special dividends at the whim of the board are no longer appropriate. I would like to see a solid commitment to paying 50% of net profit in dividends. But for the current year, noting that this is a 'quiet' year prior to Kupe coming on stream, 75% of the profits to be paid in dividends.

An interesting week ahead. Last week was quite tough, with the price of oil and the PRC share price being hit hard. But at the end of the week, NZO was still making fantastic money from Tui.



Totally agree with you Unicorn, but I have an addition.

To ease part of the tension, the company should do a compulsory buyback at this moment as well not later. (To tie shareholders’ hearts better than tie their feet, Nita)

This compulsory buyback price should be $1.50 or $1.45 (because of the 5c dividend). And the proportion is between “1 in 10” and “1 in 20”: -

If

1 in 10 @1.50 $57.5M 30% of ex NZOOD 10% of total shares

1 in 15 @1.50 $38.4M 20% of ex NZOOD 6.6% of total shares

1 in 20 @1.50 $28.75M 15% of ex NZOOD 5% of total shares

.

[fabs]

Look I Do Not See Any Need To Rush A B/b. [ Which I Favour At Below A Dollar ]

1 Poo Still Easing, Nobody Abel To Predict Bottom Yet.
2 Flow At Tui Going Down In Medium Term.
3 World Financial Crisis? Well Any Takers For Predicting Depth, Duration And Long Term Effects?
4 Big Question Marks On All Banks And Kindred Inst.if It Gets Much Worse
Why On Earth B/b Any Above, When An Average Of 1 Mill. A Day Sell For Less Than $ 1.20
Lets Be Frank, I Too Would Rather That All These Negatives Would Disapear, But That Is Not Being Realistic Is It?

[biker]

NEW YORK (CNNMoney.com) -- As the world loses confidence in the foundations of its economic system, the silver lining may be that oil prices are about to get a whole lot cheaper.

In a new report Friday, Deutsche Bank uses a number of interesting yard sticks to suggest crude is currently way too expensive and may fall to the $60 a barrel range as the economy worsens.

And the bank does expect the economy to worsen, painting a bleak picture - caused be the current financial turmoil - but stopping just short of predicting a multi-year recession.

The bank says it expects GDP growth to slow by 1.5% over the next few years - and hints that things could get even worse.

"Indeed if one examines the banking sector crises in Japan and Sweden, economic output declined for at least two years following the crisis," Adam Sieminski, the bank's chief energy economist, wrote in a research note. If the global economy slows to less than 2% growth a year, "oil prices could spiral down, much like they escalated in 2007."

Other analysts see oil prices going through the floor.

"As night follows day, low oil prices have always followed high prices, and the decline has always been swifter than the advance," said Peter Beutel, an oil analyst at Cameron Hanover.

Beutel sees a 2009 low of around $50 or $60 a barrel, then even lower prices in 2010.

"I'm not going to rule out some extraordinarily low numbers, even $20 a barrel," he said, acknowledging that five months ago many respectable analysts though we'd never go below $100. "Whatever the market does, it's going to make us all look like fools."

Deutsche Bank compared oil prices to several other measures, and came to the conclusion that "crude oil is the most richly priced commodity currently."

Compared to crude's historic price average of $35 a barrel, it's currently 100% higher, higher than any other commodity. The next highest is gold, at 56%. Many other metals are only 20 to 30% higher.

And contrary to press reports talking about how expensive food is, adjusted for inflation many food stuffs are actually lower than their long-term historical average price, according to the report.

Relative to per capita income, the bank said oil prices would have to fall to about $45 a barrel to return crude to it's historical average.

In the early 1970s, the average American family could buy about 1,000 barrels of oil on a year's salary. That 1,000 barrels was the norm for most of the last few decades, with the exception of the early 1980s and 2008, when that number dropped to around 300 barrels of oil. Today, oil would have to cost around $45 a barrel for the average family to afford 1000 barrels.

The bank also calculated how high oil prices have to be for OPEC countries to maintain their budgets. Iran and Venezuela, who are often the first to call for production cuts, need the highest price per barrel - $95.

Russia needs about $70, while Saudi Arabia, OPEC's largest producer and de facto ruler, needs about $55 a barrel.

Other measures pointed to a higher price for oil. The bank estimates crude needs to cost $80 a barrel to keep new production coming online, and as a percent of a U.S. consumer's disposable income, current prices are about average.

But taking all these measures together, the bank says $60 a barrel seems like a probable place for oil prices to bottom out.

That would represent a gasoline price of just over $2 a gallon. Good news for motorists burned at paying over $4 a gallon for much of the summer, but bad news if that price drop at the pump also comes with a pink slip from the boss.

[sideline]

NEW YORK (CNNMoney.com) -- As the world loses confidence in the foundations of its economic system, the silver lining may be that oil prices are about to get a whole lot cheaper.

In a new report Friday, Deutsche Bank uses a number of interesting yard sticks to suggest crude is currently way too expensive and may fall to the $60 a barrel range as the economy worsens.

And the bank does expect the economy to worsen, painting a bleak picture - caused be the current financial turmoil - but stopping just short of predicting a multi-year recession.

The bank says it expects GDP growth to slow by 1.5% over the next few years - and hints that things could get even worse.
..........................


How do they expect GDP to grow at all while the oil supply declines????
If prices really fall much further it will stall new developments and nothing will compensate the
natural decline in existing oil fields, estimated to be around 4 to 5% per year.

[fish]

[QUOTE=Unicorn;227886]Hi Fish

To clarify my earlier posts.

The type of buyback that I would prefer is on-market, designed to spend minimal funds, to stabilise the share price, and to mop up bargain basement shares from distressed investors in a market lacking the usual buyers. NZO needs to transition itself in the minds of the investment community from being a volatile explorer to being a stable producer with a stack of cash in the bank. A minor buyback to eliminate some of the lowest intra-day trades and to lift the closing price would help this. Simply announcing that the company is awash with cash and may buy some of its shares should in itself help price stability.

I would definitely stop this type of buyback at $1.40, as that is close enough to the NZOOD issue price to assume the market has resumed normal function. It also marks a level where the company can say it has made a good return for shareholders over the last year, so they should have confidence in supporting the growth strategy going forward. An on market buyback should not be a matter of forcing the share price against the natural market, but of countering the panic element and marketing the company as now being mature and stable.

I do not think that spending $45M on a buyback is appropriate, or is necessary to achieve these ends. I calculate current profit at around $9M a month (and by next month/week it could be anything). Spending $45M would be somewhat more than a 3/4 month profit commitment. Basing a buyback on nta is not appropriate in this case - NZO published nta is nothing more than a random number to keep the accountants happy.

A further compulsory buyback may be a good idea later on, but that is a different issue entirely. If no suitable investments can be found under the 'growth strategy', then by all means return the excess funds to shareholders. But it is far to early to make a call on that type of buyback yet. There may be some great investment opportunities ahead, and those funds may be the key to the future of NZO.

I also think the dividend policy needs to be clarified, and made appropriate to the current situation. Shareholders are more than ever looking for safety and for cashflow. Random special dividends at the whim of the board are no longer appropriate. I would like to see a solid commitment to paying 50% of net profit in dividends. But for the current year, noting that this is a 'quiet' year prior to Kupe coming on stream, 75% of the profits to be paid in dividends.

Hi Unicorn,

Your wisdom and logic make my original suggestion of a 1 in 6 cancellation at $1.50 look inappropriate . I had been thinking at the time that it was a way of fairly apportioning excess funds .
As you point out a small and limited buyback has obvious advantages-not least that the company in effect cancels far more shares for the same budget . Hence more rewards -higher dividends and higher sp in the longterm .

[digger]

Hi I have spare time now so thought i would tabulate the results of the poll.
I gave 1 point for each one hunderd thousand,including adjusting for greater than 10 points when i knew the real shareholding.This can be seen as rough as unless you actually ask people exactally how many shares they have it will not be true but like all polls should average out. I also put the weight on your comments when they said something different than your vote.Example fish and unicorn are both heavily in supporting a buy back by comments but both voted somewhat across the board.
The results are
1--just carry on as we are in Taranaki----57
2--buy back supporters-----------------69
3 -- Leave it up directors /overseas acquitions---31

All my points went to 1 but clearly some sort of buy back is most heavily supported.
Cheers Digger

[digger]

So here is my thinking why i do not support a buy back although clearly most investers here do.


An excellent example can be found on reading the article on THEOILDRUM.COM. Story is called Energy Margin Calls---Chesapeake. Here this american company was trading at $70 US in july where the CEO heavily leveraged his holding.With the downturn he got caught in a never ending series of margin calls.This last week he was finally taken out at a low sum of $11-99. In total he had 300 million to sell.
The problem with having a buy back is that we do not know the bottom and is it fair to ask the company to use its cash to interven in the market where that intervention will most benfit sellers.I certainly would not want to be on margins at the moment and i am not. But lets remember if the SP had not ran into the world finanical mess the current price would be well north of 2-00. Would the margin borrowers then want to give some of this money back to help the company. We must always be careful that we are not both at the same time capitalist in the good times and then want to solicalise the costs when things turn sour.
The very first policy NZO wants and needs to do is save all monies required to complete TUI ,PIKE and KUPE developments. According to a email from Chris the company is doing just that. Good that is priority one in order.
Now for priority 2
Unicorn spoke my mind exactally when he said that the company should set out a clear dividend policy.Such a policy is what i want and feel at this time would do the most for all in supporting the SP in this mad world we have crashed into these last few weeks. Note the government today has guaranteed all bank deposits to give confidence.NZO needs to announce a minium dividend policy paid twice yearly.At this stage two 5 cent payments for the next 12 months one in march and then in sept would be well inside the comfort zone of our current income and show much needed company confidence in the future. Such a small and minium dividend plan would leave plenty of space to also follow other plans.
Priority three is to drop the acquisition thing. As some of you said in supporting comments to your vote this can wait until things settle down a bit. At this stage just too risky. Think if we had bought into Chesapeake at 50 dollars saying what a great deal it was as they were 70 not long ago.No one knows enought at these times so it it too risky.
We need a clear minium dividend policy .It will cost the company probable nothing as likely going to do it anyways and it will go a long way to give the SP the support that you voters want from a buy back. A dividend also helps all,a BB mostly aids the seller with debatable benifit to other shareholders.
Digger

[arjay]

I think a few posters are looking at the value of a buyback the wrong way round. I support the idea of buyback not because it supports the shareholder but because it is a way for NZO to make value for itself. There is a level at which the company is clearly worth more than the SP suggests. So, buying back now and cancelling the shares will strengthen the company. The shares may even be re-issued later for a nice profit when McDunks $200 oil arrives.

[sideline]

....................At this stage two 5 cent payments for the next 12 months one in march and then in sept .......................

Just one thing digger, some of us need to do a bit of tax planning and the timing can be important.
So this years timing of 15 April was just perfect, pushing the payment into the
next financial year! (Also note that income tax might be lower for income received after March 31, 2009).

[fabs]

Digger & Arjay,
more or less agree with most, since my last post the bank deposit garantee has for the time being, removed some of my concerns regarding deposits in oz & nz banks.
Personaly i have no need to sell any more of my holding in nog, they cost me origionaly 40 cents and by buying and selling heads and selling various options over the years have had tremedous returns also did not take up the last option offering. Sold just a 100k"s heads at $ 1.75 a few weeks ago, so can at lesure come back in again anytime and this applies to a co.B/B if they can do it for under $ 1.00
In 2-3 years they can always do another option issue when everyting has hopefully settled down with all 3 systems in full swing. May issue the same number of shares as canceld by B/B say for $ 2-3.00 if needed. Do not no how it works exactly but another setting up of Tressury Stock maybe also be an option.
BTW i would certainly cherish a B/b AT $ 1.40 as unlikley that would be, the way things are going i would sell them all at that and bid my time to come in under a dollar.
AYE
ALBERT

[digger]

Just one thing digger, some of us need to do a bit of tax planning and the timing can be important.
So this years timing of 15 April was just perfect, pushing the payment into the
next financial year! (Also note that income tax might be lower for income received after March 31, 2009).

Sideline are you sure with dividends it works that way.I had the impression that the dividend would be taxed on the year it was earned.This is though splitting hairs as it will only be one off and should not get in the road of establishing a long term and regular dividend policy.I would like to get this going and talked about in the AGM.To me this is more important than acquisitions in this time.The empire building can wait.To my thinking it has enormiously jumped the que as many of us have waited for decades now for a on going return from NZo and only to find it risked by get rich or get poor scheme,depending on an uncertain outcome from events far beyond the control of directors.
See directors want more money and more perks.I will be voting and speaking against this until a dividend policy is in place.Directors and CEO's on a help yourself is exactally what has got the world into the finanical mess it is in.Their reward from the company has be be tied back to the size of reward all shareholders get. So i will be voting against this motion.Anyone care to to join me??

[sideline]

Sideline are you sure with dividends it works that way.I had the impression that the dividend would be taxed on the year it was earned........

Of course, the company pays income tax in the year the money is earned by NZO.
However, we shareholders have to pay income tax on the dividend received in the financial year
in which we receive the dividend - for this we receive imputation credits attached to the dividend.
If tax rates are lower at the time the dividend is received, the same imputation credits will go further.

So, in a nutshell, make the payment dates April and October.

[Sideshow Bob]

I see NZO were advertising for a Commercial Manager in the Sunday Star Times yesterday.

Obviously they couldn't afford McDunk.........

[joey]

Originally Posted by joey View Post
Or be a party pooper, or rain on anyones parade. Has any of you nzo traders/investors considered what would happen in a world recession to the price of oil? It would go down very quickly. Why do I think this? Because I have seen this happen in the 1970's. Gold at the time went to $US850 approximately, which in real terms is about $US2000. The United states of America is now in a recession. Bermuda, have you run the forecasts you are making on the nzo returns or the Pike River Company, if the world goes into recession? China alone cannot be a driver of the world economy if the USA "hits the wall". China's GDP is one eighth of the USA!

All I am saying is this share has a risk factor associated with the price of oil. I think the price of oil is the next bubble to burst. It's a stock for the day traders/traders!

You new investors, think very carefully of how much risk you are willing to take.

NZO is a great stock to trade if you know what you are doing. It is definately not a stock for beginners!

Anyway that's my opinion.




joey


All I hope is not too many first time investors have been hurt badly?????

[shasta]

Originally Posted by joey View Post
Or be a party pooper, or rain on anyones parade. Has any of you nzo traders/investors considered what would happen in a world recession to the price of oil? It would go down very quickly. Why do I think this? Because I have seen this happen in the 1970's. Gold at the time went to $US850 approximately, which in real terms is about $US2000. The United states of America is now in a recession. Bermuda, have you run the forecasts you are making on the nzo returns or the Pike River Company, if the world goes into recession? China alone cannot be a driver of the world economy if the USA "hits the wall". China's GDP is one eighth of the USA!

All I am saying is this share has a risk factor associated with the price of oil. I think the price of oil is the next bubble to burst. It's a stock for the day traders/traders!

You new investors, think very carefully of how much risk you are willing to take.

NZO is a great stock to trade if you know what you are doing. It is definately not a stock for beginners!

Anyway that's my opinion.




joey


All I hope is not too many first time investors have been hurt badly?????

Joey

Whilst everyone keeps focussing on China, they are only 1 of 4 countries apart of BRIC (Brazil, Russia, India & China)...

Demand from China may slow, but the Indian's aren't too far behind...

[sideline]

Originally Posted by joey View Post
Or be a party pooper, or rain on anyones parade. Has any of you nzo traders/investors considered what would happen in a world recession to the price of oil? It would go down very quickly ......................


Yeah, right!

[friedegg]

Originally Posted by joey View Post
Or be a party pooper, or rain on anyones parade. Has any of you nzo traders/investors considered what would happen in a world recession to the price of oil? It would go down very quickly. Why do I think this? Because I have seen this happen in the 1970's. Gold at the time went to $US850 approximately, which in real terms is about $US2000. The United states of America is now in a recession. Bermuda, have you run the forecasts you are making on the nzo returns or the Pike River Company, if the world goes into recession? China alone cannot be a driver of the world economy if the USA "hits the wall". China's GDP is one eighth of the USA!

All I am saying is this share has a risk factor associated with the price of oil. I think the price of oil is the next bubble to burst. It's a stock for the day traders/traders!

You new investors, think very carefully of how much risk you are willing to take.

NZO is a great stock to trade if you know what you are doing. It is definately not a stock for beginners!

Anyway that's my opinion.




joey


All I hope is not too many first time investors have been hurt badly?????
a lot are basing everything on falling oil prices but not the nz$ compared to us$,why dont you base your value of nzo and pike @ $65 a barrell for oil and $125 a tonne for the coal then apply the exchange rate,and then come and tell me these stocks will suffer the most in a reccession,cause if that is the case our dollar will continue to drop regardless

[fish]

Overseas markets starting to rebound from being oversold
NZO grossly oversold-I wonder if we will see a good bounce tomorrow !

[AMR]

Well Joey has been right actually...NZO is 80c off its peak.

Strong support between 95c and 110c, if it gets any lower the techies will scoop it up. Not to mention CPS per share of 93c was it?

I might buy when oil stops falling, but at this price I would say further downside very limited from a technical perspective (with the proviso that if 95c is breached decisively get the fock out.)

[arjay]

Just re-read the notice for the AGM. Wow! - if you want to make money become a Director of NZO! I hope they tell us the plans for our war-chest before we get to vote another raise for them.

[Rabbi]

Dow going "gangbusters" at the moment, up more than 500 points. If it closes at this level we might see some buyer interest on the NZX today.

Everything's undervalued with NZO and PRC at bargain basement prices
( I hope?) ;)

[Ripping]

.....These idiots on Fast Talk are forecasting a one day 1000 point rally. That I would like to see!!

you saw that then ?

[bermuda]

you saw that then ?

It could only happen in the USA! Frightening eh? I see Goldman Sachs are now talking about $50 oil. I cant see that either. That is why it is so frightening.

The Saudi's have already pulled back on their November shipments. Unchartered waters ahead. I cant pick it but it doesnt feel good.

At least NZO are rolling it in and the exchange rate helps. Roll on Pike and Kupe.

[Ripping]

It could only happen in the USA! Frightening eh? I see Goldman Sachs are now talking about $50 oil. I cant see that either. That is why it is so frightening.

The Saudi's have already pulled back on their November shipments. Unchartered waters ahead. I cant pick it but it doesnt feel good.

At least NZO are rolling it in and the exchange rate helps. Roll on Pike and Kupe.

And then this afternoon on CNBC.. someone is back on the $150 bbl. bandwagon. I can't pick it either, but I'm still more inclined to stay with the upside predictions. The fall in stockmarkets appears to have been arrested, along with the $/bbl of oil. A slow and steady rise for both is what I'm backing.
I'm not doing as well as i was doing in the middle of the year, but this is a great sport to watch. I'm having a ball.!! :D

[Nitaa]

At this rate its harder to pick than a broken nose. What i am sure of is that any weakness will make life difficult for companies trying to raise capital for exploration. The environment is only making it stronger for the big players like exon shell etc.

I have a seriopus problem with resolution 6,7 and 8
At a time where shareholders have lost money since the conversion i do not think its appropriate to reward directors at this stage. At a time where fat cats are being looked after and recognised as such in the face of tough economic conditions, its time for the board to recognise the capital and risk many investors are placing in such times.

As it is, the employee share plan and other benefits need a serious look at and not just throw money while the average investor suffers during these hard times. Lets not forget that Tony Radford has his nest egg looked well and truly after even when he retires. He will still get a pension (and a healthy one) irrespective of the performance of the companies he had control over.

I will be voting for a resounding no in favour of any increases. Show us the money first before asking for extra pocket money frojm investors who have forked out $190m this year and have since had their shares depreciate around $80m

[digger]

At this rate its harder to pick than a broken nose. What i am sure of is that any weakness will make life difficult for companies trying to raise capital for exploration. The environment is only making it stronger for the big players like exon shell etc.

I have a seriopus problem with resolution 6,7 and 8
At a time where shareholders have lost money since the conversion i do not think its appropriate to reward directors at this stage. At a time where fat cats are being looked after and recognised as such in the face of tough economic conditions, its time for the board to recognise the capital and risk many investors are placing in such times.

As it is, the employee share plan and other benefits need a serious look at and not just throw money while the average investor suffers during these hard times. Lets not forget that Tony Radford has his nest egg looked well and truly after even when he retires. He will still get a pension (and a healthy one) irrespective of the performance of the companies he had control over.

I will be voting for a resounding no in favour of any increases. Show us the money first before asking for extra pocket money frojm investors who have forked out $190m this year and have since had their shares depreciate around $80m
Your on to it Nita. As of last year i said i would no longer vote the automatic way and just go along with whatever the directors put forward.It is well past time the shareholders made an agreement with the CEO and directors over who gets what. This is now more important than before as we clearly have money up for grabs.That wealth should be shared and we are increasingly getting a number of Johnny come latelys that until monies started flowing had no interest in the company who now are setting themselves up to call the shots. So i am no longer agreeing to anything until a wealth sharing agreement is reached with directors. For a start and before any more monies are thrown at staff we need a clear minium dividend policy paid twice yearly put in place for the benifit of all. Director and staff benifits have to be tied back to the success of the average holder .It is the independence of CEO and director benifits that is largly responsible for the current finanical mess the world is now in. Time to change all that.

[Unicorn]

I have a serious problem with resolution 6,7 and 8
At a time where shareholders have lost money since the conversion i do not think its appropriate to reward directors at this stage.


I disagree with that point. We need to look at how well the directors have performed over the whole year, allowing for external factors that are outside their control. Returns to shareholders over the year are a much better guide than what may have happened in a single quarter.

At present shareholders are looking at about a 35% return for the year, being the share price growth plus the dividends paid. To me that indicates a directors pool increase from $295k to up to $400k may be justified - no more than that based on what has been delivered. This may change over the next couple of weeks, as the market is extremely volatile at present.

The notice of meeting may appear to be rather disappointing, as nearly all of it addresses management interests, and none of it directly addresses shareholders interests. But that is the nature of this type of document - the balance is normally addressed at the AGM itself, when announcements benefiting shareholders are more usually announced. Dividend policy is something that would normally be covered at an AGM, rather via a resolution.

[Nitaa]

Interesting point Unicorn. On the provision that any drop in shareprice for each year is directly related in proportion of their fees. 2 edge sword that if you dont give incentive then you dont get quality directors. I think you will find it an anomoly to see directors proposing a cut in their fees due to a 12 month decline in company performance.

In short, show me the performance and then pay accordingly.

[temptation]

Oh come off it Nita, the company is doing great things which is why we're still shareholders. The carnage on financial markets isn't the fault of anyone at NZO (or anyone in NZ)!

[Nitaa]

Oh come off it Nita, the company is doing great things which is why we're still shareholders. The carnage on financial markets isn't the fault of anyone at NZO (or anyone in NZ)!Maybe its taken the wrong way. My point is reward where its due and reward accordingly. I see HGD directors gave themselves an increase but how is it justified? Yes nzo has done remarkebly well over the years. Remember many of these directors still got paid and increases whilst the rest of the shareholders spent decades going nowhere. Whats reasonable? Thats up for debate but what has happened recently imo is a good reminder that the company's first and foremost responsbility is to look after the shareholders. When this is happening then the spoils can be shared around in a proportionately fair manner.

[fish]

In short, show me the performance and then pay accordingly.[/QUOTE]

Absolutely agree Nita -but dont under-estimate the directors-

I have a feeling that we will fully see the extent of that performance soon .
Investing -?60 million in us dollars could show a 25% currency gain
First coal at PRC-and we will be reminded that $300 ton = $500 nz
Tui production and nz dollars way above predictions for 1st Quarter
? more investment decisions in nz
? a buyback
? a rebound in share and commodity prices when investors realise the world economy isnt going to recede but is going to grow in the future.
Lower interest rates are coming which will push up the sp .

It would not surprise me if the nzo sp rises quickly in the next 2 weeks before the AGM

[the machine]

quite a few references to Tui, including the 10 mcf gas flaring limit

still think the next tui development well should include a gas reinjection, so that gas from all fields can find a home, pending further sale via Maui at a later date.

an additional benefit of gas reinjection is that it will displace oil at the top of the reservoir, thus enable the oil to be pumped instead of left above the production level - all those nooks and crannies, fissures, voids, call them what you like, are in effect storage for stranded oil at some point in the future.



Australian Worldwide Seeks `Elephant' Discoveries, Gas Assets

By Angela Macdonald-Smith

Oct. 14 (Bloomberg) -- Australian Worldwide Exploration Ltd., operator of New Zealand's $269 million Tui oil project, is seeking to reverse a share-price slump by targeting ``elephant'' discoveries and widening its search for investments to Europe.

The Sydney-based company will also examine the increasing number of asset acquisition opportunities arising from the global financial crisis, Managing Director Bruce Wood said today.

The estimated size of the Tui field, off the North Island's western coast, has almost doubled since it started production in July last year. Higher-than-forecast output has added to Australian Worldwide's cash reserves, put at A$200 million ($142 million) in August. The company is seeking a rig to accelerate a New Zealand drilling program that will target two potential ``company-changing'' prospects as well as additions to Tui reserves.

``We want to expose our shareholders on a regular basis to some elephant-hunting,'' Wood told reporters in New Plymouth, New Zealand. ``We are cashed up in very turbulent times. There are a lot of opportunities coming towards us.''

He declined to comment on whether Australian Worldwide may be interested in closely held Coogee Resources Ltd. Wood ruled out a bid for a stake in Nexus Energy Ltd.'s Crux liquids project.

Australian Worldwide has sunk 48 percent in Sydney trading in the past five months, leaving the stock close to half of Credit Suisse Group's A$4.09 valuation. The shares today jumped 12 percent to A$2.13.

Hoki, Kahu

Next year's New Zealand drilling program includes the Hoki- 1 and Kahu-Stratigraphic exploration wells, each of which offers the potential for an oil discovery at least as large as Tui, Wood said. Drilling planned in the second half of 2009 will target a further ``potential elephant,'' he said. Those wells will be balanced by lower-risk probes planned near Tui and in Australia's Bass Basin.

Australian Worldwide will open a European office in January to scour for investment opportunities in the gas market, Wood said.

The Tui venture is driving forward talks with Shell Todd Oil Services, producer of more than 85 percent of New Zealand's gas, on a potential link between Tui and Shell Todd's Maui production platform, Wood said. Such a link would allow the Tui venture to send excess gas for processing to Maui, avoiding flaring, while Shell Todd could send oil found at Maui to Tui, he said.

The Tui venture is set to reach the 10 billion-cubic-feet limit for flaring, the burning of surplus gas at the production site, set under its mining permit earlier than originally expected because output has been higher than projected, said Dennis Washer, Australian Worldwide's New Zealand country manger.

The company has ``contingency plans'' should an agreement not be reached with Shell Todd, to avoid the gas-flaring limit capping oil production, Wood said, without elaborating.

To contact the reporter on this story: Angela Macdonald-Smith in New Plymouth, New Zealand through the Sydney newsroom at amacdonaldsm@bloomberg.net

Last Updated: October 14, 2008 02:00 EDT

[manxman]

It could only happen in the USA! Frightening eh? I see Goldman Sachs are now talking about $50 oil. I cant see that either. That is why it is so frightening.

The Saudi's have already pulled back on their November shipments. Unchartered waters ahead. I cant pick it but it doesnt feel good.

At least NZO are rolling it in and the exchange rate helps. Roll on Pike and Kupe.


Basically the financial system is on life support. We just gave the patient the equivalent of a few hundred volts of electricity and got his heart restarted, but that doesn't mean we can send him home.
Marc Groz, managing member of Topos LLC, Reported on MarketWatch.

Is this the recovery or just a dead cat bounce? NZO can afford to pick and choose. The Maui gas/liquid swap looks like a low risk investment. Would like to hear a bit more about it.

[duncan macgregor]

Maybe its taken the wrong way. My point is reward where its due and reward accordingly. I see HGD directors gave themselves an increase but how is it justified? Yes nzo has done remarkebly well over the years. Remember many of these directors still got paid and increases whilst the rest of the shareholders spent decades going nowhere. Whats reasonable? Thats up for debate but what has happened recently imo is a good reminder that the company's first and foremost responsbility is to look after the shareholders. When this is happening then the spoils can be shared around in a proportionately fair manner. NITA, C-MON you know better than that surely.
When a person in power can write their own pay check they look after number one first, second, third, and last. Look at lets say TEL for instance when good old TG was running it.
She screwed millions from the company, all above board and legal with a sp that halved during her reign.
Surely you dont think NZO management would consider you before feathering their own nests. They now have enough money in the kitty to last for ages. Banks crashing, financial turmoil, all that money poring in, and you lot dont even ask the question of where is it, and at what average interest rate, or even what comes next. Macdunk

[Toddy]

The NZX is beautiful.

Company disclosure - the NZO Secretary has been knocked up.

This is a first for me, I have never seen a disclosure like it.

[BigBob]

The NZX is beautiful.

Company disclosure - the NZO Secretary has been knocked up.

This is a first for me, I have never seen a disclosure like it.


....and the news have pretty much wiped out all yesterday's gains, so good on them for letting us know... :)

[the machine]

with awe talking up rig market has softened then one hopes / expects there will be a new drilling program announced around time of agm

M

[duncan macgregor]

....and the news have pretty much wiped out all yesterday's gains, so good on them for letting us know... :) For petes sake the woman is taking maternity leave thats all, which has nothing to do with yesterdays gains being lost today. Dont you realize that all ships go up and down with the tide of market sentiment.
The price of oil is dropping the market is dropping until that reverses NZO sp will drop. macdunk

[Stranger_Danger]

Far out, 5 cents down on the news. Glad they didn't disclose that the scan suggests twins.

In other news, two Burger Fuel employees just got their restricted drivers licenses and Michael Hill just got a pass mark on his medical when visiting the doc after a game of golf (he shot 4 over, but I expect a separate disclosure for this later).

[BigBob]

For petes sake the woman is taking maternity leave thats all, which has nothing to do with yesterdays gains being lost today. Dont you realize that all ships go up and down with the tide of market sentiment.
The price of oil is dropping the market is dropping until that reverses NZO sp will drop. macdunk

Jeez Macdunk - don't you recognise a light-hearted joke when you see it...? or is it the mention of PEM above that's got you seeing red.....? :)

[Wilkins_Micawber]

For petes sake the woman is taking maternity leave thats all, which has nothing to do with yesterdays gains being lost today. Dont you realize that all ships go up and down with the tide of market sentiment.
The price of oil is dropping the market is dropping until that reverses NZO sp will drop. macdunk

In further news, it has been reported that a certain poster has had a sudden heart attack and died following a large over reaction to what even the blue-eyed boys could see was clearly a tongue-in-cheek comment. NZO shares initially lept on the expectation of a massive drop in negative sentiment, but have now settled back on the realisation that oil could no longer be expected to reach $200 per barrel this year ...

[Wiremu]

Toddy

The company secretary requirement is an ASX thing, as is the disclosure.

[duncan macgregor]

NITA, C-MON you know better than that surely.
When a person in power can write their own pay check they look after number one first, second, third, and last. Look at lets say TEL for instance when good old TG was running it.
She screwed millions from the company, all above board and legal with a sp that halved during her reign.
Surely you dont think NZO management would consider you before feathering their own nests. They now have enough money in the kitty to last for ages. Banks crashing, financial turmoil, all that money poring in, and you lot dont even ask the question of where is it, and at what average interest rate, or even what comes next. Macdunk It would surely convince me of their arrogance if they go ahead and try to screw the shareholders for a pay rise in a crashing market. look at all the poor sods that converted the options at $1-50 now facing the prospect of watching it all end up in the directors swill trough. Even vector canceled their directors pay rise in this market. Hope you lot read the riot act at the AGM this sort of greed is where our system needs regulation. The sp was higher five years ago than it is today Their fees should be tied to that. Macdunk

[Zaphod]

Hope you lot read the riot act at the AGM this sort of greed is where our system needs regulation. The sp was higher five years ago than it is today Their fees should be tied to that. Macdunk

Regulation? Why don't you simply vote against the increase if you don't agree with it.

[Naylz]

Digger are you attending the AGM. Want to vote my shares. Let me know if this is possible and I will get in touch with you.

Naylz

[digger]

Digger are you attending the AGM. Want to vote my shares. Let me know if this is possible and I will get in touch with you.

Naylz

Yes i will be at the AGM. Been attending regularly for quite a number of years,and into the future.
Before you or anyone else offers me there voting rights have a rough idea what i stand for. Firstly i just had a poll on the buy back and mostly it was me against everone else that was in favor of a BB. I still say of all the options it is not the best. A BB has been hatched on the run due to the sudden fall in SP and quick fixes in place of long term strategy is not the way to go.
I am though very much in favor of a fixed dividend policy.Used to be against dividends but the money lenders all like yields so you just have to go with the flow.I found this out very much when i tried to raise monies for the last conversion.Also think now we long term holders have waited long enough and need a minium fixed return.The dividend i will be pushing at the AGM will be a choice of cash or shares in lue or any combunation at the shareholder discression.
Have to say i am more in favor of an acquistion than i have given the impression before hand,just with a lot of causion.It is just that i think the dividend policy should come first.An acquisition as hugh potential to both be a winner or a loser.I am getting a little too old for all or nothing games,and an overseas acquisition will come with a bit of that attached.A close to home acquistion that we fully understand would be a good first step.
I also think we should consider a NZO shareholders council.The current world down turn is going to bring many changes.A lot of the mess we are in is a result of director and CEO greed.A council would be very useful in setting limits here,and keeping honest men honest.In the coming years NZO will be a great earner [unless the world ends] and the use of the monies needs far more general discussion than is now occuring.
Thoughts
Cheers Digger

[sideline]

...........
Have to say i am more in favor of an acquistion than i have given the impression before hand,just with a lot of causion.It is just that i think the dividend policy should come first.An acquisition as hugh potential to both be a winner or a loser.I am getting a little too old for all or nothing games,and an overseas acquisition will come with a bit of that attached.A close to home acquistion that we fully understand would be a good first step.................

An acquisition of a company with proven reserves (but maybe short of funds to develop them) could be
more profitable and a lot less risky than sinking the money into wildcat drills. Its just that there aren't
any of those in NZ. Or maybe a buy-in into a project with a company as above.
At the right time and price, that could be an easy way to expand reserves.

Steady growth instead of thrill-and-drill..

[AMR]

An acquisition of a company with proven reserves (but maybe short of funds to develop them) could be
more profitable and a lot less risky than sinking the money into wildcat drills. Its just that there aren't
any of those in NZ. Or maybe a buy-in into a project with a company as above.
At the right time and price, that could be an easy way to expand reserves.

Steady growth instead of thrill-and-drill..

A merger with NXS.AX? NZO will have to raise capital, but what a boost to reserves.

[Nitaa]

Whilst on the topic of mergers and aquisitions, the next couple of years we are going to see a lot of consolidation. Not sure what will be left of the NZX though. Big companies gobbling up smaller and weaker ones. NZO needs to protect iself from such predators and I would be interested to see what the board are looking to do in this regard.

Rich will get richer and the poor will stay poor

[spook]

Is there anyone else on here that sees NZO as a great long term buy at current SP? Obviously the market sentiment is don't buy any shares till we know prices have hit rockbottom, but once things stabilise (whenever that is)
NZO is still making good money and should be one of the first to shoot up again.

Certainly I am not going to realise a loss by selling. I would rather hold for 2 or 3 years - I made the error of selling property in the last slump and regretted it. It's just a matter of time.

[the machine]

Whilst on the topic of mergers and aquisitions, the next couple of years we are going to see a lot of consolidation. Not sure what will be left of the NZX though. Big companies gobbling up smaller and weaker ones. NZO needs to protect iself from such predators and I would be interested to see what the board are looking to do in this regard.

Rich will get richer and the poor will stay poor

nzx just another suburb of sydney and TR already lives there.

M

[Dr_Who]

Is the cash in NZO heard in USD or NZD?

[trackers]

Is the cash in NZO heard in USD or NZD?

NZD with a very small amount held in FX - Chris R confirms that a few pages back

[Nitaa]

Is there anyone else on here that sees NZO as a great long term buy at current SP? Obviously the market sentiment is don't buy any shares till we know prices have hit rockbottom, but once things stabilise (whenever that is)
NZO is still making good money and should be one of the first to shoot up again.

Certainly I am not going to realise a loss by selling. I would rather hold for 2 or 3 years - I made the error of selling property in the last slump and regretted it. It's just a matter of time.Long term this stock looks good. However since the downward pressure on oil and overall markets, potential we have a lot further downside to go.

Have we seen the bottom? Not likely and 3 months ago i would have almost rateed it less than 2% chance that nzo may test the $1.00 mark again

[Dr_Who]

Long term this stock looks good. However since the downward pressure on oil and overall markets, potentiall we have a lot further downside to go.

Have we seen the bottom? Not likely and 3 months ago i would have almost rateed it less than 2% chance that nzo may test the $1.00 mark again

I want to see oil bottom before I dip my toes in NZO again. The NZO graph seems to follow the oil price graph. With the global slow down, who knows how low will oil go.

[Corporate]

I want to see oil bottom before I dip my toes in NZO again. The NZO graph seems to follow the oil price graph. With the global slow down, who knows how low will oil go.


On that point...does anyone have the skills to post some updated NZO vs POO graphs?

At what SP does it just become plain silly? Currently at $1.08.


Also does anyone know when the quarterly report is due out?

[winner69]

P's last chart re NZO and Oil was post 6205 on this thread

Oil at US$70 a while ago suggested NZO at 90-100 ... allow a bit for the NZD down a bit and maybe 100-110 says that the correlation still exists

Psot 6222 had oil in NZD

(PS - Don't know how to post charts)

[Ripping]

On that point...does anyone have the skills to post some updated NZO vs POO graphs?

At what SP does it just become plain silly? Currently at $1.08.


Also does anyone know when the quarterly report is due out?

http://www.rippingsilk.com/pics/nymex-nzo1710.jpg

(one year chart)

[Dr_Who]

There is one very important question I need to ask and maybe someone close to NZO management can answer it.

It is forecast that Tui oil production will decrease substantially from 2009 onwards and gas production will come on stream from 2010. The question is...will the gas production be on schedule to be delivered in 2010? How much gas will be produced in 2010?

[AMR]

There is one very important question I need to ask and maybe someone close to NZO management can answer it.

It is forecast that Tui oil production will decrease substantially from 2009 onwards and gas production will come on stream from 2010. The question is...will the gas production be on schedule to be delivered in 2010? How much gas will be produced in 2010?

Now that is a question that no one knows the answer to. Energy projects tend to get delayed regularly, take a look at PRC and OEL.

[Nitaa]

Now that is a question that no one knows the answer to. Energy projects tend to get delayed regularly, take a look at PRC and OEL.By all accounts, Kupe is going along nicely and lets not forget how well Tui did to come on stream in break neck speed. PRC, well that was and is one complecated operation to get on stream imo.

[manxman]

There is one very important question I need to ask and maybe someone close to NZO management can answer it.

It is forecast that Tui oil production will decrease substantially from 2009 onwards and gas production will come on stream from 2010. The question is...will the gas production be on schedule to be delivered in 2010? How much gas will be produced in 2010?

Full gas production from Kupe is scheduled for June 2009. The wells are safely drilled, tested and suspended. The undersea and shore crossing pipeline is installed and tested. The onshore construction is well under way. Its hard to see more than a few commissioning hiccups.

Tui production will temporarily increase when the next (TUI-4H) well is drilled some time in 2009, so there really won't be a huge revenue hole. One was forecast but the performance of Tui has been so good that it hardly looks likely to happen.

AWE are talking about some more tie-in prospects for Tui and presumably NZO will be in for 12.5% of anything thats going. The current share price is crazy, but its still in a downtrend so why buy now.

Also Pike River should have a positive cash flow by June 2009, although NZO won't actually see any until 2010, it should reflect in the share price.

The quarterly financials due out next week may start a feeding frenzy.

[Mr Tommy]

If I win lotto powerball this weekend, I will be buying the whole company next week at this rate.

Market Cap currently just 420m, they probably have over 300m in the bank, not totally unreasonable is it ?

[LNR]

I already have the winning ticket for $30 million

[digger]

If I win lotto powerball this weekend, I will be buying the whole company next week at this rate.

Market Cap currently just 420m, they probably have over 300m in the bank, not totally unreasonable is it ?


Get out of here Mr Tommy .You are stealing my plan.My ticket is red hot and ready to be pulled.Like your reasoning though.
Digger

[Sideshow Bob]

My plan is to win lotto and takeover PPP, using funds to takeover NZO!!

**Sideshow Bob wakes up, clutching his $11 useless piece of paper**

[digger]

The finanical mess the western world has got itself into will be given many causes but underlieing all is invester apathy and or a belief in lack of investor empowerment to do anything about the situation.In the US directors and CEO's are walking off with tens on millions and sometimes hunders of millions for stuffing up companies.Their answer to this is that investers have OKed such action by allowing CEO's and directors to write their own contracts.They show AGM resolutions in support of such rights.
This to my knowledge has not happened yet with NZO but i am becoming very interested in keeping honest people honest.To do this we need a loosely formed shareholders council to keep track of where the monies and our future is going.
Accordingly i will be opposing and speaking against resolution 5,6,7 and 8
5---two years to early.Merge closer to home.Not yet ready to take on the world.If we are to believe half of what is in Mr Knight's resume he is too busy to have sufficent time for NZO.
6---Dividend policy needs to be put in place first.
7---as above.Mr Knight should have shown some real interest in NZO before coming on board and bought shares on the open market.
8 --- David has already been given half a million shares and so far has not bought any on market.This sort of attitude is what has got the western world in the mess it is in. Mr Salisbury has on the 16th of Sept explained to me in detail that directors have legally nil opportunity to buy shares as they always have inside info. How convenient. Strange how they can not buy any but can find ways to take all that the shareholders will give them at AGM's. The same power that comes from a AGM to receive free on subsidies shares could easily be extended to allow the right to buy some.Just after the AGM we shold all be in the same boat if all info is properly given.
So i do not accept that our CEO needs another gift.


If we are to make a company for all we how have to make that decision now that the monies are flowing in.Directors perks have to be fixed percentage wise back to invester perks.Failure to to that will very quickly see an erosion wherby directors keep coming back year after year with ever greater stories why all should be theirs for the asking. If we allow that to happen the honest directors we now have[i trust] will by our non committment erode to self centered ones taking all.

My email address is for those interested in supporting this action is.
cboreham@farmside.co.nz
Digger

[Nitaa]

Well Put digger. conversly the average investor ignorance has to be blamed as we cant blame people who ask for a handout or increase. its up to the shareholders to be educated and educate themselves on more in their investments. Unfortunately most will learn the hard way

[fish]

Hi Digger,

With the current shareprice reflecting a big loss for those that converted options I am strongly against the issue of cheap partially paid shares . Under this proposal there is a perverse incentive to keep the share price low for the date of the offer .

However I dont believe $600,000 is too much for 7 High quality well-performing directors . The company has certainly brought to fruition complex projects . They have been careful and diligent with shareholder funds and for this I feel deserve to be rewarded . I would vote for this proposal if I could be sure that shareholders who have risked substantial sums backing these projects are equally rewarded-and frankly a 38cent drop below the option price less a mere 5 cent dividend equals a 33cent loss for those loyal shareholders who converted-and many took out loans to do so .

NZO could do a lot more(with $300 million in the bank ) to ensure the share price reflected the value of this great company .

[airedale]

Digger, my understanding is that directors are legally entitled to buy shares, and are obliged to inform the market when they do so.
There may be some restriction on buying or selling around the timing and reporting of financial info.
But for DS to say that they are not legally entitled sounds like flannel to me.

[digger]

[QUOTE=fish;229089]Hi Digger,

With the current shareprice reflecting a big loss for those that converted options I am strongly against the issue of cheap partially paid shares . Under this proposal there is a perverse incentive to keep the share price low for the date of the offer .

However I dont believe $600,000 is too much for 7 High quality well-performing directors . The company has certainly brought to fruition complex projects . They have been careful and diligent with shareholder funds and for this I feel deserve to be rewarded . I would vote for this proposal if I could be sure that shareholders who have risked substantial sums backing these projects are equally rewarded-and frankly a 38cent drop below the option price less a mere 5 cent dividend equals a 33cent loss for those loyal shareholders who converted-and many took out loans to do so .Quote


Fish that is exactally my point.I also will give this extra 600,000 consideration but only after funds are future proofed for shareholders.Currently they are not,but directors want their share written in regardless. First things first.
Digger

[digger]

Digger, my understanding is that directors are legally entitled to buy shares, and are obliged to inform the market when they do so.
There may be some restriction on buying or selling around the timing and reporting of financial info.
But for DS to say that they are not legally entitled sounds like flannel to me.

Directors can only buy shares when the inside info they know is also known by all shareholders. This almost never happens especially to a company that has projects ongoing as explained to me on 16th sept by Paul and DS.My point here is that this sounds more like a convience as they can at the same time receive free or partly paid ones.
Going into the future it is first important that fully paying shareholders have there dividend policy earmarked prior to director perks.I am not against directors being fully rewarded,it is just it must come after shareholders and not beforehand.
Digger

[arjay]

Digger, I recall going to an AGM with you - the one where they announced the Ray (Ray of Hope) prospect. After the meeting one of the directors said that, now that the meeting was over they were allowed to go out and buy/sell shares for themselves.

[digger]

Digger, I recall going to a AGM with you - the one where they announced the Ray (Ray of Hope) prospect. After the meeting one of the directors said that, now that the meeting was over they were allowed to go out and buy/sell shares for themselves.
Hi Arjay.Yes i remember that one two. Directors always like to give us something to hang onto and those days it was all drill and thrill so" RAY "was invented. RAY turned out to be a non started just like the directors buying shares with their own money. RAY was never mentioned again but directors buying their own shares evolved into getting free or subsidies ones.
I will be voting against resolutions 5,6,7,and 8
Digger

[Wiremu]

Digger,

You mention several times directors getting free or subsidised shares. The terms of issue of the ESOP shares as explained in the notes to the resolutions is that the party paid shares are issued at a 20% premium to the current market price, or at the market price at the time of the final payment if that is lower.

There does not seem to be a lot that is free or subsidised given that they have to pay the full final price. They will only gain significantly if the share price increases substantially over the five year term of the ESOP shares, which I would have thought is in line with all of our interests.

[manxman]

There does not seem to be a lot that is free or subsidised given that they have to pay the full final price. They will only gain significantly if the share price increases substantially over the five year term of the ESOP shares, which I would have thought is in line with all of our interests.

The issue for me is that if the ESOP shares are renounceable, then there is no loss for the holders if the company does not thrive. If the company does well, the holders get a nice capital gain, with no risk. If the company does not thrive, then there is no corresponding downside risk. On the other hand, their jobs are probably not much chop either if the company is not doing well.

It really is a matter of proportion. In some companies it gets to an abusive stage where the entire profits are eaten up by the dilution caused by employee incentives. I don't think we are anywhere near that.

I would like to see employee incentives capped at a percentage of tax paid profits. Digger would probably like to see it tied to dividend policy.

Then there is the question as to whether the shares should be new shares, or aquired on market. Obviously market aquisition is more transparent, but I was once a holder of a company that did this, and they managed to push up their own share price in the runup to the issue of staff bonuses, to the extent that traders could take advantage. Microsnot issued so many shares that the dilution effect ate up all their profits, and if they had accounted for them to Warren Buffet's rules, they would have been making losses for the average punter. We don't want that either.

Support Digger and get some shareholder input.

[Unicorn]

Hi Digger

6 - I vote No
Market cap this time last year was 256M * 1.04 = $266M, add 127M * 1.50 new shares = $190M, deduct 2 x 5c dividends = $32M, giving shareholders contribution of $424M. Market cap now = 383M * 1.08 = $413M.

Return to shareholders for the year is close to nil. Requested gain to directors is over 100%. That is way out of synch.

Previously authorised director payments are about $60,000 per head. I am comfortable with that.

The argument that there are additional demands on directors is not convincing, given that the number of directors has increased and PRC has been floated. Bringing payments into line with other leading listed companies is not backed up by any concrete figures - but provides a good case to follow the Vector lead.

7 - I vote Yes
Here we have a new director, so he should be brought onto the same footing as the other directors. New directors need some skin in the game.

8 - I vote No
The CEO already has a large number of shares under the scheme. At present I am not aware of any major contribution he has made to the company. Full year results were generally regarded as disappointing, and did not appear to be very well explained to the market. There has been no visible response to the plummeting share price.


The question i am most interested in having answered at the meeting is ... "When does the board expect to increase earnings to more than 50% above that delivered from Tui, Kupe and PRC - that being the level required to justify the issuing of the NZOOD options?" Should I submit this as an independent question, or do you have it covered already?

[bermuda]

Hi Digger

6 - I vote No
Market cap this time last year was 256M * 1.04 = $266M, add 127M * 1.50 new shares = $190M, deduct 2 x 5c dividends = $45M, giving shareholders contribution of $411M. Market cap now = 383M * 1.08 = $413M.

Return to shareholders for the year is close to nil. Requested gain to directors is over 100%. That is way out of synch.

Previously authorised director payments are about $60,000 per head. I am comfortable with that.

The argument that there are additional demands on directors is not convincing, given that the number of directors has increased and PRC has been floated. Bringing payments into line with other leading listed companies is not backed up by any concrete figures - but provides a good case to follow the Vector lead.

7 - I vote Yes
Here we have a new director, so he should be brought onto the same footing as the other directors. New directors need some skin in the game.

8 - I vote No
The CEO already has a large number of shares under the scheme. At present I am not aware of any major contribution he has made to the company. Full year results were generally regarded as disappointing, and did not appear to be very well explained to the market. There has been no visible response to the plummeting share price.


The question i am most interested in having answered at the meeting is ... "When does the board expect to increase earnings to more than 50% above that delivered from Tui, Kupe and PRC - that being the level required to justify the issuing of the NZOOD options?" Should I submit this as an independent question, or do you have it covered already?

Hi Unicorn,
I support the overall thrust of having the Company answer to its shareholders. I mean, the shareholders own the company. The Management are paid servants. We as shareholders should decide what they get. For too long co's have paid lip service to their shareholders and have fed themselves. I have long believed that any reward shoud be linked to shareprice performance. If it goes up we all get rewarded, ...if it goes down, we all share the pain. Pretty simple really.

And with respect to Directors fees, give them something reasonable but not exhorbitant.

These comments apply to a whole host of companys, not specifically NZO which has done a pretty good job so far in looking after its shareholders.

[fabs]

HI,
if they can not buy on market because of pos. insider knowledge, then how can they sell? sounds like b/s to me, but i am all ears for any expl.
BTW I AM WITH DIGGER ON 5 6 7 8.
If this gets any legs, my support av.on

fabs@paradise.net.nz

[digger]

HI,
if they can not buy on market because of pos. insider knowledge, then how can they sell? sounds like b/s to me, but i am all ears for any expl.
BTW I AM WITH DIGGER ON 5 6 7 8.
If this gets any legs, my support av.on

fabs@paradise.net.nz

fabs,i have a number of comments i want to make and yours is most straight forward.
The selling also has some restrictions but if enought directors wanted to quit they would simply have nothing new taking place and thereby not be in an insider situation.If only one he could stop being a director and then sell.
Digger

[digger]

Digger, my understanding is that directors are legally entitled to buy shares, and are obliged to inform the market when they do so.
There may be some restriction on buying or selling around the timing and reporting of financial info.
But for DS to say that they are not legally entitled sounds like flannel to me.
airedale,DS and Paul F told me there is a legal requirment not to buy or sell shares when the directors are involved in any situation whereby they could be seen to have inside info. With a company like NZO currently that is always the case.But as i said before while they can not buy them they have found ways to come by them with no down side risk.
Digger

[digger]

Digger,

You mention several times directors getting free or subsidised shares. The terms of issue of the ESOP shares as explained in the notes to the resolutions is that the party paid shares are issued at a 20% premium to the current market price, or at the market price at the time of the final payment if that is lower.

There does not seem to be a lot that is free or subsidised given that they have to pay the full final price. They will only gain significantly if the share price increases substantially over the five year term of the ESOP shares, which I would have thought is in line with all of our interests.

Wiremu,what you say is factually correct but if there is one thing that seems to be making me ant-director at the moment it is this one.The ESOP scheme as i understand it was created to give staff some easy involvment into the company,any company not just NZO.The staff are not decision makers,they merely carry out instructions as best as they can. I would have no complaints with the ESOP scheme if it had stayed with staff.Unfortunately Tony Randford last year invented a reason why he should be included and with the help of the AMG was included.Now naturally other directors want in.
Lets think for a minute what this is saying.It is telling us that they will make the decision on how the company is run and that as they know most about their decision making ability want to quickly cover themselves on the downside.Now we go one step further and introduce Mr Knight a acquisition expert.Mr Knight knows better than the rest of us how a acquisition in this environment comes with high possible reward and high risk.Breaking all records he wants to cover his butt on the downside but clears himself to grab all the gains if his decision is correct paying a mere 20% extra if gold is struck.
When the Titanic sunk the captain went down with the ship. About three years ago a similiar ship went down and all were saved due to the action of an non staff individual who was the last to leave.When help first arrivied the captain insisted he be one of the first three rescued.My point here is clear and says more than anything about the world mess we are in.We have evolved backwards and our so called leaders especially in industry have become help yourself people who want no negative exposure to the decision they make.
So there you have it why i oppose resolution 7. Mr Knight if by our misfortune gets past resolution 5 wants you voters to carry the downside of his expert decision.
Note i will also be contacting the stock exchange to see if it is valid that Mr Knight can sneak in as a director on the coattails of the other three directors covered in resolution 5.I believe seperate votes need to be held for each director.
Digger

[fish]

Hi Unicorn,
I support the overall thrust of having the Company answer to its shareholders. I mean, the shareholders own the company. The Management are paid servants. We as shareholders should decide what they get. For too long co's have paid lip service to their shareholders and have fed themselves. I have long believed that any reward shoud be linked to shareprice performance. If it goes up we all get rewarded, ...if it goes down, we all share the pain. Pretty simple really.

And with respect to Directors fees, give them something reasonable but not exhorbitant.

These comments apply to a whole host of companys, not specifically NZO which has done a pretty good job so far in looking after its shareholders.

Bermuda with the share price hitting a new low post-option on friday of $1.08 ( a figure now probably exceeded by cash in hand and shares in prc ) when the share price should be double if you just take the bare value of the assets they have-will you be voting to increase director rewards ?

I must admit over the week-end my own feelings have hardened . If the directors take no action to stabilise the sp I will have to vote against which is a great pity because in all other respects I think they have acted well and made all the right decisions

Unfortunately I wont be able to attend the agm so will have to vote by proxy . I note the closing date for proxy votes is 27th-a holiday-so proxy votes have to be received by computershare this coming friday . So if no increase in sp by wednesday all my votes ,family votes and friends votes will be voting against

[bermuda]

Bermuda with the share price hitting a new low post-option on friday of $1.08 ( a figure now probably exceeded by cash in hand and shares in prc ) when the share price should be double if you just take the bare value of the assets they have-will you be voting to increase director rewards ?

I must admit over the week-end my own feelings have hardened . If the directors take no action to stabilise the sp I will have to vote against which is a great pity because in all other respects I think they have acted well and made all the right decisions

Unfortunately I wont be able to attend the agm so will have to vote by proxy . I note the closing date for proxy votes is 27th-a holiday-so proxy votes have to be received by computershare this coming friday . So if no increase in sp by wednesday all my votes ,family votes and friends votes will be voting against

I will vote as follows
1-5 Yes
6 No
7 Yes
8 No

Time to buckle up. We are heading into unchartered waters. Not a time for any extravagence.

[Sehnsucht888]

From what I have been able to find, my understanding is this in relation to resolution 7.
Knight would get 150,000 part paid shares, (although 1c per share part payment isn't much. This may have changed but that is what I believe it was in 2005 according to the ESOP plan rules) .
If Knight wants to then acquire these shares he needs to pay $1.32 per share (based on a share price of $1.10 when/he is granted the entitlement - i.e. a 20% premium).

So there is incentive for him to grow the share price of the company, and therefore get to a point where he could get some profit from this allocation. A 20% Premium seems reasonable in normal times and 3 Months ago the premium would have set an exercise price of around $2. Compared to then he is getting a great dea, but anyone else can buy those shares now for less, (providing they do go up in the end, and excluding cost of carry etc, and also taking into account he can’t take them up for 2+ years if the price rockets before then he can’t do much and will have to work to keep it up, ..)

[digger]

I will vote as follows
1-5 Yes
6 No
7 Yes
8 No

Time to buckle up. We are heading into unchartered waters. Not a time for any extravagence.

Bermuda as i respect your views can you explain where my thinking is faulty on saying NO to resolution 5 and 7.

Resolution 5 is not even technically worded correctly.Mr Knight was appointed to the board in Janurary and has never been elected by anyone so how with all the legal minds on board could they claim he is up for re-election?
I think it was two years ago that the ESOP scheme was stretched to include TR. TR i voted for as he has pulled the company through many hard times especially after Hochstetter when it came close to following so many other oilers in the 80's that are no longer with us.So with TR i saw it as a bit of respect for all he had done. Last year the ESOP expanded to include S.Rawson and others that were directors for some time and had at least shared the the hard times with us.Last years extension was not as acceptable as was TR so i did not vote for it.Now in three years it had deteriated to something that looks more like a cancer growth.Resolutions 7 and 8 represent two directors that have only been with us since the good money started flowing.They can claim none of the respect that the director inclusion to the ESPO scheme that went to TR.
On another point and related to the above is why is the SP so low? It is hard to get away from the gut feeling it is being brought down for a cheap entry by some into the ESPO scheme. My recent poll on a buy back showed clearly most favoured the company using a small amount of our income to support the SP. Most of the poll results against a BB came from me.Now i am have second thoughts as to just who's hands i am playing into and have decided that others had the stronger arguement and that some of our monies need to invested in this manner.The BB threshold needs to be set and my feeling is about $1-25 which is a bit lower than Unicorn's $1-40.
So at the AGM i will be moving a motions that we set a floor under the SP for the coming year at a fixed price which you shareholders should decide on in the next few days.Supporting the SP at this stage is a far better money investment that the high risk high reward Acquisition for shareholders that are not the type of shareholder that are protected from downside risk as in resolution 7and 8.

[Xerof]

I could be wrong, but I think new appointments are automatically put up for re-election at the next AGM - probably in the constitution somewhere

Speaking of constitution, is the proposed new constitution available for scrutiny before the AGM?

[Sehnsucht888]

On another point and related to the above is why is the SP so low? It is hard to get away from the gut feeling it is being brought down for a cheap entry by some into the ESPO scheme.

Digger, I think you are reading too much into this.
Someone would have to be selling a large number of shares to be pushing the price low deliberately to have an effect, compared to the shares available through the ESOP, this would not make sense.

The price is low because oil has come back, and almost everything else on the market has come back. Some people have simply had to sell NZO, and had to take what they can get depressing the price further.

[Xerof]

888,

Agree, there is no conspiracy here

As our friend MacDunk is sure to point out - all boats will sink on a falling tide

Oil has been trashed, partly compensated for by a trashed NZD, and as I have said many times, de-leveraging has been constant, unrelenting, and still has a way to go

[AMR]

NZO is still an outperformer on my (rather unscientific) medium sized oiler index

OEL 52c -> 20c
TAP $3-> ~60c
ROC $4 -> ~60c
PSA $3 -> 30c
BPT $1.70 -> 85c

It's the tide boys, not the captain.

[Sehnsucht888]

NZO is still an outperformer on my (rather unscientific) medium sized oiler index

OEL 52c -> 20c
TAP $3-> ~60c
ROC $4 -> ~60c
PSA $3 -> 30c
BPT $1.70 -> 85c

It's the tide boys, not the captain.


AMR - I don't recall TAP getting to $3... What are you timeframs for comparison?

[Sehnsucht888]

big volume today...

[digger]

Digger, I think you are reading too much into this.
Someone would have to be selling a large number of shares to be pushing the price low deliberately to have an effect, compared to the shares available through the ESOP, this would not make sense.

The price is low because oil has come back, and almost everything else on the market has come back. Some people have simply had to sell NZO, and had to take what they can get depressing the price further.

Agree world events have pushed the SP down but regardless of that with the NZO cash pile it was never necessary to go that low.At $1-40 i spoke against a BB but at these very low levels that is no longer the case.My poll certainly showed that the majority was in favor of using some of their money to support the price somewhere i estimate in the 1-25 to 1-30 level. My conspiracy here is not that the directors drove it down but for some reason did nothing to support it when the price got miles too low. WHY??? Look no further than resolution 7 and 8 for the answer.

[digger]

Thanks for the many emails i am getting regarding resolutions 5,6,7,and 8 which i will be opposing.Anyone else interested and not attending the AGM in Wellington on the 29th but want their vote counted I will look after their proxy. Send to
Charles Boreham
364 Quine road
RD3
Morrinsville/

My email is cboreham@farmside.co.nz
Cheers Digger

[Wiremu]

Digger,

If you think anything the directors might have done would have saved the share price from the forces that have been in play recently then you must still believe in the tooth fairy. It would have been been a pointless, frivolous, and negligent exercise. Even the most powerful governments in the world pouring stupendous sums of money into the market haven't been able to do it - so why would NZOG's directors?

In fact NZOG's share price has held up much better than most oilers, so why don't we give them some recognition for that?

[Unicorn]

Digger,

If you think anything the directors might have done would have saved the share price from the forces that have been in play recently then you must still believe in the tooth fairy. It would have been been a pointless, frivolous, and negligent exercise. Even the most powerful governments in the world pouring stupendous sums of money into the market haven't been able to do it - so why would NZOG's directors?

In fact NZOG's share price has held up much better than most oilers, so why don't we give them some recognition for that?


You want the directors to be given recognition - what exactly have they done to warrant recognition? NZO is more of a cashbox than most oilers. That alone holds the share price better than the average.

Please explain why improving earnings per share is pointless, frivolous, and negligent.

[bermuda]

Hi Digger,
Res 5, Andrew has the sort of experience we need on the Board. Capable guy.
Res 6 These guys get enough. It is like a merry-go-round quoting that they need to keep up with other companies. This is the sort of rort that needs to be stopped. If a Director wants to step down because he/she isnt paid enough then let's negotiate. I am available at the existing levels. lol.
Res 7 I dont mind Directors getting a limited number of partly paid shares. Keeps them interested and in the game. Of course I would love to see them make full purchases in their own right.
Res 8. DS has enough already. About time he started purchasing on his own account. Plenty of other MD's do.

And let's just concentrate on Taranaki.Cheers

[Dr_Who]

IS NZO a long term holder of PRC or are they looking to flick it off in the near future? It would have been nice to flick off the 30% at over $2 early this year.

[bermuda]

IS NZO a long term holder of PRC or are they looking to flick it off in the near future? It would have been nice to flick off the 30% at over $2 early this year.

Doctor,
They will flick it off next year at nearer the $3 mark.Wait until it is producing full tit and the other seam starts being considered.

[Bixbite]

.

YOU BIG SHAREHOLDERS CAN STAND ASIDE CONTINUING YOUR FIGHTING.


I, a small shareholder is just wish the company to conduct a compulsory share buyback 1 in 20 @$1.75.

It will only cost the company about $33.6M, approx 5% of total shares.

Why I suggest the buyback price @$1.75? Because the company got $1.50 from option NZOOD, minus 5c dividend, and then plus 20% gains from US$ + interest.

.

[JBmurc]

I personal believe NZO should be taking over or looking at friendly merger options in the ASX jnr's
there's so many undervalued oilers in the Oil&Gas market atm it's just about stupid not to at least be looking closely Thats if NZO wants to grow into a ASX mid-cap if not do nothing stay NZ'ed focused build the cash balance and wait to be taken-over

[fabs]

81.5 MIL. @ $ 1.43 = $116.5 MIL. PLUS $ 300 MIL. IN HAND = $ 416 MIL PRESENT VALUE OF CO.

360 MIL. + SHARES @ $ 1.08 = $ 388 MIL.

THE VULTURES ARE CIRCLING AND I DO NOT LIKE IT ONE BIT, ANY ONE HAVING SIMILAR SENTIMENTS.
Anybody can be conned, it is just that a sucker will bet money thinking he can't be.
btw. $ 1.25 - $ 1.30 could buy maybe a comanding interest in nzo.

[fish]

81.5 MIL. @ $ 1.43 = $116.5 MIL. PLUS $ 300 MIL. IN HAND = $ 416 MIL PRESENT VALUE OF CO.

360 MIL. + SHARES @ $ 1.08 = $ 388 MIL.

THE VULTURES ARE CIRCLING AND I DO NOT LIKE IT ONE BIT, ANY ONE HAVING SIMILAR SENTIMENTS.
Anybody can be conned, it is just that a sucker will bet money thinking he can't be.
btw. $ 1.25 - $ 1.30 could buy maybe a comanding interest in nzo.

Much higher volumes than of recent traded today . Its the ideal time for a buyback-what is holding back this company when it has so much cash in the bank ?

[Sehnsucht888]

fish, Is i that simple that they can just do it? I think the ESOP is entitled to do on market purchases, but not suer about the company in general - or has it previously got the ok for that? I recall seeing other companies getting it approced by share holders, or at least reffering to it happening before doing it, and then reporting daily.
I don't think it would be legit to do a buyback simply to push the price up 20c.. That would be deemed market manipulation.. wouldn't it?

[JBmurc]

Can't really see the point of NZO buying back more of their shares not really a decisive growth plan
In the current times mass Fear NZO management should be very greedy and looking at ways to wisely spend some of their kitty to grow NZO's reserves low risk Why spend massive amounts exploring when is cheaper to buy assets NZO has a massive advantage many jnr Oilers would love to be in.

Just like many things like Houses buildings etc it's far cheaper to go out buy a brand new home than build the same home in the current marketplace

[Corporate]

I think some of you guys are being a little unfair on NZO management.

They do not control the market, and are not responsible for the share price drop. It is absolutely unreasonable to expect that they try to fight the sinking market. Management are there to create long-term shareholder value and not make SHORT-TERM decision just to hold the share price up. This is the type of thinking that has led the world down the path we are on.

For a lot of companies a share buy back is not a silly idea when share prices are lower than fundamental value. However, NZO is a growth orientated company and in a market with so many opportunities a share buy back would be conceding that there are none.

Everyone knows NZO have a massive amount of cash. And this is a once in a life time opportunity for this company. In the long term a well thought out acquisition of a beaten down oiler will create more value than buying a few shares back to raise the share price 10%.

Caution is what is needed. We are in uncharted territory.

[Corporate]

Can't really see the point of NZO buying back more of their shares not really a decisive growth plan
In the current times mass Fear NZO management should be very greedy and looking at ways to wisely spend some of their kitty to grow NZO's reserves low risk Why spend massive amounts exploring when is cheaper to buy assets NZO has a massive advantage many jnr Oilers would love to be in.

Just like many things like Houses buildings etc it's far cheaper to go out buy a brand new home than build the same home in the current marketplace


Basically what i also said JBmurc. It is time to buy proven reserves.

[fish]

fish, Is i that simple that they can just do it? I think the ESOP is entitled to do on market purchases, but not suer about the company in general - or has it previously got the ok for that? I recall seeing other companies getting it approced by share holders, or at least reffering to it happening before doing it, and then reporting daily.
I don't think it would be legit to do a buyback simply to push the price up 20c.. That would be deemed market manipulation.. wouldn't it?

I doubt it would be a problem to do it-companies such as vector just seem to make annoucements-

Cashed up Vector to buy back shares
5:00AM Saturday Aug 02, 2008

Vector, New Zealand's biggest electricity and gas distributor, plans to buy back as many as 25 million of the company's shares to increase investor returns.

Vector's shares are undervalued and represent an attractive "risk-return proposition," chairman Mike Stiassny said in a statement to the NZ stock exchange yesterday.

Terms of the buyback, equivalent to 2.5 per cent of the company's shares, will be provided after full-year results on August 27, he said.

Auckland-based Vector has funds to spare after the $785 million sale of its Wellington power network to Cheung Kong Infrastructure Holdings last month. The sale reduced the company's debt to 50 per cent of total assets and prompted Moody's Investors Service to raise Vector's rating outlook to "stable" from "developing".

Vector gained 7 cents to $2.25 yesterday. The stock has advanced 13 per cent since shareholders approved the Wellington asset sale on May 30.

At yesterday's price, the proposed buyback will cost the company about $56 million.

[Sehnsucht888]

They can do it, but even this Vecor case implies 5 odd weeks from announcement of intention to actually doing it - I guess that gets around the manipulation part, and makes it a support maker.. And it has done that, only around 10% off its peak...

[digger]

Digger,

If you think anything the directors might have done would have saved the share price from the forces that have been in play recently then you must still believe in the tooth fairy. It would have been been a pointless, frivolous, and negligent exercise. Even the most powerful governments in the world pouring stupendous sums of money into the market haven't been able to do it - so why would NZOG's directors?

In fact NZOG's share price has held up much better than most oilers, so why don't we give them some recognition for that?

What you say is correct but only half said.The directors are not in any way that i know of responsible for the current world events nor can they take any credit for the rapid rise in crude oil that brought us in so much money.I am not asking the directors to solve the world finanical problems--just to recognise that we would be a better team if we were all in the same boat.This is not the time for newby of NZO to be lining their own pockets by asking the rest of us to carry the down side risk of the decisions they make.
The share price has held up much better than other oilers because much of it we just put there by the last exercising of options.The other oilers you refer to only had oil income .It is now at these very low prices not unreasonable for NZO to put some of that back[somewhere between 1-25 to1-30] And i do give the directors a lot of respect but not the two newbys that have their hand stuck out under resolution 7 and 8. Respect has to be earned over time and they are going about it the wrong way.

[Unicorn]

I think some of you guys are being a little unfair on NZO management.

They do not control the market, and are not responsible for the share price drop. It is absolutely unreasonable to expect that they try to fight the sinking market. Management are there to create long-term shareholder value and not make SHORT-TERM decision just to hold the share price up. This is the type of thinking that has led the world down the path we are on.

For a lot of companies a share buy back is not a silly idea when share prices are lower than fundamental value. However, NZO is a growth orientated company and in a market with so many opportunities a share buy back would be conceding that there are none.

Everyone knows NZO have a massive amount of cash. And this is a once in a life time opportunity for this company. In the long term a well thought out acquisition of a beaten down oiler will create more value than buying a few shares back to raise the share price 10%.

Caution is what is needed. We are in uncharted territory.

Of course they should try to counteract the sinking market. They are there to enhance shareholder value. Doing nothing while the market marks down the stock by much more than the indexes is not good for the long term image of the company. This is a market - they need to promote their stock as solid and suitable for long term holders. By doing nothing at a time of wild swings they promote the stock as suitable for traders. This will encourage shareholders in future to bail out at the first signs of any trouble, and perpetuate that cycle.

A large part of the share price drop is related to the market recently being flooded with shares from the NZOOD options. That has resulted in a number of weak holders, as well as massive dilution of profits from the established projects. This is a board action that has thus far undermined the share price.

The resolution to increase directors fees by over 100%, in a year when shareholders have received no return must also have a significant negative impact on the share price. It is not being unfair on management to bring this up - they initiated this stupid idea, and thus far haven't shown the nous that Vector did in withdrawing the proposal.

There may be a lot of cash in the bank, but thus far the company has failed to give any concrete indication of what will be done with it. They are thereby creating uncertainty, which is a well known path to investor disquiet. It is increasingly looking like they have no plan - all that dilution for nothing. A simple reassuring announcement would help to alleviate shareholder concerns and give the impression that things were under control - but that has not happened.

In the absence of any announcement the market will usually assume the worst - perhaps the hedging costs from last year have continued, or increased; perhaps some of that cash is not safe as shareholders might think. It is not a case of being unfair on the directors - the simple facts are that their actions and lack of actions have contributed to the current low share price.

[Nitaa]

Engineers warn of imminent oil shock
4:00AM Tuesday Oct 21, 2008
By Mathew Dearnaley


Petrol prices come down 5c
Engineers are warning politicians that the lull in oil prices will be short-lived, and New Zealand is headed for sustained job losses unless it boosts energy efficiency efforts.

Senior North Shore City transport strategist Archer Davis, speaking on behalf of Engineers for Social Responsibility, said a conservative estimate of a 4 per cent annual decline in oil supply raises the prospect of a 12 per cent contraction of New Zealand's economy over 15 years.

"We are looking at losses of jobs, people losing their income, we are looking at severe issues here," he told Auckland Regional Council members in a call to action after a joint conference of the engineers' group and the Sustainable Energy Forum on how to prepare for oil shortages.

"It will have a major impact and it will be ongoing - it won't be short term."

Mr Davis, a civil engineer with 30 years of managing local government services, said his calculations were based on an International Energy Agency indication three years ago of a 50 per cent chance of reaching global peak oil production in 2012.

That probability assessment of the leading international oil management organisation had since been overtaken by estimates of an even more imminent peak, after which supplies would become scarcer, costlier and of lower quality.

New Zealand could be left on even shorter rations as bilateral deals between producers and large consuming nations such as the United States and China sew up dwindling supplies.

Although the international body believed energy use could be reduced by 7 per cent by voluntary efforts, his conservative assessment was that New Zealand would need some type of rationing to achieve a 10 per cent cut by 2018.

Far more forceful measures would be needed to achieve the 20 per cent needed by 2022, requiring a lead time of about 10 years.

That was how long it had taken in the past to develop transport initiatives such as North Shore's network of cycling paths and the Northern Busway.

Mr Davis said New Zealand's only hope was to "decouple" energy consumption from gross domestic product by using oil and other resources far more efficiently.

Urgent measures needed in transport included ending government subsidies for "personal car infrastructure"; stopping free parking; converting public transport vehicles, including buses, to electricity; converting motorway lanes to public transport; supporting car "clubs" of shared vehicle use rather than individual ownership; and focusing on the development of small mixed-use town centres, but not remote "dormitory" communities, to reduce travel needs.

That meant "defending the MUL [Auckland's metropolitan urban limit] to the last councillor - I would hope".

Mr Davis said electric cars for personal transport were "a pretty long shot" at a time when households would be struggling to cope financially, with little to spare for costly purchases.

"It could be done but electric cars will cost $25,000 or more," he said.

"The break-even [for electric cars] against the internal combustion is only when petrol gets to $4 a litre, so unless that happens, it doesn't make economic sense."

But he said electricity was a far safer proposition for mass transport.

[duncan macgregor]

Electric cars are the future, just as nuclear generation wil be the source of power for most countries. Electric cars are cheaper to run, but at the moment rely on heavy inefficiant batteries. Shares to get into for the ride back up, are oil first, which will double and triple in price, followed by another collapse when the new technology takes over.
The new technology battery metals will be well worth investing in which will sky rocket in price. Then we have the uranium which is out of favour making a huge come back.
Electric cars are safer cheaper to run have very few moving parts in comparison and should be cheaper to buy. I see the future as instead of filling up you swap batteries which will be on hire. Getting back to NZO the management will have their pay rise they have enough votes tied up to push that one.
People never seem to understand that investing is a private thing, with companies competing for your investment dollar. To fall in love and worry about the direction of a company is a very stupid thing to get your self involved in. The most successfull investors are the ones that stand back with an open mind, [similar to NZO management] and play the game for everything its worth. Macdunk

[Nitaa]

MD. Can you slap some time frames with that?

[digger]

Big story on bloomberg.com about Oracle to buy back as much as 8 billion of its own shares after they fell 20%.

Some of you posters would have us believe that a buy back is always a tooth fairy land thing and that really each company should use that money to get another expensive director and go the acquisition way.When the drop gets big enough a company should support itself as Unicorn has so well put it.This support is not a charity but a long term investment decision that stabalises the price for future investers that are always considering where best to put there money.Could some of you please tell Oracle they do not know what they are doing.
Unicorn and i only disagree on the BB trigger level.He wants it as high as 1-40 and i feel it must be a good deal for the company first and therefor only as high as $1-30.
Digger

[duncan macgregor]

MD. Can you slap some time frames with that?
1,NZO management will get this pay rise.
2,Oil will at least double in price 2009.
3,electric cars will be mass produced in three years.
4, The chinese are at this moment running hundreds of thousands of electric scooters
5, The metals for the new battery technology will explode in price.
6,Nuclear is the only long term source of additional power in the foreseeable future for most countries.
America and China will try and corner the oil market as they are doing right now, oil will go sky high, thats when to get out of it. This time set yourself a stop loss NITA you must be a bit more clued up from the last time.
Macdunk

[Sehnsucht888]

Digger, I would be happy for a buy back as well, and yes, it would give the price some much needed support.
My comments simply relate to the impression I have based on what I have seen, and that its not simply a matter of buying shares, then reporting it.
Maybe it isn't complex, AUW have done so this year, and started 2 weeks after announcing it.
Their reasons seem like they should be familiar to...
Although, it still didn't stop the price from dropping from 1.90 to 1.20 over that time to finish buying back when the price was 1.40, (now 1.00).
So short term it hasn't done a lot for them...

[Wiremu]

Sehnsucht888

AUW is a very good example of the futility of most share buy-back schemes. They chased the market all the way down from A$1.985 to A$1.13, spending A$25 mil at an average of A$1.47.

And when they stopped buying the price kept going down to where it is currently at $0.975.

The end result is that they have lost A$8.5 million or 34% of the A$25 million they have spent on that exercise, and probably haven't helped support the share price for the average investor.

King Canute thought he could do it, and so do Unicorn and Digger.

Other oilers I follow have performed in the period from the beginning of May to now:

AWE -46%
HZN -37%
FAR -63%
CUE -48%
NZO -21%

[fabs]

Wirimu,
they only lose the 8.5mil. if they have to sell, but on the plus side they bought a bit more protection against raiders.
I would only rec. b/b for nzo if this crisis cont. and or gets worse,
for under a Dollar.
The lower the nzo s/p the more vulnerable they become.

[digger]

Hey Wiremu and 888 ,you are both fudging the figures to get the results you want.For a start if NZO starts soon they will be at a reasonable guess at the bottom of this cycle.AUW has indeed taken on the world at the crest and lost.If you go back a few short weeks i was cunningly against a BB. Now for NZO to entre has a good chance of not only seemingly to be doing something but more importantly a good chance to shortly show a profit.
If the directors had a small fraction of the interest in shareholders welfare as their own they would have no concerns even if a small loss occured.However at this stage and if we hold the BB to no more than$1-30 it will be a far better deal than what resolution 7 and 8 will eventually cost the company.Directors greed is showing itself to be a bottomless pit but the $1-30 will have a limited life span as TUI cash is fast closing in on that value.
So speaking for my 1% of the company[all of which i paid for and no one else was ever asked to carry the potential downside] i would like to see a BB acted on now to $1-30. This time is different from AUW as we are at the probable bottom and not the crest.
Digger

[Bixbite]

.

NZO shareholders,

My suggestion is a compulsory share buyback “1 in 20” or “1 in 15” price @$1.75. It is “equal and fair” to every NZO shareholder. And the key is the company will not lose on this conduct. Because the company got $1.50 from each option NZOOD, minus 5c dividend, plus the gain 20% on US$ and interest.

Bb

.

[777]

I think we may now be off the bottom.

14% gain for the day. And thats with a drop in PRC share price.

[Unicorn]

Big story on bloomberg.com about Oracle to buy back as much as 8 billion of its own shares after they fell 20%.

Some of you posters would have us believe that a buy back is always a tooth fairy land thing and that really each company should use that money to get another expensive director and go the acquisition way.When the drop gets big enough a company should support itself as Unicorn has so well put it.This support is not a charity but a long term investment decision that stabalises the price for future investers that are always considering where best to put there money.Could some of you please tell Oracle they do not know what they are doing.
Unicorn and i only disagree on the BB trigger level.He wants it as high as 1-40 and i feel it must be a good deal for the company first and therefor only as high as $1-30.
Digger

I think you have misquoted me Digger. I would want any buyback to have stopped before the share price reached 140c - preferably somewhat before that.

The level to be buying back is down at the sub 125c level, and even more so at the sub 115c level where a few million have traded of late. The time to be buying is when the market is empty of buyers and the price is in free fall. It would not have cost very much to support the share price at 115c or 120c, and would have greatly helped shareholder confidence.

I would only support an on market buyback, to soak up any cheap shares - any compulsory buyback would not help, as there is no need to buy shares that are not for sale.

[Unicorn]

.

NZO shareholders,

My suggestion is a compulsory share buyback “1 in 20” or “1 in 15” price @$1.75. It is “equal and fair” to every NZO shareholder. And the key is the company will not lose on this conduct. Because the company got $1.50 from each option NZOOD, minus 5c dividend, plus the gain 20% on US$ and interest.

Bb

.

I don't see why the company should buy shares that I don't want to sell. I also see no reason why the company would pay more than current market price for shares.

The objective of any buyback must be to enhance the value for continuing shareholders, by buying assets cheaply and increasing earnings per share. Your proposal does neither of those.

I don't see the relevance of the 20% difference in the exchange rate.

[Unicorn]

Do those other companies hold over 60% of their market cap in cash?

Have those other companies released an additional 50% of their shares onto the market in that timeframe?

AUW were paying more than 12x earnings for their buyback, which would equate to NZO buying back at above 240c. Don't you understand the difference?

[duncan macgregor]

I would think a buy back in the open market is a great tdea. Sell at $1-50 buy back at anything under that from the brain dead. It would be a technical analysis versus old fundies who when times are right would pay another $!-50 for some more of the same medicine. Who needs oil when you can exploit the financial illiterates with wild promises and free options.
Macdunk

[Bixbite]

.

Wiremu, it seems we both have got big red crosses on our papers.

.

[Sehnsucht888]

Digger, I don't think I have fudged any figures. Maybe I should have said "from about", but those numbers are pretty close from the chart I checked.
My point was that the buy back gave some? support for a period, but then the support ended and the price didn't increase.

Unicorn - PPP has around 100% market cap in cash - maybe more than 100%, and it hasn't stopped it from dropping to that. (Although it has got to a point where it seems no one would sell at silly values).
Unfortunately, I have to almost agree with McDunk. Fundamentals are not meaning a lot at the moment.
Further Unicorn- Wiremu's example shows that NZO (since may) has lost substantially less than the other companies in the example and so is showing what the 60% cash & assets has done for support I assume.

NZO have cash but investors/potential investors are concerned as to what they will do with it, according to the commonly voiced theme and that deters some.

I have been with NZO since 30c and steadily increased my position since, so don't get me wrong, I also believe in the potential. (Opening up for McDunk to comment about falling in love with a company..) I have sold when required, but bought when it seemed appropriate. And if I had been smarter/less stubborn I would have much more than I have at the moment.

I am not saying don't do a buy back, I simply comment that in cases I have seen, (yes different circumstances), it hasn't done much in the long term.
Hopefully it will be a moot point shortly, and the price will be back where it should be..


Assuming foreign markets and the oil price stabalise as they are appearing to do - there may be no time for NZO to action a buy back anyway.

[upside_umop]

BixBite, its not to do with 'red crosses,' its to do with increasing shareholder value.

If you want more cash handed out, reinvest in a dividend paying company.

Basically what you're saying is you want a special dividend, and the shareprice would react the same way it does when it goes ex-divendend - ie downwards by the amount paid out.

If it was $1.75 per share, expect a drop of $1.75/20 ~ 9 cents... what good does that do, it just gives confusing signals to shareholders.

Suppose however, a buy back is announced, it indicates that the directors believe the company is undervalued and the best place for some money is into itself. It sends 'positive' messages out to the investing public. Emperical evidence also shows investor returns outperform longterm when buybacks happen....Warren Buffet does buybacks..

Along with Unicorns reasons of keeping share stability, it makes good sense and in the future the stock wont be discounted by investors so much in the future.

Sure there is good bargins out there, TAP etc, but at the moment, NZO is offering cashbacking + pike to almost the shareprice. Then we get tui and kupe thrown in for free...nice. At least management know what is going on and this makes it a lot lower risk..

Sorry for the very simple 5 year old writing style...study is getting to me. Maybe i should go underground.

[the machine]

AWE still interested in offshore Taranaki block
(Tuesday, 21 October 2008)

OPERATOR Australian Worldwide Exploration has applied for a second five-year term for its offshore Taranaki, New Zealand licence PEP 38483 where, in August 2007, it drilled the unsuccessful Hector-1 wildcat well.
Full Story...


from energy review

[fabs]

Look i do not care if the s/p goes up,down or sidewise as a result of a b/b it is just absolute essential, that if the price goes below a Dollar it nessitates a b/b regime.
I do not now if the co. can hold the bought back shares, and slowly release them to the market at a later date say for $ 2.00 plus, as in Tresory stocks.Lets take sentiments out of this and there is certainly no room for whisful thinking, as much as i too whish things where different.
Also beware of fluctuations in the s/p at the moment as i am not so sure that the present turmoil has ended.In addition my records show the s/p rising before the AGM only to flop back down again in the weeks after.

[upside_umop]

http://www.stuff.co.nz/4735868a13.html

interesting...

[trackers]

http://www.stuff.co.nz/4735868a13.html

interesting...

Looks like NZO's been drilling on the wrong side of N Island ....sheesh!!

[macduffy]

http://www.stuff.co.nz/4735868a13.html

interesting...

Someone who knows more about the oil business than I do may care to comment but I wouldn't have thought that an oil shale discovery would generate much excitement, or be anywhere near economic, at today's PoO.

[trackers]

Someone who knows more about the oil business than I do may care to comment but I wouldn't have thought that an oil shale discovery would generate much excitement, or be anywhere near economic, at today's PoO.

Ya, re-reading that it sounds like absolute crap....

"The rock lacked the permeability for oil to flow, and had only become viable because of extraction technology breakthroughs."

So you've got artifical lift for starters. They haven't even drilled yet and rigs are in very high demand, could be a couple years before they put a drill bit in the ground.

Then you have net recoverability of course, which could be a very small percentage of whats actually there.

[RossT]

http://www.stuff.co.nz/4736069a13.html

Initial reports of oil discovery "misleading" according to above article.

[777]

From stuff.co.nz

A bit of reality perhaps.

Massive oil discovery reports 'misleading'
By AARON LIM - BusinessDay.co.nz | Wednesday, 22 October 2008

Big oil on East Coast?

The Petroleum Exploration & Production Association of New Zealand (PEPANZ) says reports suggesting 12.6 billion barrels of oil could be discovered in the East Coast Basin were misleading.
“The company’s [Trans-Orient Petroleum Ltd] assessment of the prospect for oil is an estimate of potential, not a discovery of oil,” PEPANZ executive officer Pfahlert said.
“It is completely hypothetical.”
Pfahlert was responding to news stories which reported Canadian oil explorer Trans-Orient Petroleum Ltd as having found at least 12.6 billion barrels of oil on the East Coast Basin.
The surveying permits held by the Canadian company identified conditions which could indicate the presence of oil, but it was not a sure thing, Pfahlert added.
“There is no guarantee of the volume of oil underground. The only way of confirming there is oil is to drill. And no wells have been drilled there since 2001,” Pfahlert emphasized.

[Zaphod]

When I read the original article this morning, it stated that they'd found 12.5M Barrels and that was from exploring only 10% of the permit, inferring that further exploration would yield similar results.

Absolutely terrible reporting.

[Oiler]

Ya, re-reading that it sounds like absolute crap....

"The rock lacked the permeability for oil to flow, and had only become viable because of extraction technology breakthroughs."

So you've got artifical lift for starters. They haven't even drilled yet and rigs are in very high demand, could be a couple years before they put a drill bit in the ground.

Then you have net recoverability of course, which could be a very small percentage of whats actually there.

Trackers

You're onto it ;)..........oil shale extraction is a very expensive process.

Yes, it is being developed in the US, BUT with the help of subsidies/tax relief etc etc, even when the POO was high.

Maybe in years to come but not now.:eek:

It was interesting reading but ...daaahhhhhhhhhh ..not for me.

Oiler

[the machine]

digger - am not in favour of a BB as it signals nzo have nothing better to spend the money on.

further dividend policy development would be welcome.

hows this for a question one could ask [maybe with earlier email to nzo so they can prepare]

what is the deemed cash position in nz$ if all foreign currency was to be exchanged on day before agm and also shown per share.
this is putting the kupe project loan to one side and the receivable etc for the sake of the exercise.

there has been much speculation how much it would be.

in event nzo can't show it for whatever reason at the agm, then how about detailing it in the quarterly report [using deemed position as atday before agm]

IMO shareholders would welcome this info

M

[digger]

Machine,i can not truely understand your question as by in large NZO more or less does that anyways.My thinking is that in making a value assesment it has to be a range giving probability of various outcome.This would also be true if you were to do the same with your personal cash value,as many things would impact on the accuracy of that figure.Personally i have not had a problem with the rough asset value as from NZo,knowing it is as good as what i could give from my own.This is especially so if intangible assests are to be included,and sales that may or may not achieve previously agreed values.

The contact energy will be very interesting today.Am wondering if NZO is planning to use ACC to ram through there director grab.If so some govt work after our AGM.