NZ Oil & Gas (NZO)

[Mr Tommy]

From that article today ... "Mr Salisbury reckons that the company is in a good cash flow position, with no need to ask the bank or shareholders for money, at least in the foreseeable future. "

What about the 138,837,891 NZOODs due to expire in under 9 months, thats going to be asking for over $200 million from the shareholders !

[Mr Tommy]

Nice to see some momentum is share price, hope stays till AGM - many of you going? I am -1st time its been in Wellington for ages and its at the citys best hotel!


Yep I am going, I hear the sausage rolls will be extra special this year. Sorry I couldnt resist that.

[neopole]

what an awesome report!
this does answer alot of things for me, and shows the path that NZO wishes to take...... elephant hunting.
the comments about the divies or share buybacks is interesting.
to me it seems that all the profits generated will be sunk back into exploration or purchace of, or into other companies. and with no one ( major instos) paying much interest in NZO the share price would seem to stay low with occational spikes due to speculation on good and bad news. the general long term investor would seem to be the crutch that holds this company up while the directors collect salaries and bonus's and the traders trade the share.
some how i cant see the options in the money at all now. investors get nothing for their risk of converting the options for $1.50, traders are in and out for profit, so they wont convert, and there are not many large insto stake holders, the question is........
who would convert their options at $1.50 and most importantly.......... WHY?

gee...... am i sounding like MacD?

[sideline]

what an awesome report!
this does answer alot of things for me, and shows the path that NZO wishes to take...... elephant hunting.
the comments about the divies or share buybacks is interesting.
to me it seems that all the profits generated will be sunk back into exploration or purchace of, or into other companies. and with no one ( major instos) paying much interest in NZO the share price would seem to stay low with occational spikes due to speculation on good and bad news. the general long term investor would seem to be the crutch that holds this company up while the directors collect salaries and bonus's and the traders trade the share.
some how i cant see the options in the money at all now. investors get nothing for their risk of converting the options for $1.50, traders are in and out for profit, so they wont convert, and there are not many large insto stake holders, the question is........
who would convert their options at $1.50 and most importantly.......... WHY?

gee...... am i sounding like MacD?

You sound like somebody looking for a cheaper entry price.

[trackers]

what an awesome report!
this does answer alot of things for me, and shows the path that NZO wishes to take...... elephant hunting.
the comments about the divies or share buybacks is interesting.
to me it seems that all the profits generated will be sunk back into exploration or purchace of, or into other companies. and with no one ( major instos) paying much interest in NZO the share price would seem to stay low with occational spikes due to speculation on good and bad news. the general long term investor would seem to be the crutch that holds this company up while the directors collect salaries and bonus's and the traders trade the share.
some how i cant see the options in the money at all now. investors get nothing for their risk of converting the options for $1.50, traders are in and out for profit, so they wont convert, and there are not many large insto stake holders, the question is........
who would convert their options at $1.50 and most importantly.......... WHY?

gee...... am i sounding like MacD?

While I understand what you're saying, they can't just dig a couple of holes and watch the revenues pour in for the rest of all time....


As Oil prices near the ALL-TIME high, I'm a happy holder of this oil PRODUCER :)

[neopole]

You sound like somebody looking for a cheaper entry price.

i might sound like that, but i wont be buying anymore... i have more than enough.
but as a long term investor, and this company making the transition for explorer to producer, i was hoping for a dividend or some other return for my investment. as this doesnt seem to be on the cards now in the foreseeable future i have to re assess my holdings.

[Nitaa]

yes it does look like they want to go for the big kahuna and so they should. Most oil and gas companies need to be continuely exploring for new reserves because they all have a finite period.

most companis such as nzo will often need to go back to the market to seek further funding until they get a decent find. Thats the nature of the beast.

go the nzo

[upside_umop]

yeah exactly, there is no point paying divi's with depleting resources.
sure, if hector came through at 100 m barrels then they would have a bit of headroom to do so, but not now...

find an elephant i say

[sideline]

I think there it was forshadowed that 50% of profit would eventually be paid
as divi - that makes of course only sense if there are imputation credits available.

[the machine]

with the west texas price now above usd$85 then the hedging will now come into play as nzo will be forced to sell oil cheaper than otherwise. - but still a handy price to sell oil for though.

tapis hit usd$90 today

nzo should include the outstanding hedge positions for the quarterly.

M

[777]

From stuff.co.nz

NZ Oil & Gas chief spreads good news about production
By BRUCE MCKAY - The Dominion Post | Wednesday, 17 October 2007



During the past couple of weeks David Salisbury, chief executive of NZ Oil & Gas, has been doing the rounds of the brokers and journalists doing what CEOs do not do often enough; meeting those people face to face and answering their questions.
Mr Salisbury joined NZ Oil & Gas earlier this year when the company was going through something of a quiet revolution.
As an exploration company, the prospects for revenue have often seemed somewhat distant, but now the company is enjoying its first real revenue in quite some time.
Also, NZ Oil & Gas has managed to get the Pike River IPO away after a few bumpy moments. Given the state of financial markets since August, it is an achievement to have raised $85 million from the public for a coal company.
But what's next?
Mr Salisbury's message is that the company is hunting for the next big thing, having boosted its exploration staff, and is ready to tackle some new offshore targets with all the cash flow coming in from, firstly, the Tui project and then from Kupe.
Though the company's share of these two projects is only 12.5 per cent and 15 per cent respectively, they are significant investments and profit generators.
The nature of the reserves means that Tui will flow strongly in the first couple of years and then rapidly reduce to a long tail, while Kupe, which is due to start production in the middle of 2009, will have a longer, more stable profile.
The company is planning to produce about two million barrels of oil equivalent on a continuing basis from both Tui and Kupe and from new discoveries. That's where the new staff come in.
One of the near-term opportunities for the company is drilling new wells in prospects that are near both the Tui and Kupe platforms.
The idea is that any new fields can be hooked into the existing production facilities, making the new fields relatively cheap to develop and prolonging the useful lives of the existing production assets.
There is also the possibility that the recoverable reserves estimates will increase from new drilling and testing in the existing fields.
The focus remains on offshore Taranaki assets rather than looking for new targets in areas such as the Southern Ocean.
NZ Oil & Gas knows the Taranaki structures very well and will continue to work in that area. It seems that the Taranaki basin is still highly prospective, even if a big replacement for Maui hasn't been found yet.
Mr Salisbury reckons that the company is in a good cash flow position, with no need to ask the bank or shareholders for money, at least in the foreseeable future.
The very nature of oil and gas exploration means that shareholders always risk being tapped on the shoulder for more money.
NZ Oil & Gas has a commitment to provide funding to Pike River. However, it would seem that if the company has to lend money to Pike River, it will do so only on commercially advantageous terms.
Mr Salisbury has been at pains to point out that the two companies are now separate entities in every sense, with the only contact between them at the board level.
It would also seem that NZ Oil & Gas will look to exit its holding in Pike River, but that is unlikely to happen for some time.
Pike River isn't due to start producing coal till March next year and any sale would probably happen only after Pike has established a production track record.
So will the company pay a dividend? It would seem unlikely.
Firstly, the company has $139 million of exploration and other tax losses that it can use, so it won't be generating any imputation credits in the foreseeable future.
It doesn't make sense for companies to pay dividends without imputation credits, so the most likely form of any payment to shareholders is likely to come from share buybacks.
Whether a share buyback programme is instigated remains to be seen as the only time a company should undertake a buyback is when the share price is trading at a deep discount to fair value.
In the oil and gas game it's a bit of a moot point to determine fair value, due to the volatility of the oil price.
NZ Oil & Gas has been in the NZX 50 Index for some time now, but is not that widely followed by analysts.
The company has more than 12,000 shareholders, but less than 20 per cent of the shares are held by institutional investors.
Given the "wall of money" hitting the market each week it seems surprising that the level of fund manager investment in the company is so low, given that it is in the headline index.
It could be that institutional investors have a hard time understanding the company.
There aren't many oil and gas analysts in New Zealand and the Australian analysts aren't about to divert their attention from much bigger companies in their own market to look at NZ Oil & Gas.
Another reason could be the need for the company to improve its corporate governance performance before institutional shareholders start taking more interest.
One of the issues here is the presence of Tony Radford as chairman of the company. He has been a key driver behind the company since it first listed in 1981.
However, at times the governance of the company has been somewhat opaque.
During the 1990s, Ron Brierley and GPG had a crack at Mr Radford and the cross shareholdings between related parties that were linked to NZ Oil & Gas.
While that has all gone away, it might be time for the company to look for a new chairman that has a good market profile and a sound corporate governance track record.
NZ Oil & Gas has certainly had a big year. The start of production from Kupe next year will be another major step forward and will provide ongoing cash flows and profits for the next few years.
Mr Salisbury's challenge is to find the next Tui and Kupe to ensure that the company can produce two million barrels a year. If he can do that, then one day the company may start paying tax and dividends will start to flow. That will be a major achievement.

[dsurf]

Does anyone have a feel for whether the exercise price for the options could be lowered?

Appreciate the value transfer issues, need for resolution / EGM etc, but was thinking that the same issues would apply if the exercise date was extended and they have done that in the past.

[duncan macgregor]

Does anyone have a feel for whether the exercise price for the options could be lowered?

Appreciate the value transfer issues, need for resolution / EGM etc, but was thinking that the same issues would apply if the exercise date was extended and they have done that in the past. Its more fun playing pass the parcel up to the time the music stops. Macdunk

[upside_umop]

you make it sound as though your sitting down in the circle maccy dee. or are you the one with the cassette tape stopping and starting the show?

[boysy]

macdunk i appreciate your input you are stright up im just wondering if there were any other stocks that you heap as much crap on as NZO and PRC, and why is this i mean surely you can diversify and bag other stocks as well ?. I mean it comes across as sour grapes, i assume you once held NZO and didnt do well out of it .

[sideline]

macdunk i appreciate your input you are stright up im just wondering if there were any other stocks that you heap as much crap on as NZO and PRC, and why is this i mean surely you can diversify and bag other stocks as well ?. I mean it comes across as sour grapes, i assume you once held NZO and didnt do well out of it .
Yes, dunky did once hold NZO - must have hurt him to sell when he did and he hasn't overcome his grief
yet. May need some counselling for that to let go.

[Toddy]

One way the management could boost the current SP (or atleast reflect some of the current value of NZO in the SP) would be to lock in future oil sales at the current oil price.

This would give the company certainty over future revenues and send a clear message to the market that they will be banking cash and be able to better forecast cashflows. The market will take on board the lower risk profile and re-rate NZO.

Yes, the long term trend is for the oil price to trend up. However, this is more likely to happen in the medium/long term and hence, taking advantage of spikes like we have today would be a positive move in my opinion.

[tim23]

Good call Boysy - Duncan must have had a really bad experience cause he has it really bad with NOG & PRC - its a bit tedious for me now.

Neopole - I guess people will exercise their options if they are in the money, otherwise why would you when they are not even close; however they are still 9 months out so its not an issue today - there is still about a 50c lag as there was when the options were about 30c (i.e cost of option + $1.50 minus share price)

[arjay]

Interesting that a dividend is seen as unlikely. With all that exploration and aquisition planned NZO must be keen for the ODs to be exercised. However, with no carrots for the shareholders in the forseeable future (any thrill/drills will likely be well past next June) I can't see how it's going to happen. Oil going up will increase profits for NZO but the shareholders won't see any of it until one of those dry holes turns up wet.

dSurf - doubt they'd be allowed to reduce the exercise price. To be fair to everyone they'd probably have to issue rights or OGs at a lower exercise price.

[boysy]

they hinted at a sharebuy back didnt they ? though it would have to be large to make up the curent deficit between current and excise price

[arjay]

That's true, although a share buy-back would take money out of the NZO coffers, whereas getting the ODs exercised will put it in. I think they will want the money in for upcoming exploration.

[Nitaa]

dr nita has much experience with patients or victums in such circumstances. i have recently named the symtom as macdunkitis. this is the most serious of illnesses but is very easlily diagnosible. symptoms include....totally in denial....only talks about his own winners and never ever talks about his losers...blames everyone else for a past screw up in a stocks.....shows extreme symptoms of a scorned lover of a stock who will seek revenge through spending half his life trying to figure ways on getting even.

Other bizarre traits of macdunkitis are....often wears a tartan dress with no panties....will always..always develop new trading systems but never ever sticks to his theories....last but not least will hang around agms eating as many sausage rolls as he can.

All is not lost... There is a very simple cure...suicide.

of course just poking you in the ribs macdunk. ya ol crusty tart nita

[upside_umop]

woah, that is harsh!
hes harmless haha

[bermuda]

I see the AA is asking the oil companies to hold off putting the price of petrol up until after Labour Weekend because it is going to be very busy.

What a laugh.

They should be asking the Govt to increase the price by $2 a litre. And Bush should do the same.

If we did that then people would start getting the message before its too late and the Govt could use the money to build some more dams.

I wonder how long it will take the market to appreciate the true worth of NZO.

[Dr_Who]

The govt should look at cutting the petrol tax at these levels. They are laughing all the way to the bank.

[Billy Boy]

I wonder how long it will take the market to appreciate the true worth of NZO.

Hi Bermuda
I am kicking myself coz I sold out 90% of my holding at $1.05.
Bought Pike
What do you think is the true worth of nzo .
I,m think about $1.20 - $1.30 right now
Value your opion
Cheers BB

[bermuda]

The govt should look at cutting the petrol tax at these levels. They are laughing all the way to the bank.

Dr Who,

I think you have missed the message.

We need to reduce our dependence on fossil fuels and increase our sustainable energy options. A leap in petrol tax would assist in not only funding alternatives, especially hydro, but also reduce our fossil fuel consumption.

Trouble is the Govts of the world refuse to bite this bullet.

[Wilkins_Micawber]

The govt should look at cutting the petrol tax at these levels. They are laughing all the way to the bank.

Careful - that's almost heresy, and would first require comrades Cullen and Clark to loosen the purse strings. There are only 2 money flows with this government - in from the workers, business, GST etc, and out to the burgeoning public and welfare sectore (that includes working for families).

Interesting under this "regime" that someone earning just over $60K MUST be very well off (i.e. in the top tax bracket), but NEEDs support from Welfare (oops) Working for Families to raise a 2 child family (Working for Families goes up to $81K with 2 kids). What's even more ludicrous is that your can choose to have up to 6 kids and still get working for families up to a salary of (wait for it) a paltry $142,120 !!!

IMHO, chances of a cut in taxes (of ANY sort) will be about zilch, zip, nullah, ninch .... until, of course, just before the next round of bribery aka election.

[jdg]

struggling to see how that relates to nzo, mate.

[arjay]

Spot on Bermuda,
I walked to work today (note halo over my head) down East St in Hamilton. The street was jammed with vehicles waiting for movement at the intersection. As I walked, I counted the SUVs containing one mum and one child in school uniform. There were heaps - at one point there were 4 in a row. Plenty of room to reduce dependence on fossil fuel. I say increase fuel taxes and bring back trams.

[Mike.Gayner]

WM - $81,000 combined household income for a 2 child family is not exactly swimming in cash.

[Wilkins_Micawber]

WM - $81,000 combined household income for a 2 child family is not exactly swimming in cash.

MG - am quite aware of that (I have 2 kids) - but why should the top tax bracket kick in at $60K, given that a 2 (to 3?) child family is probably the average in NZ.

PS. Sorry for going off subject

[skinny]

Dr Who,

I think you have missed the message.

We need to reduce our dependence on fossil fuels and increase our sustainable energy options. A leap in petrol tax would assist in not only funding alternatives, especially hydro, but also reduce our fossil fuel consumption.

Trouble is the Govts of the world refuse to bite this bullet.


That is clearly not true. Petrol taxes are *much* higher for example in Europe than here in NZ, while in the US petrol taxes are lower still. There is a cool site below that lists pump prices across the world as at dec '06. Cheapest was Turkmenistand and Venezuela at 2 and US3c per litre (i.e. very heavy govt subsidies), most expensive is Norway and Iceland at 1.85 per litre. The estimated pump price free of Govt. distortions is US53c, NZ prices at the time was 98c.

http://www.gtz.de/en/themen/umwelt-infrastruktur/transport/10285.htm

[digger]

[QUOTE=skinny;169459]That is clearly not true. Petrol taxes are *much* higher for example in Europe than here in NZ, while in the US petrol taxes are lower still. There is a cool site below that lists pump prices across the world as at dec '06. Cheapest was Turkmenistand and Venezuela at 2 and US3c per litre (i.e. very heavy govt subsidies), most expensive is Norway and Iceland at 1.85 per litre. The estimated pump price free of Govt. distortions is US53c, NZ prices at the time was 98c. End quote.


Skinny,our addidiction to oil is probably so great that small price increases will have little effect,especially when no alternative public transport is available. It seems we will go without most things than lose our independence for travel.Just increasing taxes without other means of getting around will only bring more money to the treasury and solve nothing .
However a large jump in prices will have the effect that we will see in the near coming future. The sh-it will hit the fan.My quess is we have 4.5 years left to squander this valuable resource before we hit the geology limit from which there will be no escape.

[FlyingJack]

Its hard to know the geology limit when new technologies enable drilling deeper and further and further offshore

[arjay]

Given exponentially growing demand for oil any new technologies would have to be fabulous to keep up. Such talk is reminiscent of the German belief that super-weapons would win the war for them while the Russians were marching on Berlin.

[digger]

Its hard to know the geology limit when new technologies enable drilling deeper and further and further offshore

OK i should have said the financial geological limit. There is little point in saying we have not reached the complete world exhaustion if the last drop is unaffordable by all except Bill Gates

[sideline]

from Bloomberg:


Oil Rises Above $89 to a Record as Dollar Drops Against Euro

By Mark Shenk

Oct. 18 (Bloomberg) -- Crude oil rose above $89 a barrel in New York for the first time after the U.S. dollar declined to a record low against the euro, enhancing the appeal of commodities as an investment.

Investors purchased oil on speculation the Federal Reserve will cut borrowing costs to bolster the U.S. economy. Oil reached records the past four days on concern Turkey will use military force against Kurdish rebels in northern Iraq, a step that the U.S. says may damage Iraqi security and disrupt oil supplies.

``The further decline of the dollar sent the oil price higher as the day went on,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``There's a round robin of bullish elements at play. The realization that prices will hit $100 a barrel is seeping into the market.''

Crude oil for November delivery rose $2.07, or 2.4 percent, to settle at $89.47 a barrel at 2:51 p.m. on the New York Mercantile Exchange. It was a record close. Futures reached $89.78, the highest price since trading began in 1983. Futures are up 55 percent from a year ago.

On Oct. 15, prices passed the previous all-time inflation- adjusted record reached in 1981 when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars.

Brent crude oil for December settlement rose $1.47, or 1.8 percent, to $84.60 a barrel on the London-based ICE Futures Europe exchange. It was a record close. Futures touched $84.80, the highest since trading began in 1988.

Turkish Measure

Turkish legislators passed a measure yesterday that allows Prime Minister Recep Tayyip Erdogan to authorize one or more military assaults within a year. Erdogan is threatening to direct an attack against members of the Kurdistan Workers' Party, or PKK, saying U.S.-led forces failed to control about 3,500 militants sheltered in Iraq's north.

``It doesn't look like anything is imminent but it does make the situation more unstable,'' said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant. ``As we have seen, giving politicians permission to attack normally leads to an attack.''

Iraq holds the world's third-biggest crude-oil reserves, after Saudi Arabia and Iran, according to BP Plc. Iraq's oil-rich northern region is controlled by a semi-autonomous Kurdish administration. Kirkuk, the center of the region, is about 100 miles (161 kilometers) from the Turkish border.

``There are plenty of bullish geopolitical headlines,'' Kilduff said. ``Yesterday we had Bush's World War III comments and the Turkish legislation.''

World War III

President George W. Bush said yesterday a nuclear-armed Iran risks World War III. He added that the U.S. and Russia remain in agreement that Iran shouldn't gain a nuclear weapon. The dispute over Iran's nuclear program has raised the prospect of a decline in shipments from the country, the fourth-biggest oil exporter.

``Most commodities are priced in the U.S. dollar, so the drop on the dollar has an immediate effect,'' Beutel said. ``The price in dollars needs to go higher to reflect the true value of the commodities.''

A lower dollar makes oil relatively cheaper in the countries using other currencies. In U.S. dollars, West Texas Intermediate, the New York-traded crude-oil benchmark, is up 46 percent so far this year. Oil is up 35 percent in euros, 40 percent in British pounds and 42 percent in yen.

Members of the Organization of Petroleum Exporting Countries have said a falling dollar justified higher prices because oil- producing countries sell oil in dollars and often buy goods in euros. Algerian Oil Minister Chakib Khelil said on Oct. 15 that the increase in crude oil prices is helping Algeria recoup losses from the falling value of the U.S. currency.

Higher Output

OPEC agreed last month to produce an extra 500,000 barrels a day starting Nov. 1 to meet rising demand. World oil consumption peaks in the fourth quarter when refiners make heating fuel for the Northern Hemisphere winter.

``What they did a month ago is too little, too late,'' former Saudi Arabian oil minister Sheikh Ahmad Zaki Yamani said at a London conference organized by the Centre for Global Energy Studies, which he chairs. More OPEC oil is needed ``to reduce tension in the market as we approach winter.''

The profit margin, or crack spread, for turning crude oil into fuels fell 11 percent to $4.6184 a barrel today, the lowest since Oct. 31, 2006, based on closing futures prices in New York. It rose to $30.479 on May 17, the highest since at least 1989.

Heating oil for November delivery rose 3.04 cents, or 1.3 percent, to $2.3493 a gallon in New York, a record close. Futures touched $2.3609, the highest intraday price since trading began in 1978.

Gasoline for November delivery increased 3.85 cents, or 1.8 percent, to $2.1851 a gallon, the highest close since July 19.

[the machine]

Crude Oil Rises to Record $90 After Dollar Drops Against Euro

By Gavin Evans

Oct. 19 (Bloomberg) -- Crude oil rose to a record $90 a barrel in New York after the U.S. dollar fell against the euro, enhancing the appeal of commodities as an investment.

Investors purchased oil on speculation the Federal Reserve will cut borrowing costs to bolster the U.S. economy when the bank next meets Oct. 31. Interest-rate futures show a 70 percent likelihood the Fed will lower its target rate for overnight loans a quarter-percentage point to 4.5 percent.

``There's still no end in sight in terms of what people are willing to pay,'' said Bob Frye, commodity broker at Access Futures & Options Trading in Woodlake, California. ``With the weakness in the dollar'' we may get to $96 if prices stay much above $90, he said.

Crude oil for November delivery reached $90.02 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $89.56 at 8:07 a.m. in Sydney

The contract rose $2.07, or 2.4 percent, to $89.47 yesterday, a record close. Futures reached $89.78, the highest price since trading began in 1983.

Oil futures set records the past four days on concern supplies from northern Iraq may be disrupted if Turkey takes military action against Kurdish rebel bases in the region.

``There's a round robin of bullish elements at play,'' John Kilduff, vice president of risk management at MF Global Ltd. in New York, said yesterday. ``The realization that prices will hit $100 a barrel is seeping into the market.''

Brent crude oil for December settlement rose $1.47, or 1.8 percent, to $84.60 on the London-based ICE Futures Europe exchange yesterday. It was a record close. Futures touched $84.80, the highest since trading began in 1988.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net

Last Updated: October 18, 2007 18:12 EDT

[Toddy]

If NOG locked sales in at the current oil price (forward contracts) then the SP would more than likely be rerated. If they gamble that the oil price will stay high then the NZO SP will continue to under perform others in the same industry.

Its simple. Lock in the cashflows please.

[macduffy]

Do we know whether they have a forward contracts policy?
As an aside, failure to deliver under forward contracts can have a disastrous result if production volumes don't meet targets and prices rise, as more than one Australian goldminer has found!

[digger]

If NOG locked sales in at the current oil price (forward contracts) then the SP would more than likely be rerated. If they gamble that the oil price will stay high then the NZO SP will continue to under perform others in the same industry.

Its simple. Lock in the cashflows please.


Let us review this locking in so called profits. Firstly it came up two years ago at the AGM.Then someone wanted to lock in all forward sale at US $40. I lost little time saying that was just dumb. Thankfully that idea was shelved.
Last year it resurfaced again this time at US$50.
Now you want it locked in at US$90.
Well i don't. In fact i should say this cracked idea of locking in a vanishing presious resource should be brought up at the AGM and and thrown out.
Remember the locking it in crowd--supported by small thinking banks-in fact do not have any oil to lock in,as they gave it all away at 40 dollars two years ago. Locking it in today at 90 will just chop the haed off future price rises.
The lock it in crowd always find someone who thinks oil will return to sub 20 so better grab your profits while you can. Well you can still find people that believe the world is flat,so i say lets assess this idea for less than two seconds and see it for what it is.---Dumb

[Crypto Crude]

digger,
g8t post....
Some banks want prices locked in because they dont benefit from higher prices, and they suffer if prices are much lower by taking on the risk of default....
Banks get paid no matter what...it is in their interest to demand such a proposition...
If you are a bank, or think like a bank... then...:rolleyes:....
get some bonds in a blue chip...
:cool:
.^sc

[Toddy]

Digger/Shrewd


Good risk management is the way to win every time. Good company management run their ships by risk management practices. Lloyd Morrision is a good example of a risk manager.

Yes, company's without the appropriate skill levels do seek advice from bankers. However, this should not be confused with bankers advising clients to take out derivatives for the banks own pockets.

I'll take US $90 PB any day of the week and I think NZO should too. Now is a good time to lock in a good proportion their production at a good rate.

[shane_m]

ok I read the report? where is the water cut rate?

[arjay]

Quarterly out - I see they've dumped the Felix prospect.

[shasta]

Let us review this locking in so called profits. Firstly it came up two years ago at the AGM.Then someone wanted to lock in all forward sale at US $40. I lost little time saying that was just dumb. Thankfully that idea was shelved.
Last year it resurfaced again this time at US$50.
Now you want it locked in at US$90.
Well i don't. In fact i should say this cracked idea of locking in a vanishing presious resource should be brought up at the AGM and and thrown out.
Remember the locking it in crowd--supported by small thinking banks-in fact do not have any oil to lock in,as they gave it all away at 40 dollars two years ago. Locking it in today at 90 will just chop the haed off future price rises.
The lock it in crowd always find someone who thinks oil will return to sub 20 so better grab your profits while you can. Well you can still find people that believe the world is flat,so i say lets assess this idea for less than two seconds and see it for what it is.---Dumb

Digger

I agree with both yourself, & Toddy.

We need a mix of "locking in" approx 50% around $US80-85/bbl & leaving approx 50% to the open market...

As Toddy states, the market would like the revenue assurance, & also for brokers/institutions to calculate DCF's, NPV's before covering NZO.

I did read somewhere (cant recall the source sorry) where an "oil expert" mentioned oil was overvalued by around $US10/bbl & would "correct" itself.

My personal belief is that we are heading for $US100/bbl & sooner than people think!

Nice quarterly ann too :D

[Mick100]

those people who are suggesting forward sales may be interestad to know the futures prices for crude as of today:
dec 07 $88.00
april 08 $84.00
dec 08 $80.00
dec 09 $76.80
dec 10 $76.00

IMO. if any forward sales were to be made they should be very short term - like for the next 6 months at the furtherest out

Probably not worth it at all with the market in backwardation as it is at the moment. Markets are expecting lower oil prices in the future - I doubt whether this will eventuate. More likely to be higher in the future.
.

[bermuda]

Herewith the answers to some questions I asked David Salisbury on behalf of Posters.
David gave an excellent 2 hour Broker presentation and I am sure that those going to the AGM will be impressed with both his mana and experience.

Here we go

1.You mentioned the possibility of a dividend some time back. This was of course before Hector and Taranui came up dry. What are your thoughts now particularly as the oil price has increased ?

Answer.

2008 Tui revenues will be used to repay debt, fund existing exploration commitments, meet administration costs and pay government royalties, and there is a need to keep $NZ 25 million spare just in case PRC make a call on it. Pike is independent from NZO but NZO will be there to help if required. Any such funding assistance would be at commercial arms length. Also as far as Dividends are concerned it would not be prudent to pass a dividend while NZO will not be paying company tax because of accumulated tax credits.

2. At $1.09 do you think NZO is a takeover target?

Answer

NZO is not in the game of commenting on it's shareprice but suffice to say that the current shareprice could be very attractive to any Predator.


3. How do you plan to to improve value for shareholders and achieve the $1.50 option target by 30 June 2008. Will the Option date be extended?

Answer

The company is very conscious of the options and is working on a plan to increase it's awareness and shareholder value. Factors that could enhance the value of the company include

the emergence of Pike, particularly with a very strong coking coal price,

the strong Tui revenues at record prices and the potential for further Reserve upgrades

the Kupe drilling programme and in particular the drilling of nearby wells in the 2Q 2008

the addition of further expertise on the exploration front and

the possibility of an aquisition to acheive the target of 2mmbo per annum equivalent.

4. What is Tui revenue being spent on ?

Answer

See question 1.

5. What is the purpose of having all these subsidiary companies?

Answer

The company is undertaking an exercise to eliminate them by 1 April 2008.


6. What is the forecast and actual water cut rates at Tui?

Answer

Water cuts are expected relatively early as Tui production continues. To date NZO have experienced less water cut than forecast.



7. Enquiries to the NZO website apparently do not receive replies. Why?

Answer

There is one known instance of a reply not being received, and this is regetted. A new Public Affairs manager Chris Roberts has just been appointed and we will be working to ensure that enquiries are answered swiftly. NZOG has increased its total staff from 10 to 17 – mostly technical specialists - which means it now has the staffing resources to respond more quickly on a range of issues.


How are you going to acheive the 2mmb of oil per annum target?

Answer
This cannot be realistically acheived by exploration alone although it is possible. The Board have agreed to this target to introduce a new culture to the Company and in that regard aquisitions are being looked at.


9. Do you have any further contractual commitments with the Tui JV partners? Are you in discussions with Australian oil companies?

Answer No.

10. Does NZO have any desire to be part of the GSB.? ( I hope not! )

Answer The GSB is too capital intensive for NZO. It is high risk high reward and is not part of NZO's thinking.


11. Does NZO wish to explore the deeper Taranaki waters e.g Romney?

Answer

NZO have a lot of experience in Taranaki but exploration will be focussed in and aropund Tui and Kupe and others that have been highlighted


12. When do you think you will have a rig ready to drill Toke?

Answer

A lot more work has to done on this project before a drill is contemplated.


A whole host of other detail about NZO was thoroughly discussed and I applaud the Company for making the effort to do these very thorough Broker presentations.

If anyone is going to the AGM I would be interested to hear your comments and whether there were enough sausage rolls.

Exploration, Development and now Production. Well done NZO. A 15-20 year solid earning stream. The March 31 2007/2008 Financials will turn a few heads.

I should add these are my answers after digesting what David said.

[shasta]

Herewith the answers to some questions I asked David Salisbury on behalf of Posters.
David gave an excellent 2 hour Broker presentation and I am sure that those going to the AGM will be impressed with both his mana and experience.

Here we go

1.You mentioned the possibility of a dividend some time back. This was of course before Hector and Taranui came up dry. What are your thoughts now particularly as the oil price has increased ?

Answer.

2008 Tui revenues will be used to repay debt, fund existing exploration commitments, meet administration costs and pay government royalties, and there is a need to keep $NZ 25 million spare just in case PRC make a call on it. Pike is independent from NZO but NZO will be there to help if required. Any such funding assistance would be at commercial arms length. Also as far as Dividends are concerned it would not be prudent to pass a dividend while NZO will not be paying company tax because of accumulated tax credits.

2. At $1.09 do you think NZO is a takeover target?

Answer

NZO is not in the game of commenting on it's shareprice but suffice to say that the current shareprice could be very attractive to any Predator.


3. How do you plan to to improve value for shareholders and achieve the $1.50 option target by 30 June 2008. Will the Option date be extended?

Answer

The company is very conscious of the options and is working on a plan to increase it's awareness and shareholder value. Factors that could enhance the value of the company include

the emergence of Pike, particularly with a very strong coking coal price,

the strong Tui revenues at record prices and the potential for further Reserve upgrades

the Kupe drilling programme and in particular the drilling of nearby wells in the 2Q 2008

the addition of further expertise on the exploration front and

the possibility of an aquisition to acheive the target of 2mmbo per annum equivalent.

4. What is Tui revenue being spent on ?

Answer

See question 1.

5. What is the purpose of having all these subsidiary companies?

Answer

The company is undertaking an exercise to eliminate them by 1 April 2008.


6. What is the forecast and actual water cut rates at Tui?

Answer

Water cuts are expected relatively early as Tui production continues. To date NZO have experienced less water cut than forecast.



7. Enquiries to the NZO website apparently do not receive replies. Why?

Answer

There is one known instance of a reply not being received, and this is regetted. A new Public Affairs manager Chris Roberts has just been appointed and we will be working to ensure that enquiries are answered swiftly. NZOG has increased its total staff from 10 to 17 – mostly technical specialists - which means it now has the staffing resources to respond more quickly on a range of issues.


How are you going to acheive the 2mmb of oil per annum target?

Answer
This cannot be realistically acheived by exploration alone although it is possible. The Board have agreed to this target to introduce a new culture to the Company and in that regard aquisitions are being looked at.


9. Do you have any further contractual commitments with the Tui JV partners? Are you in discussions with Australian oil companies?

Answer No.

10. Does NZO have any desire to be part of the GSB.? ( I hope not! )

Answer The GSB is too capital intensive for NZO. It is high risk high reward and is not part of NZO's thinking.


11. Does NZO wish to explore the deeper Taranaki waters e.g Romney?

Answer

NZO have a lot of experience in Taranaki but exploration will be focussed in and aropund Tui and Kupe and others that have been highlighted


12. When do you think you will have a rig ready to drill Toke?

Answer

A lot more work has to done on this project before a drill is contemplated.


A whole host of other detail about NZO was thoroughly discussed and I applaud the Company for making the effort to do these very thorough Broker presentations.

If anyone is going to the AGM I would be interested to hear your comments and whether there were enough sausage rolls.

Exploration, Development and now Production. Well done NZO. A 15-20 year solid earning stream. The March 31 2007/2008 Financials will turn a few heads.

I should add these are my answers after digesting what David said.

Thanks Bermuda

It seems there is a new culture forming at NZO headquarters, going by the answers DS provided.

Time for NZO, & it's shareholders to start to look forward to the future as an O&G producer :cool:

[digger]

those people who are suggesting forward sales may be interestad to know the futures prices for crude as of today:
dec 07 $88.00
april 08 $84.00
dec 08 $80.00
dec 09 $76.80
dec 10 $76.00

IMO. if any forward sales were to be made they should be very short term - like for the next 6 months at the furtherest out

Probably not worth it at all with the market in backwardation as it is at the moment. Markets are expecting lower oil prices in the future - I doubt whether this will eventuate. More likely to be higher in the future.
.

Thanks Mike100 for setting this out. If you or anyone else can find the forward contracts for two years ago and for last year ,you will see that what you have pointed out for now going forward has always been the case. Why this is so is beyond me. The forward contracts get it wrong with oil about 90% of the time.Nearly always the actual price is greater than what the contracts would have them.This is probably because they are treating it as a commotity instead of a vanishing resource.
I would also like to ask anyone wanting a forward contract to refer to my question of where we would be now if we had taken one out two years ago at 40 dollars. Last year it was 55 dollars. In both case we would have lost a lot of needed money. This has been ignored and posters are still saying well do 50% then. So what is so good about being half wrong.
The forward contracts do not reflect reality and are a good way to lose money.


Nothing would make me exit this company more than finding out that the company were to do some of the future profit give away some of you posters are suggesting.
A big NO to forward contracts. Keep all future profits for the NZO.

[digger]

Oil price can hit $150 before 2010 - Investec
Dominic Lau, Reuters
The price of oil, which hit a new record high above $88 a barrel on Tuesday, can rally further and may reach $150 before 2010, the fund manager for Investec's Global Energy Fund said.

"The reason why it has potential is the underlying supply and demand fundamentals are causing a serious crunch in oil markets," said Tim Guinness, chairman of Guinness Asset Management, who runs the Investec Global Energy Fund.

Guinness, who was chairman of Investec Asset Management for four years before he retired in 2002, said strong demand from developing countries was emulating that of the developed world from 1950 to 1970.
(17 October 2007


Two years ago some wanted to sell our holding for 40 dollars. Now give well at least half away for 90 dollars. In both cases both this forward contracts look foolish given just two years.
I have said my piece on this subject and hope the 40 dollars man from two years ago will step forward to enlighten others on how foolish 90 will look in two years.

[bermuda]

Atta boy Digger! I am right with you on this one.
The sooner the company can pay off the term loans the better.As you know they come with hedging restrictions.

As soon as that's done I would be happy to take a hedge at say $US60 for protection but leave NZO to enjoy market price above that. Could go to $US150-300 if that texan idiot gets his way. He has just about stuffed America. Actually he has.

[sideline]

Thanks Bermuda for getting all those infos to us.

One question which is not answered yet and not covered in the quarterly is the oil hedging,
i.e. the calls capping the oil price. Can somebody at the AGM please ask whether they have
now expired, and if not what their expiry dates are.

[shasta]

Atta boy Digger! I am right with you on this one.
The sooner the company can pay off the term loans the better.As you know they come with hedging restrictions.

As soon as that's done I would be happy to take a hedge at say $US60 for protection but leave NZO to enjoy market price above that. Could go to $US150-300 if that texan idiot gets his way. He has just about stuffed America. Actually he has.

Just remember Uranium went from $US10/lb - $US136/lb & back to $US75lb in a relatively short space of time, & theres a massive shortage of the stuff (unlike Oil where there plenty of it, just whether its economic to extract etc)

Oil prices will rise on the threat of war etc, but in reality could slip back a few dollars (back into the 70's anyway), or could jump to $US100bbl in a heartbeat.

Either or, i'm not too fussed, we face a massive energy crisis in the next few years & NZ will end up paying through the nose for oil & gas, as a result of non existent O&G exploration in NZ waters over the last decade or so.

I want NZO to get the best possible price for its oil, & for as long as it can, & i dont care how they do it...

[neopole]

since my last post there has been some very informative and educational posts, and answers from posters and transcribed replies from management regarding dividends and expendature of revenue and profits. this is a very good thing, but, as an average investor...... like most of the 12000 investors in NZO who want to see a return of their investment capital, its beginning to look like an acountants spider web.
what i mean by this is..... here is a company promising riches though exploration, discovery and production of oil, gas and coal, and..... the company is forefilling that promise, which is what most laymen investors looked for and recieved, but now that the riches are coming in, we are told that the revenue and profits are allocated here and there, and tax right offs etc, which is fair and true, and for those that understand business finance and taxes, fully understandable. but for the layman investor like myself and maybe thousands more, this is something new to think about, as most mums and dads invest in tax paying top 50 companies and recieve a dividend or such.
my investment in this company was based on the premise that this company struck oil, gas and coal several years ago, and was going to develop and share the rewards with its investors........ which is why i invested, now that the wealth is coming in, the non technical investors like me and others are learning about the financial reasons why there is no financial reward for the investor at this stage..... having learnt this i do understand now........ but, this makes me think about the reason why i invested in the first place, maybe many of the 12000 investors also.
which brings me to the simple point.
is this a company for the average investor, or a share only for the speculator or investor who is educated in financial matters and risk/reward.
im sure alot of people 2 years ago who know what they know now about NZO might have different thoughts about investing in a pot of oil...........
which might explain the current share price.
having said all this, i have learnt a great deal about investing in high risk high reward companies........ NZO was high risk 2 years ago(when i started to invest), yet the reward hasnt been worth the risk to date, and a $1.50 option conversion is less than a year away.
i guess the jist of what im trying to say is........ most NZ investors dont have a handle on the oil game in this country, and i suspect alot of NZ investors in NZO have become disallutioned in the promise of oil wealth which relates to the lack of informative information from the CEO.
at this point in time i am struggling to decide what to do with my investment in this company, it seems to me...... that to be an astute investor in NZO you also need to be very aptitude in company finance as well as a risk taker,.
risk taking is easy..... swallow the hype and take your bet, but for this company to go forwards it also has to educate the average investor in the new New Zealand game of public energy investment.
i read this thread avidly, and learn from the many points of views posted here, but the more i learn, the more i realise that the oil game is a game for the big boys, and unfortunately NZO is being ingnored by the big boys and propped up by the un-informed little guy..... and yes i admit im a little guy......... and probably the best thing i have ever learnt.
if a company educates its investors in its core fundamentals up front, then its investors are more likely to make educated decisions about their investment in that company, especially in the new field of public energy exploration, as it stands, most kiwis have an aversion to share investment as it is.
(not that the company hasnt been upfront........ it has..... just not in a way that mums and dads fully understand)

thats my humble opinion of the week.
good fortune to you.
ps...
PPP is doing well.

[Hoop]

Thxs Bermuda
very informative :)

[bermuda]

Neopole,
The sell off on Wall St could be the start of a major recession in America as forecast by Julian Robertson.Hopefully the emerging Chinese and Indian economies can still maintain a growth in world GDP.

The strong run up in oil prices has been fuelled by geopolitical concerns lately but deep down there are supply demand issues that will continue to surface over the next few years that will underpin the oil price.

NZO have only start started to produce and after their tax credits have been sensibly used I am sure the strong longterm revenues will produce dividends to shareholders.

A little more patience is required but I am confident the Kupe project and further adjacent drilling will lift the company into an even stronger position.The Kupe pipeline has been built to cover 3 times the current forecast output . They wouldnt do that for nothing.

Could be a volatile week next week that's for sure.

[shane_m]

bermuda cheers for asking those q.:D

[rotweiller]

NEOPOLE - my thoughts exactly and many thanks for your succinct appraisal. I wonder how long I will remain a holder but will certainly keep PPP.
BERMUDA - Again many thanks for asking the questions that needed to be asked and getting the answers. Can you or anyone else surmise when we might get our first dividend.
Cheers

[arjay]

Thanks also Bermuda for asking those questions. thanks also to Neopole and Rotti for keeping the issue of shareholder rewards to the fore. From David Salisbury's answers to Bermuda's questions, it seems fairly clear that the shareholders of NZO are well down the list of beneficiaries from Tui and other cashflows. Ahead of shareholders comes the government (roylaties, taxes etc), repaying debt to banks, and 'administraiton costs' - which probably includes staff salaries and benefits to the directors. The people who risked most to discover and develop Tui (ie the ordinary shareholder) will benefit last. However, I recall NZO saying once they planned to pay out 50% of a consistent profit stream as dividends. What they mean by 'consistent' is anyone's guess (maybe someone could ask at the AGM) and maybe a mere 10 year cashflow from Tui will not be considered consistent enough. However, in the meantime I reckon return to the investor should at least equal the increases in benefits being recieved by the likes of Tony Radford. I noticed form a quick flick through the PPP annual report the other day that TR is creaming it in from there as well so maybe PPP shareholders should be asking similar questions.

By the way, if oil really does hit $150 by 2010 and NZO really is pulling in 2 million barrels as planned then that's a $70 per barrel wind-fall profit over todays prices which by my reckoning at 50% should come back as around 35 cents per share divie to the investor. Not bad.

[boysy]

Tui is the only project on line currently anyone could see that dividends would only becom possible after all three or at least two of the current projects are up and running. Sure they could pay a dividend but what is the opportunity cost of doing so . People who want a steady dividend income from a company should clearly not go near NZO for a few more years at least. I for one would rather see the money invested into projects which will not only further NZO but also increase the potential dividend stream in the future. The question which people should asking is will the positives of offering a dividend out weigh the negatives ?

[Scuffer]

Can they offer fuel vouchers then

[shasta]

Tui is the only project on line currently anyone could see that dividends would only becom possible after all three or at least two of the current projects are up and running. Sure they could pay a dividend but what is the opportunity cost of doing so . People who want a steady dividend income from a company should clearly not go near NZO for a few more years at least. I for one would rather see the money invested into projects which will not only further NZO but also increase the potential dividend stream in the future. The question which people should asking is will the positives of offering a dividend out weigh the negatives ?

Ok, once again i shall enlighten those "deluded" into thinking dividends are forth coming...SIMPLE they aren't.

Yes, NZO's dividend policy is to pay out 50% of net profit AFTER tax, BUT with consideration of future capital committments!!!!

Reasons why NZO would not & should NOT pay a dividend:

1. Tax losses make it not "tax efficient" to do so, wait til we have full imputation credits folks

2. This would be akin to putting money into a savings a/c & 7%, & not paying your credit card @ 20% first!

3. The "letter of comfort" NZO provided to Pike's bankers for up to $25m looks like it will be required in the next 3 months.

4. Lets pay off Tui first huh?

5. Kupe costs have increased (approx 10%) & again we had to borrow up front, so we now have more interest to pay.

6. DS has hinted at acquistions, & we will need to lower debt levels before taking on more!

7. Option holders do not get dividends, so no point until after the expiration of the options.

8. A share buyback would be a far better option than dividends, for NZO shareholders, assisting the options get converted & NZO's capital structure (remembering if all options are converted, NZO will have around 400m shares on issue).

9. We will also want to continue to explore O&G opportunities particularly in the Taranaki Basin.

10. Lastly, whats the point paying say a 10 - 15c dividend & then having to come back to shareholders for more cash 6 months down the track?

Yes, we have $5m per week revenue/cashflows at present, but we have expenses & loan repayments/interest as well, (just look at the last quarterly cashflow statement), whilst getting two other projects into production & cashflow positive.

If NZO holders are after a "steady" stream of dividends then come back in 2 years time & buy NZO, PRC & PPP (if its still around!).

Until then perhaps some of the bigger Aussie oilers would be a better option, ie Santos, Woodside etc

[digger]

Tui is the only project on line currently anyone could see that dividends would only becom possible after all three or at least two of the current projects are up and running. Sure they could pay a dividend but what is the opportunity cost of doing so . People who want a steady dividend income from a company should clearly not go near NZO for a few more years at least. I for one would rather see the money invested into projects which will not only further NZO but also increase the potential dividend stream in the future. The question which people should asking is will the positives of offering a dividend out weigh the negatives ?

Your on to it boysy. Agree 100%. Complete the other two projects then we will start hounding about a dividend.

[digger]

shasta, agree 100% with your last post as well. Now if we can just get everyone else to see the light.We are getting there as a company but another two years are required to really complete all projects ,then NZO will be a different company.
Still planning to fly to Greymouth and then on to Wellington if weather will allow.
All are coming i trust.

[COLIN]

Tui is the only project on line currently anyone could see that dividends would only becom possible after all three or at least two of the current projects are up and running. Sure they could pay a dividend but what is the opportunity cost of doing so . People who want a steady dividend income from a company should clearly not go near NZO for a few more years at least. I for one would rather see the money invested into projects which will not only further NZO but also increase the potential dividend stream in the future. The question which people should asking is will the positives of offering a dividend out weigh the negatives ?

I agree with your points, my boy. I don't want dividends from any of my investments if the payment of such dividend results in a negative for the particular company. If I want some cash to pay for the groceries then I can just sell a few shares. Simple!

[BigBob]

Bravo Shasta, Bravo...!! Finally someone makes some sense... !!!

[arjay]

So, let's assume for a moment that NZO want the ODs exercised. With no dividend and Felix relenquished, what do they have to get the SP above $1.50 within the next 28 weeks? On this note, can someone please explain how a share buyback could do this? Ta. Kupe exploration is planned for Q2, but that can easily slip past June 30th.

Playing devils advocate here: If mum and dad investors, going on Shasta's advice, sell their NZO's now for $1.09 they can put the money back into paying their mortgage for a year, which gives them a total valuse after one year of $1.20 per share. They can then buy back into NZO if a divie seems imminent. This is good for them because they can buy more NZO's for their $1.20. Knowing there is no return on their NZO investment over the next year or so, why would the market pay more than $1.50 in the short term?

[boysy]

A possible rerating of TUI reserves ?
Higher than anticipated earning from TUI oil ?
Possible t/o target ?
Higer oil prices to come ?
PRC producing coal before options expire ?
Increase in coal prices set to continue and negotiated before excise date ?

Any one of which could happen or none at all. I mean $1-50 does seem abitious currently but with 2 projects up and running hopefully by then and the third on the horizon time will tell.

[arjay]

A possible rerating of TUI reserves ?
Higher than anticipated earning from TUI oil ?
Possible t/o target ?
Higer oil prices to come ?
PRC producing coal before options expire ?
Increase in coal prices set to continue and negotiated before excise date ?

Any one of which could happen or none at all. I mean $1-50 does seem abitious currently but with 2 projects up and running hopefully by then and the third on the horizon time will tell.


Being a takeover target might do it, however value to shareholders changes little if they don't tangibly see any of the rest before OD expiry time.

[shasta]

A possible rerating of TUI reserves ?
Higher than anticipated earning from TUI oil ?
Possible t/o target ?
Higer oil prices to come ?
PRC producing coal before options expire ?
Increase in coal prices set to continue and negotiated before excise date ?

Any one of which could happen or none at all. I mean $1-50 does seem abitious currently but with 2 projects up and running hopefully by then and the third on the horizon time will tell.

Quite right Boysy, & lets not be forgetting the Kupe project is twice the size of Tui (boe) without any further drilling/upgrades, so there is some leverage to the gas price as well.

[bermuda]

Quite right Boysy, & lets not be forgetting the Kupe project is twice the size of Tui (boe) without any further drilling/upgrades, so there is some leverage to the gas price as well.

I quizzed David S on the gas contract particularly as the previous one would have left NZO in a hopeless position as capital inreases couldnt be covered adequately. Saisbury has considerable gas contact experience and stated that the new negotiated contract is in line with good practice but the gas price escalates due to an inflation factor and not the actual gas price. Pity because I see gas prices firming in NZ. Good to know that LNG is off the NZ agenda.

Anyway the oil factor is now worth at least half the Kupe value and both the condensate (Tapis Value ) and the LPG's are tied to world oil prices (Platts ) which is good news indeed. Expect some big upsides with kupe.

[shasta]

I quizzed David S on the gas contract particularly as the previous one would have left NZO in a hopeless position as capital inreases couldnt be covered adequately. Saisbury has considerable gas contact experience and stated that the new negotiated contract is in line with good practice but the gas price escalates due to an inflation factor and not the actual gas price. Pity because I see gas prices firming in NZ. Good to know that LNG is off the NZ agenda.

Anyway the oil factor is now worth at least half the Kupe value and both the condensate (Tapis Value ) and the LPG's are tied to world oil prices (Platts ) which is good news indeed. Expect some big upsides with kupe.

Thanks Bermuda

Given NZO & JV partners are spending just over $NZ1 billion dollars which includes an onshore gas handling facility, the nearby Kupe drilling is of immense interest to me, as part of there 2008 drilling campaign.

They obviously intend drilling more around Kupe in the future, & are seemingly very confident there's plenty more Gas, LPG & light condensate to be found!

[upside_umop]

Playing devils advocate here: If mum and dad investors, going on Shasta's advice, sell their NZO's now for $1.09 they can put the money back into paying their mortgage for a year, which gives them a total valuse after one year of $1.20 per share. They can then buy back into NZO if a divie seems imminent. This is good for them because they can buy more NZO's for their $1.20. Knowing there is no return on their NZO investment over the next year or so, why would the market pay more than $1.50 in the short term?

every share has an element of risk which the shareprice is discounted at annually by a theoretical discount rate. going a bit further, history tells us that the markets rate of return is in the vicinity of 13%, which suggests year on year it will rise 13%, in the long run. if we apply this to nzo, or any other share on the market, without a crystal ball, we will expect it to rise by 13%. if more, we outperform the market, any less, underperform.
given nzo has many developments on the go, and the risked nature of the companies projects, i would assume a slightly higher discount rate than 13%. saying this, if all goes well, and no nasty suprises, it should rise by more than your average mortgage interest rates even if they are tax free way of saving.

this is my opinion on it what your asking, im sure some others have different views...like warren buffet who ive heard has a stock valuation formula using a discount rate equivalent to risk free rate (usually short term govt bonds for the corresponding country.

does this help answer your question?

[Unicorn]

So, let's assume for a moment that NZO want the ODs exercised. With no dividend and Felix relenquished, what do they have to get the SP above $1.50 within the next 28 weeks? On this note, can someone please explain how a share buyback could do this? Ta. Kupe exploration is planned for Q2, but that can easily slip past June 30th.

Playing devils advocate here: If mum and dad investors, going on Shasta's advice, sell their NZO's now for $1.09 they can put the money back into paying their mortgage for a year, which gives them a total valuse after one year of $1.20 per share. They can then buy back into NZO if a divie seems imminent. This is good for them because they can buy more NZO's for their $1.20. Knowing there is no return on their NZO investment over the next year or so, why would the market pay more than $1.50 in the short term?

A share buyback would increase the share price, simply by adding buying demand. If the buyback is done below the underlying value of the shares, then the remaining shareholders end up with a larger slice of the remaining smaller, although comparatively less so, cake.
e.g a company has 200M shareholders, and assets/business worth $250M
Value = $1.25 per share.
Buys back 150M shares at $1.
Leaving 50M shares owning assets/business worth $100M
Value = $2.00 per share

Dividends on the other hand reduce share price, because assets (cash) are given away without any reduction in the number of shares.
e.g a company has 200M shareholders, and assets/business worth $250M
Value = $1.25 per share.
Gives dividend of 25c per share.
Leaving 200M shares owning assets/business worth $200M
Value = $1.00 per share

A buyback this side of NZOOD conversion is therefore possible, but a dividend is extremely unlikely.

"They can buy more NZO's for their $1.20" is an illogical statement. If NZO price stays the same, or falls, then this is true. If NZO shareprice rises to more than $1.20 then it is wrong. There is no reason to suggest that the value of a company that is returning a healthy profit remains unchanged.

"Knowing there is no return on their NZO investment over the next year" means they know the NZO shareprice will be static for the next year. This doesn't make any sense - it is almost guaranteed to be wrong.

The value of a company to its shareholders is the sum of the returns paid to shareholders and the increase in value of the company itself perceived by the market. You seem to suggest that it is only the returns paid that matter - which implies that it is irrelevant whether a company makes a small profit, a large profit, or a loss! Doesn't make sense, does it?

[Bilo]

Unicorn and others

In the light of DS's comment that NZOG has “no need for more capital from shareholders” it seems to me that any buyback of shares would have to start by buying back NZOODs.



I have posted my interpretation of NZOs Valuation at 30 September based on recent (I consider very conservative) company releases to market and the NZOOD adjustment:

$M
200 ....Tui
100 ....Kupe (30M ebit pa for 15years)
..60 ....Pike
..30 ....Cash
390 ....Total NZOG Value
..20 ....Buy Back NZOODs
370

Values 260M head shares @ 1.42 cps

N.B.
No majority shareholder premium on PRC that is conservatively valued at >$40M
No value on producing asset upgrades or near field developments
No value on exploration licences
No value on $130M tax losses
....also serve to make this estimate of value conservative
....but I accept that if I sold on Friday I would have been lucky to get $1.08 for heads and 12c for options.

For a company with no need to pick shareholders pockets yet again buying back the options seems to me to be the best thing to do all round.:)

[shasta]

Unicorn and others

In the light of DS's comment that NZOG has “no need for more capital from shareholders” it seems to me that any buyback of shares would have to start by buying back NZOODs.



I have posted my interpretation of NZOs Valuation at 30 September based on recent (I consider very conservative) company releases to market and the NZOOD adjustment:

$M
200 ....Tui
100 ....Kupe (30M ebit pa for 15years)
..60 ....Pike
..30 ....Cash
390 ....Total NZOG Value
..20 ....Buy Back NZOODs
370

Values 260M head shares @ 1.42 cps

N.B.
No majority shareholder premium on PRC that is conservatively valued at >$40M
No value on producing asset upgrades or near field developments
No value on exploration licences
No value on $130M tax losses
....also serve to make this estimate of value conservative
....but I accept that if I sold on Friday I would have been lucky to get $1.08 for heads and 12c for options.

For a company with no need to pick shareholders pockets yet again buying back the options seems to me to be the best thing to do all round.:)

Bilo

Wouldn't NZO buying back the options (& cancelling them) ultimately reduce the total $$$ possibly received from the option conversion?

I'm thinking they want the "new" money to fund an acquistion!

For me, a buyback has to be the heads & those holding options should benefit indirectly as the heads rise accordingly...

[upside_umop]

yeah totally with you on this one shasta...
if they wanted to get rid of the options, they should just let them expire.
if they're in the money, they can search for an elephant or buy up assets in large, if not, save themselves 20 million and NOT buy back the shares. why spend 20 million and get nothing out of it? seriously, i think thats nuts...

[Onthemoney]

Unicorn and others

In the light of DS's comment that NZOG has “no need for more capital from shareholders” it seems to me that any buyback of shares would have to start by buying back NZOODs.



I have posted my interpretation of NZOs Valuation at 30 September based on recent (I consider very conservative) company releases to market and the NZOOD adjustment:

$M
200 ....Tui
100 ....Kupe (30M ebit pa for 15years)
..60 ....Pike
..30 ....Cash
390 ....Total NZOG Value
..20 ....Buy Back NZOODs
370

Values 260M head shares @ 1.42 cps

N.B.
No majority shareholder premium on PRC that is conservatively valued at >$40M
No value on producing asset upgrades or near field developments
No value on exploration licences
No value on $130M tax losses
....also serve to make this estimate of value conservative
....but I accept that if I sold on Friday I would have been lucky to get $1.08 for heads and 12c for options.

For a company with no need to pick shareholders pockets yet again buying back the options seems to me to be the best thing to do all round.:)

An option is not a share - but a tradable option to purchase at a set price..... A company can only buy back shares.

[Bilo]

Onthemoney a question for you.

On what point of law do you say that "NZO can only buy back shares"?
And how do you see that stopping NZO buying back the 2008 Options?

Secondly what is to stop NZO offering to convert options to shares, buy them back for (say)15c, and cancel that share?

I didn't see anything that would stop the company from buying the options back on market, but that may be what you are referring to.

I had a look at my prospectus and it was difficult to tell (without a complete knowledge of company constitution, the Companies Act and NZX rules). The prospectus refered me to Brian Roulston (are you following Brian?) if I had a problem with this investment. And I do.

A few snippets from the Prospectus indicate (to me anyway) that change to option terms is up to us:

"NZ PART A 7. Can the investment be altered?
The rights and obligations attaching to 2008 Options and/or Shares can only be altered by special resolutions passed at a general meeting of Option holders and Shareholders of NZOG, respectively.

Australia PART B 7.9

“Under the companies Act 1993, NZOG can cancel its shares

“Buyback of Shares

Subject to the Companies Act 1993, the Constitution and the Listing Rules, NZOG may repurchase its shares from Shareholders.

Variation of Rights Attaching to Shares (and other securities)
The rights attaching to a class of Shares can only be varied with the sanction of a special resolution passed at a separate general meeting of the holders of that class of shares and any other class of securities (for example 2008 Options) which are affected. ……A variation of the rights attached to the 2008 Options will be treated as also affecting the rights attached to the Shares.”

Some danger that this is taken out of context, and the prospectus may have to be read in conjunction with NZOG’s Constitution but anything seems possible. This includes waiting until next year and letting us shareholders (and option holders) elect not to take up our options.

Surely as shareholders, given that the company doesn't need to touch us for the couple of hundred million NZD, and has no stated use for it, we would vote to have the 2008 share options cancelled for this small amount instead?

[shasta]

Bilo

NZO (& in particulcar the CEO, David Salisbury) has recently stated "as a priority" to ensure they do get the options converted?

Why do you question this, i believe the money raised will be used to fund an acquistion, in which case they will want as much as they can get.

Do you hold options & heads, just options?

In any case Shareholders MUST approve of any share buyback, & this is usually done as a resolution at a companys' AGM, & normally states something like "...to buyback up to 5% of shares of the total shares on issue over the next 12 month...".

I dont see it on the Proxy form either...

[upside_umop]

bilo,

they would be giving money away if the options didnt get converted in the end. be a bit of a waste of company resources really...and a bit of risk to give 20 million away. rather bang a few more holes into the ground to find a gusher.

i also dont see, at this point how it would be anti-dilutive and raise the sp before option date, which essentially they would have to try to be doing.

simple story is, the company will want the options converted, but they wouldnt be doing any share buy backs before option date imo. they will be trying to build a mini war chest (remember they have minimal debt also so can leverage to buy quite a bit) to get hype and really turn up the pr machine making a lot interest and the sp jump a bit...its not out the of question, and im hanging in for the ride. exciting isnt it!

the only thing about an acquistion at this point is that some companies could want too much for their assets given the oil price. i hope they announce more drilling permits, acquire a few more assets, and get that drilling for kupe spudded before june 30th.

[shasta]

bilo,

they would be giving money away if the options didnt get converted in the end. be a bit of a waste of company resources really...and a bit of risk to give 20 million away. rather bang a few more holes into the ground to find a gusher.

i also dont see, at this point how it would be anti-dilutive and raise the sp before option date, which essentially they would have to try to be doing.

simple story is, the company will want the options converted, but they wouldnt be doing any share buy backs before option date imo. they will be trying to build a mini war chest (remember they have minimal debt also so can leverage to buy quite a bit) to get hype and really turn up the pr machine making a lot interest and the sp jump a bit...its not out the of question, and im hanging in for the ride. exciting isnt it!

the only thing about an acquistion at this point is that some companies could want too much for their assets given the oil price. i hope they announce more drilling permits, acquire a few more assets, and get that drilling for kupe spudded before june 30th.

UU

My comment re NZO would want the "options money" for an acquistion is based purely on the timing of it.

By June 08, Pike River should be up & running & independent, Kupe drilling campaign will be in full swing & Tui will be ticking along largely forgotten as we anticipate Kupe coming on line in 2009.

The fall in Tui reserves during the 2008/09 year, & before Pike & Kupe really contribute to NZO's revenues, is the most likely time they will go hunting for an acquistion.

NB, My question to DS (via Bermuda) was, how do NZO intend achieving there stated 2mmbo annual production target, & no surprises they do see acquistions playing a part!

Yup, exciting times ahead, though you might wanna check NZO's debt/capital committments though, it's quite high & too leveraged to go looking at the moment, & i hope they don't.

Remember we are holding back $25m to assist PRC, we already hold 31% of PRC, plus with the options & convertible notes, we hold 34.6%.

NZO will want to sell down some of the PRC shares eventually, possibly during 2009, or sell out altogether at the right price, which would add to the warchest.

[duncan macgregor]

Only nine months left for pass the parcel for the SP to reach $1-50 to make the options worth while.
At 11.5c that makes it $1-61.5c to break even, plus add to that whatever profit you expect the market to pay back for risk taken. How many noggers actually think the price will be that high?, even wearing those rose tinted glasses. What the company could do to raise the sp price against what the company will do going from their record is open for discussion. The SP was 20c higher at one stage, two years ago and only dropped back because of the contempt shown by the company to its owners the shareholders.
The company has learned nothing from past experience, simply going by the unanswered questions that the shareholders discuss on this forum.
Its all public relations, letting the mums and dads know what is going on, not keep them in the dark as this company does with no open disclosure. I walked out of the last AGM half way through nothing but waffle, i would expect this one to be equally as informative. Last time they announced a PR lady to keep you informed which was just to shut you lot up thinking all would get revealed. I wonder what this years condescending gift to the shareholders will be?. Macdunk

[bermuda]

Macdunk,
You are not in a good mood about this company eh?

Why dont you email Chris Roberts at chris.roberts@nzog.com with all your 'unanswered 'questions and see if you get a reply. Chris is their new Public Relations Manager.

I remember at last years AGM there was one rather irate fellow who had a go about Tui being a bit of a 'pipedream' and that NZO didnt understand and didnt have the expertise to ever pump any oil. I doubt if that was you but you are starting to sound like it.

It is a beautiful morning here in CHCH. Is it raining where you are?

[shasta]

Only nine months left for pass the parcel for the SP to reach $1-50 to make the options worth while.
At 11.5c that makes it $1-61.5c to break even, plus add to that whatever profit you expect the market to pay back for risk taken. How many noggers actually think the price will be that high?, even wearing those rose tinted glasses. What the company could do to raise the sp price against what the company will do going from their record is open for discussion. The SP was 20c higher at one stage, two years ago and only dropped back because of the contempt shown by the company to its owners the shareholders.
The company has learned nothing from past experience, simply going by the unanswered questions that the shareholders discuss on this forum.
Its all public relations, letting the mums and dads know what is going on, not keep them in the dark as this company does with no open disclosure. I walked out of the last AGM half way through nothing but waffle, i would expect this one to be equally as informative. Last time they announced a PR lady to keep you informed which was just to shut you lot up thinking all would get revealed. I wonder what this years condescending gift to the shareholders will be?. Macdunk

Macdunk

Not sure if we will get to the $1.50 before 30/6/08 or not, i'll let the market decide that & the NZO management sort out how, however...

By the end of the year we will know if there is more OIP @ Tui, & whether is it recoverable. New technology & drilling methods are able to recover more OIP these days, so it seems.

What say the Tui reserves are upgraded from 32mmbls to 40mmbls???

That would get the oppies over the line, being worth an extra million barrels to NZO :D

Far too much could happen between now & the end of June.

Who knows Oil might be $US120bbl by then :confused:

[shane_m]

for me water cut rate is critcal paramter. Answer to burmudas q to DS indicated this is as per expected water cut. I would like to know exactly what value the water cut is, BWR indicated that these will be published in the quarterly last time I questioned, but I could t find the water cut % on the quarterly.

If they find lot of water coming up few months down the track not so rosy for NZO. TUI is fairly high risk for me, but i will continue to hold my entry at 86c hoping NZO SP will follow the oil price re-rating.

[bermuda]

I came out of the meeting very happy about Tui's performance. Pateke's drilling was expensive due to a drill collapse but the actual production volume could go above 100,000 bpd. It is the collection facilities and the FPSO design that are limiting factors because they were designed to handle 50,000 bpd.

Since production startup there have been hiccups in acheiving the target of 50,000 bpd due to gas tripping. Production has probably averaged 40,000bpd but these hiccups are currently being resolved. I am very happy to throttle it back a bit. Oil field research has shown more often than not that the slower you take it out the more oil you will ultimately get.Read Twilight in the Desert.And despite volatility the fundamentals say oil goes higher.

The price acheived is at a premium to Nymex but it must be remembered that initially cargoes will be discounted slightly until refiners get to know and understand just what Tui is all about. Although not giving the figures DS did say that the water cut was below that forecast which was a good sign.

Dont really see too much of a problem with Tui. My concern was where NZO was going to get a drilling rig to drill in and around Tui. The good news was that the "Industry" was gearing itself up to act as a 'club' to get another rig out here to do a number of wells next summer.

AWE are currently doing a thorough assessment of the Tui fields which could possibly improve the stated reserves again. Their report will be out before the end of the year.

[Bilo]

Shasta $ Upside_down
It was the the Chairman's review in the Annual report (30th June - wasn't that a long time ago) that stated "One clear objective is to ensure that NZOG's value is fully recognised in the marketplace ahead of the 30th june 2008 final date for option holders to exercise the share options which the company has on issue."

DS's statement indicating that NZOG didn't need to ask shareholders for more money was in early October. I for one felt that the company had moved on from the June statement, to focus on delivering profitable growth to shareholders which the Chairman also included in his Annual Report review.

Who in their right mind would give $200M to someone who hasn't got an outstandingly clear view of how they are going to make a return on it?

Which directors would be acting in their shareholder's best interests by taking on another $200M when they haven't been able to demonstrate a satisfactory return (for the level of risk) on the ~$200M they already have?

As McDunk correctly points out, June 2008 is far too late to have indicated value, the options will be sold down months before then unless they are well in the money. The options are not near "in-the-money" according to recent company releases on company value. Reducing the conversion price to $1 might do it...but DS still needs to demonstrate future return on investment.

To answer your other question, I am a long term holder and have lots of both heads and options. I think most of the investors in the company are in a similar position wrt heads and options. Although a number of major shareholders notably appear to have fewer than their allotment of options, I guess that the numbers of shareholders with both heads and options out-number those that do not have options.

[shasta]

Shasta $ Upside_down
It was the the Chairman's review in the Annual report (30th June - wasn't that a long time ago) that stated "One clear objective is to ensure that NZOG's value is fully recognised in the marketplace ahead of the 30th june 2008 final date for option holders to exercise the share options which the company has on issue."

DS's statement indicating that NZOG didn't need to ask shareholders for more money was in early October. I for one felt that the company had moved on from the June statement, to focus on delivering profitable growth to shareholders which the Chairman also included in his Annual Report review.

Who in their right mind would give $200M to someone who hasn't got an outstandingly clear view of how they are going to make a return on it?

Which directors would be acting in their shareholder's best interests by taking on another $200M when they haven't been able to demonstrate a satisfactory return (for the level of risk) on the ~$200M they already have?

As McDunk correctly points out, June 2008 is far too late to have indicated value, the options will be sold down months before then unless they are well in the money. The options are not near "in-the-money" according to recent company releases on company value. Reducing the conversion price to $1 might do it...but DS still needs to demonstrate future return on investment.

To answer your other question, I am a long term holder and have lots of both heads and options. I think most of the investors in the company are in a similar position wrt heads and options. Although a number of major shareholders notably appear to have fewer than their allotment of options, I guess that the numbers of shareholders with both heads and options out-number those that do not have options.

For a start the $200m would clear out all debt, that would be both smart & prudent?

[Nitaa]

This may have been answered already. NZO are possibly looking at aquisitions. To me an obvious synergy was a PPP and NZO merger. This would have achieved DS target. Clearly this is off the table as NZO sold its holding. The big question is why? I remember they said that they needed the money for possible aqusition or something to that affect. However a merger would have still be able to create this. Keeping PPP also gave it a useful blocking stake with its converted options. Bermuda, you may be able to shed something that i am missing.

On one had NZO are ready to put their hand in their pocket to stump up another $25m for Pike which is quite likely to happen. Since this will be strickly a commercial deal then its a bit puzzling why they sold PPP. If they have confidence in Tui and now in production stage it begs the question again, why sell your stake?

I am a holder of PPP as well and have done extremely well out of it but i really think TR should go. DS has probably done more for NZO since April than TR was able to do in the last 5 years. How could he possibly have been effective while sitting in his North Sydney home. I really dont get it. (ok this bit should be on the ppp thread)

Reserve upgrade? you bet. I acrulately picked the last upgrade (4mbo) perhaps luck more than good management. Clearly as long as oil stays above $65 then the life of Tui will be extended.

The PR lady was totally ineffective last year but i suspect her primary role was the Pike IPO which would have had her bogged down for some time.

OP's getting converted. 50/50 i say but there is no question that NZO will be or have developed a plan to achieve this. I think its clear part of those plans are in operation now...ie Broker presentations etc. Although Pike and NZO are seperate companies you can also bet your life that they are working closely together as time is becoming critical for NZO and its options. The next 8 months will no doubt see some strong SP movement but whether its enough will be another thing.

macdunk you should concentrate on your aussie speccy shares (big risk but whatever gets your jollies going) rather than on a stock that you have no financial interest. Thats gotta be dumb

[duncan macgregor]

macdunk you should concentrate on your aussie speccy shares (big risk but whatever gets your jollies going) rather than on a stock that you have no financial interest. Thats gotta be dumb NITA, Not to jolly on the ASX today with all the shares opening way down. NZO on the ASX dropped 5.5% so it looks like you will be back to a dollar tomorrow.
PRC untraded. It looks like a grim week starting up. Macdunk

[bermuda]

NZO weighed up their investment in PPP and decided it was time to cash up after a very good sp run up.

If Hector or Taranui had come in then okay if may not have been the best decision but PPP had only 10% of Tui and NZO had only 10% of PPP so its only another 1%.

I think they got better than fair value in hindsight

[arjay]

McDunk - A downward trend has been predicted for this week on world markets due to another miserable performance in the US. This is another factor we need to consider re the ODs - NZO may perform stunningly over the next few months but the SP may languish on due to the continual hangover on Wall Street.

OTM - what I meant earlier about shareholders not seeing returned value related to tangible value - such as in divies or barrels of oil. In an ideal accountants world more oil out of the ground should equate to increased SP which the investor can then sell to make profit. However, as we have seen market fickleness and extenal events can prevent this. It's a bit like putting your money in the bank - who would be interested in investing $1.50 in the bank for a year if it grew the bank bigger but returned no interest? There are interesting times ahead. Many in this forum are dead keen to have all NZO income reinvested in the giant fruit machine of exploration. This can only have two possible outcomes - (1) all our earnings go down the porcelain, or (2) a discovery is made requiring the cycle to repeat itself - ie, no returns until development is underway and a sustained income generated.

[Nitaa]

NZO weighed up their investment in PPP and decided it was time to cash up after a very good sp run up.

If Hector or Taranui had come in then okay if may not have been the best decision but PPP had only 10% of Tui and NZO had only 10% of PPP so its only another 1%.

I think they got better than fair value in hindsightr u saying Allan Tettersfield got it wrong and NZO got it right. Even though the wells came up dry they know exactly the position PPP are in and so does AT. I am not saying its a bad move but if you are going to sell its most likely because of 2 things. 1 that PPP SP is at a premium or 2/ they need the cash for something else. At 26 cps when they sold i have yet to see neither being necessary. One other thing is i am not in favour of a company with close ties to directors to sell their shares to them. It opens up the possibility of colusion, backhanders as such. just my opinion.

[shasta]

r u saying Allan Tettersfield got it wrong and NZO got it right. Even though the wells came up dry they know exactly the position PPP are in and so does AT. I am not saying its a bad move but if you are going to sell its most likely because of 2 things. 1 that PPP SP is at a premium or 2/ they need the cash for something else. At 26 cps when they sold i have yet to see neither being necessary. One other thing is i am not in favour of a company with close ties to directors to sell their shares to them. It opens up the possibility of colusion, backhanders as such. just my opinion.

Nita

In the ultimate act of irony, perhaps PPP are lining up NZO! :eek:

NZO's cashflows would just about pay for the purchase!

[Onthemoney]

Onthemoney a question for you.

On what point of law do you say that "NZO can only buy back shares"?
And how do you see that stopping NZO buying back the 2008 Options?

Secondly what is to stop NZO offering to convert options to shares, buy them back for (say)15c, and cancel that share?

I didn't see anything that would stop the company from buying the options back on market, but that may be what you are referring to.

I had a look at my prospectus and it was difficult to tell (without a complete knowledge of company constitution, the Companies Act and NZX rules). The prospectus refered me to Brian Roulston (are you following Brian?) if I had a problem with this investment. And I do.

A few snippets from the Prospectus indicate (to me anyway) that change to option terms is up to us:

"NZ PART A 7. Can the investment be altered?
The rights and obligations attaching to 2008 Options and/or Shares can only be altered by special resolutions passed at a general meeting of Option holders and Shareholders of NZOG, respectively.

Australia PART B 7.9

“Under the companies Act 1993, NZOG can cancel its shares

“Buyback of Shares

Subject to the Companies Act 1993, the Constitution and the Listing Rules, NZOG may repurchase its shares from Shareholders.

Variation of Rights Attaching to Shares (and other securities)
The rights attaching to a class of Shares can only be varied with the sanction of a special resolution passed at a separate general meeting of the holders of that class of shares and any other class of securities (for example 2008 Options) which are affected. ……A variation of the rights attached to the 2008 Options will be treated as also affecting the rights attached to the Shares.”

Some danger that this is taken out of context, and the prospectus may have to be read in conjunction with NZOG’s Constitution but anything seems possible. This includes waiting until next year and letting us shareholders (and option holders) elect not to take up our options.

Surely as shareholders, given that the company doesn't need to touch us for the couple of hundred million NZD, and has no stated use for it, we would vote to have the 2008 share options cancelled for this small amount instead?


Hi Bilo

I have not got the time at the moment to look into the point of law but can tell you that a share buy back is exactly that.

Options are not shares.

An option is the right to buy shares in a company at a fixed price (the excercise price), on or before a specified date in the future.

The reason they would not buy them back is because they would transfer wealth unfairly/unequally to market holders of options as opposed to the legal owners of the company - the shareholders.

A buyback of options will not happen - but a buyback of ordinary shares could - very unlikely though. This is only done when a company has surplus capital.

[Onthemoney]

Also be very aware that NOG have only extended the options once and there was a reason for this. Other options have expired worthless.

[Nitaa]

I hope i havent killed off what has been a pretty good discussion and thoughts while i have been relaxing on a tropical island the last few days. I would like some feedback or thoughts from digger, SC, Shasta etc on my previous post. Like in any good discussion one needs to ask all types of questions even if it challenges or questions your own judgement.

The initial response why they sold PPP was to some efect help reduce debt and possibly help in an aquisition. However i ask myself that if i was in the same shoes would i have done the same for the same reason? I keep coming up with no, except they think that PPP had reached a premium price. Apart from that i just dont buy into any of the other arguments.

discl. Have held NZO for 5 years although have 70% of my NZO and OD portfilio this year.

[Onthemoney]

I hope i havent killed off what has been a pretty good discussion and thoughts while i have been relaxing on a tropical island the last few days. I would like some feedback or thoughts from digger, SC, Shasta etc on my previous post. Like in any good discussion one needs to ask all types of questions even if it challenges or questions your own judgement.

The initial response why they sold PPP was to some efect help reduce debt and possibly help in an aquisition. However i ask myself that if i was in the same shoes would i have done the same for the same reason? I keep coming up with no, except they think that PPP had reached a premium price. Apart from that i just dont buy into any of the other arguments.

discl. Have held NZO for 5 years although have 70% of my NZO and OD portfilio this year.

Hi Nita

NOG had to sell PPP to get some cash. They were in a very poor cash position before they sold the shares.

[shasta]

Hi Nita

NOG had to sell PPP to get some cash. They were in a very poor cash position before they sold the shares.

OTM

Totally agree, NZO did not wish to exercise the PPP options, & at a time where they had little cash, & selling the PPP shares would mean they didnt need to tap into there loan facility money (setup for Tui & Kupe).

NZO do have cash now (& did have), but the difference being it wasn't "available" for use.

Like the situation we have at present - over $30m in the bank, but during the last quarter NZO drewdown $5m for working capital, because $25m of there cash holding has already been earmarked for Pike.

Nita - I hope that clarifies your query.

[Nitaa]

thanks for that. the commitment to Pike seems to have been premature then. although as a substantial holder of Pike they must have needed to make that commitment to appease the bankers.

i guess no different to many own peoples personal finances... need to rob peter to pay Paul

[digger]

Nita,come to the AGM and ask that question. See you their.

[Nitaa]

Nita,come to the AGM and ask that question. See you their.
Are you referring to the question of why did NZO sell their PPP? I agree that they may not have been in an ideal position to fund their options but i still dont agree with Shasta and OTM that they needed the cash. They sold about a week prior to June 30th if i am not mistaken so it would like for the profit/loss statement. In less than 2 weeks from the time they sold Tui was pumping. Forward contracts of Tui was sold by Mitsui so cashflow was almost at the point that that NZO sold their shares. That is the reason for my question. Perhaps NZO needed to come up with money by June 30th but with caskflow iminent from Tui i just dont buy it. There may be 100 plus reasons for them selling when they did and most likely i will never know the real reason as they have pretty well covered themselves.

Will i attend the AGM? I would love to but i have other commitemtns that will have me out of the country at the time.

What i have been saying is not to detract from what DS is doing as i belive his efforts will be well rewarded for the shareholders. I have maintained for some time that i was never a fan of TR but since i was from Taranaki myself i know that DS is a pure bred (unless he was from south of New Plymouth). Seriously though i like his approach so far and hope it continues.

[the machine]

Quarterly out - I see they've dumped the Felix prospect.

per crown minerals felix is in play for mid 2008




NZOG sets ambitious exploration and growth targets
19 October 2007 - Wellington-based, New Zealand Oil & Gas, has laid out an ambitious exploration spending plan, and reserves and production growth targets in its 2007 annual report.
The rise in spending will follow the big increase in cash flow it has started to receive from the Tui oil field.

Chief executive officer David Salisbury says the company plans to spend around $25 million on exploration in the 2008 financial year.

He says that NZOG has set an “ambitious growth target” of increasing its current reserves from 14 million barrels of proved and probable (2P) reserves to 25 million barrels by 2012.

The company is also targeting to double production to two million barrels a year by 2012.

The nearshore North Taranaki Felix oil prospect, which NZOG operates has been recently upgraded after new seismic data. Drilling is planned around mid 2008.

The Kupe gas condensate offshore field in which NZOG is a partner (and where production drilling starts inside two months) will also see the planned Momoho-1 exploration well drilled in the second quarter of 2008.

Mr Salisbury says NZOG is also building an inventory of new exploration opportunities, seeking fresh exploration acreage, and is on the look-out for acquisition opportunities.

A key priority has been to recruit further experienced staff capable of realising NZOG’s growth strategy.

Recently a number of people have been appointed to the positions of chief geophysicist, staff geoscience co-ordinator, reservoir engineering manager, public affairs manager, commercial manager and legal counsel.

At current oil prices and exchange rates, NZOG’s share of Tui revenues over the 2008 financial year is expected to exceed $100 million.

The additional 15% upgrade in Tui reserves to 32 million barrels would at current prices deliver NZOG approximately $50 million in additional revenues with only minor costs.



Last updated 18 October 2007



m

[duncan macgregor]

Lucky your market was on holiday yesterday and missed the knee jerk reaction to the drop in the DOW on friday. NZO did rather well on a small turnover down 1.5%. NWE went down 18.8% and AED 13.8%. The DOW is up at the moment so you might miss out on the drop.
Question are the shares now cheaper to buy in AUSTRALIA even with the exchange rate difference or will your sp drop or theirs rise straight away?. Macdunk

[Mingeathinaikos]

Lucky your market was on holiday yesterday and missed the knee jerk reaction to the drop in the DOW on friday. NZO did rather well on a small turnover down 1.5%. NWE went down 18.8% and AED 13.8%. The DOW is up at the moment so you might miss out on the drop.
Question are the shares now cheaper to buy in AUSTRALIA even with the exchange rate difference or will your sp drop or theirs rise straight away?. Macdunk

Macdunk, this is relatively constructive post for you on this thread, well done! Lets hope it continues this way.

[duncan macgregor]

I would say that NZO will drop about !% in NZ and rise about !% in Australia today to get back to near level. C-MON noggers give out your prediction before the market opens. That would be more interesting than waffling on about PEAK OIL surely. Macdunk

[Hoop]

107
Sorry I cheated :D:D

[bermuda]

This stock has 12000 odd shareholders and many of them dont understand that NZO has just about booked in annual revenues of over $NZ100 million per annum for the next 15-20 years,....

Until they do the sp could go anywhere,...but when they do the sp will go well north of where it is now. We will see some retraction today but with sausage rolls being served at both the PRC AGM tomorrow and at the NZO AGM on Friday I would expect a lift and a continual lift as the Kupe drilling gets nearer.

PS you picked on NWE and AED being down substantially.They were hit by news of reduced production and sand problems.Not really fair of you to include them as part of the sell off..

No such problems with Tui

[Onthemoney]

Are you referring to the question of why did NZO sell their PPP? I agree that they may not have been in an ideal position to fund their options but i still dont agree with Shasta and OTM that they needed the cash. They sold about a week prior to June 30th if i am not mistaken so it would like for the profit/loss statement. In less than 2 weeks from the time they sold Tui was pumping. Forward contracts of Tui was sold by Mitsui so cashflow was almost at the point that that NZO sold their shares. That is the reason for my question. Perhaps NZO needed to come up with money by June 30th but with caskflow iminent from Tui i just dont buy it. There may be 100 plus reasons for them selling when they did and most likely i will never know the real reason as they have pretty well covered themselves.

Will i attend the AGM? I would love to but i have other commitemtns that will have me out of the country at the time.

What i have been saying is not to detract from what DS is doing as i belive his efforts will be well rewarded for the shareholders. I have maintained for some time that i was never a fan of TR but since i was from Taranaki myself i know that DS is a pure bred (unless he was from south of New Plymouth). Seriously though i like his approach so far and hope it continues.


Hi Nita

Sorry I have been referring to the first block of shares they sold a few years ago.... Not any before Tui....

[oldowl]

Tough rock drives costs up
By MARTA STEEMAN - The Press | Thursday, 25 October 2007

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Tunnelling the Pike River coalmine has proved more difficult than expected, Pike River Coal's shareholders were told yesterday at the firm's inaugural annual meeting.


"In fact, based on tunnelling experience to date we now expect nearly all the tunnel to be in the more expensive rock classes, rather than a maximum of 40 per cent," managing director Gordon Ward told about 70 shareholders at the meeting, which was held at the mine site.

The 2300-metre tunnel to the coal seam was 71% complete with 666m to go. Pike River Coal (PRC) expected to hit the coal seam next April 30.

That was about a month later than previously forecast although there was still potential for more slippage of one to three months, Ward said.

Last month, PRC said it had approved an $11 million increase for the extra tunnelling costs taking the approved budget to $185m, excluding a working capital budget of $33m.

Since July 2005, $105m had been spent on the underground mine development. The mine is in the Paparoa Range, 46km north of Greymouth with the access road cutting through Department of Conservation land. PRC raised $85m in an issue of shares to the public in July. Overall, the benefit of higher coal prices was expected to more than offset the increased mine development costs, Ward said yesterday.

Pike was poised to reap the benefit of an expected jump in hard coking coal prices next year. China and India were big influences on the price. For the first time China had become a net importer of thermal and coking coal.

Ward said market commentators were expecting premium hard coking coal – the type PRC would produce – to sell about $US120-125 a tonne from next April, compared to the current price of $US96.

Construction of the $19.2m coal preparation plant was expected to start at the end of the month and be completed in May next year in time for the first processing of coal.

Production in the first 12 months to April 2009 was forecast to be 240,000 tonnes building to 1m tonnes in the following year.

In the next six months the company would recruit 50 staff.

The company was looking at options to transport the first coal exports of about 60,000 tonnes next year. A possibility was by rail to Lyttelton Port.

Transport by two purpose-built vessels from Greymouth to Taranaki for export from there was being finalised by the West Coast Coal Consortium, Ward said.

Ward told shareholders coal exports were to be exempt from the Government's carbon emissions trading scheme.

Once the mine was running at full capacity, PRC's mine would be the fourth largest employer in the Grey District and would spend about $35m a year in the local economy on labour, services, power and transport.

[Toddy]

Looks like they may be giving away free Tui down on the Naki.

STOCK EXCHANGE ANNOUNCEMENT

24 October 2007

Taranaki Basin incident

AWE Ltd, as operator of the Tui Area Oil Project, has been informed by New
Zealand authorities that degraded oil, in the form of tar balls, has washed
up on a stretch of beach on the country's Taranaki coast.
AWE is working closely with New Zealand authorities, including Maritime New
Zealand and the Taranaki Regional Council, to identify the nature and source
of the oil.
AWE, has been asked for and supplied, a sample of Tui crude to Maritime New
Zealand for analysis and comparison with the degraded oil washed up on the
coast.
Taranaki Regional Council, which is co-ordinating the cleaning of the beach,
has collected approximately six cubic metres of oil contaminated sand,
understood to be the majority of the affected area.
The Tui area oil project lies approximately 60 km from the affected Taranaki
coastline.

[duncan macgregor]

Six cubic metres is a big spill to big to be a little accident so someone will pay a hefty fine. The sp will take a tumble making a good buying opportunity the moment we know who spilled what. They are a little unlucky with wind direction, that points to it being a TUI spill. The winds have been gale force west to south west with huge seas. Hope its proved that they are not the culprits, but who knows at this point. Get ready to buy in at under a dollar, might make a decent trade next week. Macdunk

[Ripping]

Six cubic metres is a big spill .... Macdunk

They've removed 6 cubic m of contaminated sand, not to say that it was a spill of 6 cubic metres. Thats about a truckload of sand they've removed. Not good news... but no reason to think it was anything but a small spill....

[shane_m]

I am out until the investigation results ann, just minimizing risk.

[JBmurc]

maybe perfect timing as my funds will be in my new NZ ASB account next week sub $1 NZO sounds good to me and maybe a top up in PPP- 100k to be invested

[arjay]

They've removed 6 cubic m of contaminated sand, not to say that it was a spill of 6 cubic metres. Thats about a truckload of sand they've removed. Not good news... but no reason to think it was anything but a small spill....

6 cu metres of contaminated sand found on one one area of beach 60 km from the source suggests a rather large amount of oil lost.

[bermuda]

My two cents on this is that these tar balls are shipping discharge from one of the numerous vessels that enter the Taranaki Port.

Reminds me of the old days in Bermuda when the beautiful pink beaches were an illusion because when you went to stand on the sand you sunk down into black tarry oil that had been illegally discarged by ships in the area.The hotels and motels had bottles of drycleaning fluid to use to clean your feet.

The international maritime union got onto it as it was becoming a problem worldwide and within a couple of years the problem was almost eliminated by heavily fining those vessels owners.

Oil has its own 'DNA' (Nickel : vanadium ratio) and the culprits were easily found.

This oil could be from anywhere but the source should be found with a good bit of detective work. My pick would be from a vessel and not associated with Tui ( a very light crude oil).

However it could have come from one of the support vessels or from the FPSO but my pick is from something else.

You have to be an optimist otherwise the world could get very bleak.

[duncan macgregor]

It sure beats bleating on about PEAK OIL. Should make nzo a good trade next week i am picking. Macdunk

[Toddy]

It sure beats bleating on about PEAK OIL. Should make nzo a good trade next week i am picking. Macdunk

Hell, I thought that you would be down there with your bucket and spade. Another opportunity missed by the Macdunk man.

[blockhead]

I am out until the investigation results ann, just minimizing risk.

Man are you easily spooked or what ? Wouldn,t surprise me if the operator (AWE) has insurance to cover such a hiccup but at this stage we don't even know where the "oil balls" came from, could be local cow cocky gave the Hilux an oil n grease and flushed it all down the creek, cow cockies are known for such antics

[Dr_Who]

You guys on here totally crack me up... LOL

[Oiler]

My two cents on this is that these tar balls are shipping discharge from one of the numerous vessels that enter the Taranaki Port.

Reminds me of the old days in Bermuda when the beautiful pink beaches were an illusion because when you went to stand on the sand you sunk down into black tarry oil that had been illegally discarged by ships in the area.The hotels and motels had bottles of drycleaning fluid to use to clean your feet.

The international maritime union got onto it as it was becoming a problem worldwide and within a couple of years the problem was almost eliminated by heavily fining those vessels owners.

Oil has its own 'DNA' (Nickel : vanadium ratio) and the culprits were easily found.

This oil could be from anywhere but the source should be found with a good bit of detective work. My pick would be from a vessel and not associated with Tui ( a very light crude oil).

However it could have come from one of the support vessels or from the FPSO but my pick is from something else.

You have to be an optimist otherwise the world could get very bleak.

I am with you on this Bermuda. People jump to conclusions on issues such as this one and without all the facts start pointing fingers :mad:

Tar balls on the beach can also be a natural phenomena ....eg Huntington Beach California has tar balls regularly and it is all because of the very shallow oil deposits.

In the same area a small oil slick was seen from the air and immediately the platform operator was accused of spilling oil. $5million later .... ooops an earthquake had opened a small fissure and released a trace of oil.

Lets not be too hastie in coming to conclusions.

[Nitaa]

Taranaki oil spill exposes southern oceans risk: Greens
| Thursday, 25 October 2007

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Advertisement

AdvertisementGreens Party co-leader Jeanette Fitzsimons says a Taranaki oil spill should ring alarm bells in Government about the potential risks and costs of mooted oil exploration in the Great South Basin.


Work on cleaning up tar balls discovered on Tuesday on the Taranaki shore near Okato beach is continuing.

Taranaki Regional Council director of resource management Fred McLay said 10 workers had been working for two days to clean up the affected area.

Six cubic metres of oil contaminated sand had been collected and would be disposed of at a landfill, Mr McLay said.

Ms Fitzsimons said the risk of oil spillage from such explorations activities was real.

"The Taranaki contamination should be taken as wake-up call about what could happen on a far bigger scale, in a much more environmentally sensitive region in our southern oceans."

The Tui Area
.................................................. .................................................. ......................

If it was from Tui then the spill would have been significant to the point that AWE would already have been aware of it. Its more likely someone like Digger dumping his used oil in an attempt to get a cheaper entry price.

I have said it in the past and although only a slight posibility is the potential for seismic activity to cause problems. There has been quite a bit lately although not in the Taranaki region

[jdg]

looks like it was from tui. release been made on the asx.
-j

[shasta]

looks like it was from tui. release been made on the asx.
-j

Im celebrating guys, we obviously have so much oil flowing about, we can't handle it!

Seriously, what sort of fines & compensation are we up for?

[Nitaa]

Yes it now looks likely. At least that reported the day of the event. Should it have been released to the market at the time.The report to the Maritime should have been released to the market because we dont know the extent of the problem. I believe it should have as it appears to have had a slight impact on the SP especially with AWE. Also if any fines are imposed etc then again it could have an impact on the SP.

So it wasnt digger after all

[boysy]

looks like it was tui but that it was likely discharged by the umuroa as contaminated dischared water from the tui field. I mean i wish people read the entire ann before jumping to conclusions such as 6 cubic meters of oil as oposed to the 6 cubic meters of oily sand. Just if you comment on the ann announcing something make sure you have read the ann properly.

[Ripping]

looks like it was tui but that it was likely discharged by the umuroa as contaminated dischared water from the tui field. .

which announcement that you read carefully gave you this conclusion ?

[boysy]

on the asx AWEs latest announcement

[Dr_Who]

Holy Moly.. Brent Crude hit $90 this morning!!!

[blockhead]

Holy Moly.. Brent Crude hit $90 this morning!!!

If it goes much higher it should be worth gathering tar balls

[Mr Tommy]

From stuff site ...



An oil slick washed up on Taranaki's coast looks likely to have come from the Tui oil field.

Australian Worldwide Exploration (AWE) media spokesman Ian Howarth, of Sydney, said the company had been advised the washed-up oil was similar to the oil produced from the Tui field.

AWE operates the Tui Area Oil project 50km off the Taranaki coast.

Mr Howarth said the analysis, done by the Taranaki Regional Council, was only preliminary and an investigation to directly link the oil to the Tui field was not complete.

A discharge of contaminated water early on Sunday from the Umuroa, a floating production, storage and offloading facility, could be responsible for the pollution.

"The incident occurred when the tanks were discharged.

"Normally only a portion of the water is discharged. On this occasion, the level in the tank was allowed to go down too far and some contaminated water was discharged into the sea."

Mr Howarth said the spill was reported to Maritime NZ on the day.

Exactly how much oil escaped was not known. "The fact of the matter is it should not have happened, if this is established as the cause."

AWE claims the incident is its first environmental blemish.

Sticky blobs of the tar-like oil have littered some of the coast's best surf breaks.

While there were no visible signs of any harm to wildlife yesterday, the pollution has angered locals. Adrian Fenton, New Plymouth, said he was shocked when he arrived to help clean up yesterday.

"The whole beach just reeked of oil."

Chris Daley said he was devastated when he saw the mess. Whoever was responsible for the spill should own up to what they had done.

Mr Howarth said substantial investigations were going on to find out what happened and how to stop it happening again.

AWE managing director Bruce Wood is expected to visit New Plymouth next week.

The sticky black goo was first spotted coming ashore on Tuesday night. By Wednesday morning, it had spread 10km from north of Kaihihi Rd, near Okato, to Paora Rd, near Puniho.

A three-day clean-up operation run by the TRC and costing more than $20,000 is expected to be completed today.

Maritime NZ marine pollution response team manager Nick Quinn said the chemical analysis of the oil was being done in Australia.

He hoped to have the results within seven working days.

Mr Quinn said it was too soon to say what penalties the culprit could face.

TRC compliance manager Bruce Pope said the clean-up was going well.

"We have got most of it, but we still have another day to go."

About six cubic metres of oil-contaminated sand has been removed from the beach.

[duncan macgregor]

it will be an interesting few days in the market for AWE, NZO, PPP. They all dropped on the ASX by roughly similar ammounts yesterday. PPP by 4.3%, AWE by 4.1% and NZO by 3.3%. Now that the greenies are jumping up and down it looks like further downtrends have to be expected. Thats the risk you take in the exploration and recovery game accidents must happen especially out in rough seas in gale force winds where you couldnt drink a glass of water without spilling the lot. It might be only a drop in the bucket, but its a major disaster for the oil industry in NZ with this greenie govt making the rules. Its another nail in the coffin for the options i expect pass the parcel will speed up now that the music is louder. Macdunk

[boysy]

Macdunk i think we should invent an "Best share bagging advice" award for the Auckland sharetrader meeting and im sure with almost unanimous certainty you would be front runner for this award with your continuiois pass the parcel rhetoric about NZOODs. Will be great to see the man in the flesh at the gathering though thats for sure.

[Sharp737]

Could be just a storm in a tea cup. This is not a major incident although bad enough for the locals. There may be a fine but the project supports locals. Just lessons to be learned so it doesn't happen again. My thoughts anyways.

[rimu]

6 cubic meters of sand. so, a chunk 2 meters wide by 3 meters long by 1 meter deep

probably a couple of trailer loads?

sweet **** all, compared to the millions of cubiic meters of sand on any given beach

[Hoop]

with this oil spill ....what is the worst that could happen.

Fine the companies involved say $100,000 and cost of the clean up say $50,000 ...peanuts!! Overreaction by Mr Market methinks

[gulf]

Madduck give it a break - you have made your point whatever it was !

[clips]

from - NZO: Chairmans Address to 2007 Annual Meeting

"Share Options
The listed options in the company have currency until 30th June 2008. These
options were issued gratis to all shareholders in late 2005 and have an
exercise price of $1.50.
Some investors have asked whether the term or other conditions of these
options may be varied. At this stage, the Board has no such proposal. Having
said that, I assure you the directors are cognisant of the fact that the
exercise of a prior tranche of options brought a substantial sum of very
useful equity capital into the company in June 2005 and that share options
can be a valuable trading mechanism for certain investors.
The approximately 140 million options on issue represent a potential source
of significant funding for the Company and your directors recognise the
substantial opportunity that this can provide for the Company if, as
intended, we have the projects in place that justify that level of additional
capital raising.
Further, as I stated in my overview in the annual report,
*****your directors firmly intend that the value of NZOG is fully recognised in the marketplace ahead of June 2008." ********

[jdg]

never before has a stock been so discussed that has delivered so little to so many. this thing’s been tracking sideways for a good couple of years. i sold about a year ago at a price somewhere near where it is now. i can't see it making the option conversion price before the end of june. excluding exploration success, i simply can't see a trigger that would make it run. those still in the options are expecting the sp to be north of $1.60. i'm not sure if brave is the word for that... best of luck,

-j

[Kropotkin]

Unispiring AGM in welly today.

Went to get a feel for the big brains on the board.......unimpressed.

1. Salisbury came off alright - good speaker but nothing visionary.

2. Radford appears more intent on keeping his own pockets filled to the brim - appears to think NZOGs profits are his personal entitlement (would love to see the coy justify his 2K per day consultancy not to mention additional bennies).

3. Meyer seems like a smug sonofabitch - looked very put out at having to answer q's from the lowly sharholders. Not a man I would trust at the helm of the remuneration committee tbh. I suspect he may have been a used car saleman in a previous life.

Cheap bastards didn't even lay on the sausie rolls! :p

Overall: I think I'll take a hit on my oppies and exit stage left.

[Nitaa]

Interesting post. Yes i agree with your thoughts on TR especially. However as sharholders we have and continue to let him get away with it. He has very little to offer apart from his best attibute and that is to prevent takeovers (if he wants to)

Im sure others will report soon but i was also hoping to see what their game plan is. Starting to sound very similar to Brent King and Viking. No clear direction and more hoping something good will fall in his lap. early days with DS though.

in a nutshell.. the dead wood needs to go and it will be up to the shareholders to get rid of them.

[arjay]

How did the vote on increasing Directors fees go? I would be dissapointed if, after telling shareholders that divies for them were out of the question until the CO repays debt, shareholders then went ahead and approved incresed payouts to Directors.

[shane_m]

I have voted yes, give that man a pay rise!!! :D he deserves one.

Not a holder anymore though.

[Wiremu]

Kropotkin,

I don't know whether you were at the same meeting as me, but there were sausage rolls left over when I left.

And you couldn't be more wrong about Ray Meyer. Try dean of engineering at the University of Auckland, rather than used car salesman.

[Kropotkin]

How did the vote on increasing Directors fees go? I would be dissapointed if, after telling shareholders that divies for them were out of the question until the CO repays debt, shareholders then went ahead and approved incresed payouts to Directors.

funny you should mention that..lambs to the slaughter with a few dissenters.

but in principle i agree with no divvy at the mo - shasta explained it much better than I ever can...


Kropotkin,
I don't know whether you were at the same meeting as me, but there were sausage rolls left over when I left.
And you couldn't be more wrong about Ray Meyer. Try dean of engineering at the University of Auckland, rather than used car salesman.

serves me right for leaving early haha

Meyer could have all the degrees in the world. Hell, he could be the Queen of Sheba. My impression (uninformed as it may be) is an of another stuffed shirt (big brained he may be) riding on the NZOG gravy train. I said he was smug not stupid.

[duncan macgregor]

funny you should mention that..lambs to the slaughter with a few dissenters.

but in principle i agree with no divvy at the mo - shasta explained it much better than I ever can...



serves me right for leaving early haha

Meyer could have all the degrees in the world. Hell, he could be the Queen of Sheba. My impression (uninformed as it may be) is an of another stuffed shirt (big brained he may be) riding on the NZOG gravy train. I said he was smug not stupid. The gravy train lasts until it runs out of oil or the gullable wake up to what is going on which ever comes first. I woke up to that halfway through the 2006 AGM got to the nearest ph and sold the lot. TR was bleeding the company then, nothing seems to have changed. they still treat the shareholders with the contempt they deserve. Macdunk

[geezy]

I must admit, Krop's post did shake me a lil, with such good products but so little movement in share price, is lookin grim (even with Oil prices) up .

Starting to have (more) doubts about the whole management group now.

Might sell on strength instead of thinkin long term. :/

[Mick100]

first positive - the oil price is over $90

second positive - David S commented that he was very pleased with talent of the new people that he has bought into the NZO team in an environment in which good people are hard to get
The way forward, as DS sees it, is through exploration in the taranaki area - lets see if their luck with the drill bit improves

third positive - there was an unlimited supply of sausage roles

forth positive - it was a nice day in wellington

those who didn't make it didn't miss out on any new info - there was nothing reported that was not already known to the public.
,

[sideline]

Mick, did they say anything about the hedging, i.e. the calls and their expiry? (We know that
the puts run to 2010).

[Mick100]

Mick, did they say anything about the hedging, i.e. the calls and their expiry? (We know that
the puts run to 2010).

Yes - TR gave quite a good explanation of the situation regarding hedging

Firstly, the calls were taken out to help pay the premium on the puts - ie NZO got paid for the calls which covered some of the cost of buying the puts - a wise move at the time IMO

As it turns out the puts are very unlikely to be exercised (unless oil falls below $50/bbl) however the calls that NZO sold look as though they will be exercised - some of them anyway (TR did say that no calls have been exercised so far, so obviously NZO have not sold oil for a price in excess of the call price which I thought was $85)
The good news is that the remaining calls add up to 100,000 bbls over the next three years. Even if oil prices continue increasing then only around 10% of the next three yrs production will have to be sold at the call price.

So absolutely no problems with hedging in my opinion
.

[duncan macgregor]

Having not gone to the meeting and listening to all the unanswered questions on this forum i presume the meeting was a raging success. I left halfway through the previous meeting and sold the lot knowing that management had greed and utter contempt for the shareholders. Listening to the people so far that have gone to this years Agm i notice a change of attitude by some of the brainwashed. Some of them i presume voted for management to get over the top wage rises. DID ANYONE STAND UP AND CALL THEM A BUNCH OF GREEDY BASTARDS. I would say not, so you lot can pay the piper, you deserve to hire him. Mick 100 states nothing new that wasnt known before at the meeting, which makes it a raging success against open disclosure. All the unanswered questions by a bunch of wimps who come home knowing nothing new about what their hard earned investment dollar is up to. The only hope you lot have is an increased sp, before you get out, the management will play for time. Macdunk

[Onthemoney]

I must admit, Krop's post did shake me a lil, with such good products but so little movement in share price, is lookin grim (even with Oil prices) up .

Starting to have (more) doubts about the whole management group now.

Might sell on strength instead of thinkin long term. :/

As a shareholder on and off in this company for most of its life, be very wary. I too was warned many years ago by my peers and later on posters on this site about investing in this company and the lack of respect for its owners the shareholders.

I stood up for it but in later years have changed my tune when I realised why the price reacts why it does. Be very aware and wary!!!!

As an aside you do not want this company to be paying divis until they accumulate imputation credits.

[Onthemoney]

The gravy train lasts until it runs out of oil or the gullable wake up to what is going on which ever comes first. I woke up to that halfway through the 2006 AGM got to the nearest ph and sold the lot. TR was bleeding the company then, nothing seems to have changed. they still treat the shareholders with the contempt they deserve. Macdunk

Yeah I have wondered about TR and saw Salisbury and thought great. But am now wondering how far TRs hand is up his rear to control the puppet as he seems to be re-enacting some of the comments of the 90s.

[shane_m]

give TR a break guys, he deserves a pay rise. definitely worth more than 2k a day.

I would be more worried about the oil spill, and clean up cost. hence I got out after reading the oil spill ann two times.

[Onthemoney]

give TR a break guys, he deserves a pay rise. definitely worth more than 2k a day.

Great stuff - definitely deserves a rise look at his performance over the past 2 decades... I wouldn't turn up for less than 2k a day....

[shasta]

first positive - the oil price is over $90

second positive - David S commented that he was very pleased with talent of the new people that he has bought into the NZO team in an environment in which good people are hard to get
The way forward, as DS sees it, is through exploration in the taranaki area - lets see if their luck with the drill bit improves

third positive - there was an unlimited supply of sausage roles

forth positive - it was a nice day in wellington

those who didn't make it didn't miss out on any new info - there was nothing reported that was not already known to the public.
,

Must have some incredible talent there now, who edged me out of the Finance job there for a start? :mad:

Could have sorted the PR in me lunchtime :D

Nice to see someone focus on the positives from the meeting.

Why on earth people are expecting a company that 6 months ago was technically still an "explorer", & 4 months after first oil, is now a mature dividend paying producer, is just plain crazy!:confused:

TR stepped down as he said he would, so lets not be having a go at him personally.

Like it or not, NZO have finally delivered & had TR not fought tooth & nail against GPG (?) in the early days, NZO wouldnt be around today...

Granted the market hasn't woken up to NZO yet, good i say.

Those that don't like the setup....exit stage left, right even!

Those that believe in NZO & it's future - it's a cheap producer & not without risk, look back in 2 years time & see how far we've come.

Lets look back at the years highlights...

1. Tui first oil - Discovery to production in around 4 years (& the fastest payback period?)

2. Pike River "PRC" - Dual listed (not without delays & cashflow problems)

3. Kupe - Finance sorted, gas sale contract altered, drilling program ahead

4. New Management (TR stepping down) - new era?

5. Put/Call options - smart play by NZO, limiting the downside & now sitting pretty with the POO.

Wish i could have been there today, but alas work committments...

[digger]

just got back from wellington. Thanks for all the comments but would like to add some points.
All the share bonuses to the staff should be looked at. Roughtly it means they get the right to take up the options two years after they join the company at 20% above the price they were when they joined the company or 20% above the price when they agreed to take up the rights.
{Helen tells me that in the US staff get these options for no capital outlay.}
So if theses options are issued today at 1dollar they will have to be 1-20 when exercised.

I have to accept the hedging policy in place to satisfy bank lending policy but i have it from several directors that hedging will be kept to a minium in the future.
Agree that there should be no dividend until imputation credits are available,and also until the other two projects are at or very near production.At that stage i will be prepared to lead a lunch mod if more shares are issued to staff if no dividend is paid to shareholders.

[tim23]

Krokopin- you were not at the AGM so stop commenting; the food was fine but I was impressed with David Salisbury; TR usual dulect tones.

[Mick100]

just got back from wellington. Thanks for all the comments but would like to add some points.
All the share bonuses to the staff should be looked at. Roughtly it means they get the right to take up the options two years after they join the company at 20% above the price they were when they joined the company or 20% above the price when they agreed to take up the rights.
{Helen tells me that in the US staff get these options for no capital outlay.}
So if theses options are issued today at 1dollar they will have to be 1-20 when exercised.

.

thanks for explaining that digger
that looks fair enough
When they said "partially paid shares" I assumed they were going to be heavily discounted, ie a give away
.

[sideline]

just got back from wellington. Thanks for all the comments but would like to add some points.
All the share bonuses to the staff should be looked at. Roughtly it means they get the right to take up the options two years after they join the company at 20% above the price they were when they joined the company or 20% above the price when they agreed to take up the rights.
{Helen tells me that in the US staff get these options for no capital outlay.}
So if theses options are issued today at 1dollar they will have to be 1-20 when exercised.

I have to accept the hedging policy in place to satisfy bank lending policy but i have it from several directors that hedging will be kept to a minium in the future.
Agree that there should be no dividend until imputation credits are available,and also until the other two projects are at or very near production.At that stage i will be prepared to lead a lunch mod if more shares are issued to staff if no dividend is paid to shareholders.

Thanks digger et al for your observations from the AGM . Are you sure you mean lunch mod and not
lynch mob??
Mick, partially paid means they have to pay 1c per share now to reserve the right to later take them up.
At uptake they have to pay the difference i.e. if the are offered at 20% over today's price they'll have to
fork out another $1.23 at uptake. Only after that do they become fully paid shares and can be sold on the market.

[Nitaa]

From what i have figured so far with the share option plan for employees is they are getting free cracks of the cherry imo. By that i mean that as incentives so to speak they can purchase these various options at reletively low price compared the the current SP at the time. There are a sway of options available at around the 41.00 to $1.10 mark. This is significantly lower than the 20% that digger has mentioned if you read the NZX release when they come out.

What does all this mean. NZO is probably no different to most other listed companies where imo the strike rates or incentives are too easliy attained. This is biggest gripe but it wont do us any good if only the odd person complains about it. In effect we are paying for mediocrity. It could be worse. You only have to look at many of the spec assie mining stocks to realise that most NZ companies arent too bad.

Although i wasnt at thge meeting i am growing to dislike TR more and more every day. I sort of expected that DS is a puppet to TR by the looks of today my fears are not easing. If someone wants to put their heart and soul into a company then reard them for their effort but TR has his fingers in a lot of pies and since he is based in Aus i dont see how he is being efficient for NZO. His family will do very well out of his legacy.

Im sure the oil spill was mentioned today and since AWE acknoweledeged there was an incident on the 21st I wonder how significant it was. was the question asked and if so what was the reply?

Although i am a holder i cant help but get the feeling the pong is getting stronger.

[Dazza]

ill be holding nzo till the day digger sells his shares.

me and the old mans cash in this company for 3 years now, has pretty much been flatlined.


a dissapointment? you bet

in the past 3 years, they have got tui into production , ipo'ed the coal

i tink that aint too shady for the company IMO

share price wise = shocking

company's projects = good work.

lets hope the share price will catch up some day...

[boysy]

Those of you who didnt see NZ herald article

NZOG expects $100m from Tui
5:00AM Saturday October 27, 2007

New Zealand Oil and Gas (NZOG) is expecting its oil revenues from the Tui area in offshore Taranaki to top $100 million this financial year.

Chief executive David Salisbury told NZOG's annual meeting in Wellington yesterday that production from Tui had averaged about 40,000 barrels a day since oil began flowing on July 30.

Some technical modifications were needed to reach the 50,000 barrels a day target, which the company expected to achieve during November.

NZOG has a 12.5 per cent interest in the Tui area, from which 2.5 million barrels of oil have so far been shipped.

About 60km from the coast, the Tui Area Oil Project, operated by AWE, is being investigated as the possible source of oil that washed up on a Taranaki beach.

About 6cu m of contaminated sand has been removed from the beach.

Salisbury said the oil produced from Tui was a high quality sweet, light crude, but so far the amount of money earned from it was commercially sensitive.

During the September quarter NZOG had received US$7.5 million cash from Tui, he said.

Forward revenue predictions were difficult, but a useful rule of thumb was that each barrel of oil earned roughly $100, Salisbury said.

With NZOG's share of production this financial year expected to be about 1.2 million barrels, the company expected its revenue from Tui to comfortably exceed $100 million in 2007-08.

Developed proved and probable reserves for the Tui area were put at 32 million barrels, with project operator AWE carrying out a study which would include evaluation of the economic potential of undeveloped reserves.

NZOG chairman Tony Radford said the cash flow being generated from Tui this financial year was earmarked in part to repay much of the bank loan NZOG used as the primary source of funding for the development.

The company also needed to meet its other operational costs and to be able to provide financial support , if needed, to the development of the Pike River Coal mine on the West Coast, of which NZOG now owns around 31 per cent, following an $85 million public equity raising.

NZOG's other major investment is a 15 per cent interest in the Kupe gas and condensate field development, also in offshore Taranaki, where first production is due in mid-2009.


Salisbury said NZOG's share of the Kupe development costs up to the beginning of October was about $50 million which was met from general sources of funding.

Remaining development costs were being funded through a $125 million debt facility with Westpac Bank.

He acknowledged the company had "recent disappointments" with the overseas Taranaki Hector, Taranui and Tieke exploration wells.

NZOG's current exploration portfolio was not as strong as the company would like. It remained committed to pursuing attractive exploration opportunities, both within its existing acreage portfolio in the Taranaki region, and elsewhere, Salisbury said.

Taranaki alone would not provide sufficient future opportunities for NZOG, and the company believed New Zealand had good remaining prospectivity for oil and gas.

NZOG was also looking at specific acquisition opportunities but could not yet talk about those.

"The economics for NZOG of exploring in New Zealand remain very good," he said. "New Zealand continues to be under-explored. Worldwide the hunt for acreage is on - yet New Zealand is still largely off people's radar screens.

"But we know that New Zealand has active hydrocarbon systems. There are eight identified basins, but only Taranaki has seen any significant exploration."

Salisbury said the company had been through a "transformational" period, with production beginning at Tui and the long-awaited float of coal mine Pike River.

NZOG shares closed down 1c at $1.04 yesterday, having ranged between $1.34 and 86c in the past year.

- NZPA

Tui tips

* The Tui Oil development is located off Taranaki.

* It was discovered three years ago.

* Oil began flowing on July 30.

* NZOG has a 12.5 per cent interest in the development.

* It intends to lift production from about 40,000 barrels a day to 50,000.

[Kropotkin]

Krokopin- you were not at the AGM so stop commenting; the food was fine but I was impressed with David Salisbury; TR usual dulect tones.

I had no idea someone was tracking my every move...:p

Quick! Tell everyone where I'm a going to be monday lunchtime!

Clearly you missed by further comment about leaving early - had $ to make rather than listen to TRs ramblings.

I stand by my comments - you don't have to pay attention.

[Wiremu]

Kropotkin,

If you object so much to the two directors you have made disparaging remarks about, why didn't you vote against their re-appointment.

Oh I forgot, then you couldn't hide behind anominity.

[duncan macgregor]

Kropotkin,

If you object so much to the two directors you have made disparaging remarks about, why didn't you vote against their re-appointment.

Oh I forgot, then you couldn't hide behind anominity.He probabely did what i did at the previous years meeting, walk out half way through In disgust. When you listen to what i listened to i knew to vote with my cheque book, no point upsetting the starry eyed brigade. I do notice that even some of the companies greatest supporters starting to wake up to the reality of what is going on. Never mind only eight months to go in pass the parcel that should upset a few apple carts. All those questions you lot wanted answers to what a bunch of wimps to come back none the wiser. Macdunk

[Wiremu]

Macdunc,

Is there a union of those who attend annual meetings and walk out half way through that you feel bound to answer for Kropo and in doing so repeat your great disappearing act of 2006 yet once more?

As for the reality of what's going on - I think Shasta has summed it up well:

1. Tui first oil - Discovery to production in around 4 years (& the fastest payback period?)

2. Pike River "PRC" - Dual listed (not without delays & cashflow problems)

3. Kupe - Finance sorted, gas sale contract altered, drilling program ahead

4. New Management (TR stepping down) - new era?

5. Put/Call options - smart play by NZO, limiting the downside & now sitting pretty with the POO.

[Nitaa]

Bit unfair on Kropotkin are some of you.

He has given his/her opinion and i most agree. As long as he/she doesnt play the smae record day after day then i am not sure what the problem is.

In all fairness i was unable to attend the AGM so i am have got some things wrong here.

Since most of us are shareholders here, how do you feel if money is easily given away through ESOP or through consultancy work (which can be a away to write your own cheque).

To me i have no problem with the way the company has deveopled ove rthe last couple of years. Cost blowouts are par for the course and will continue to be so. What i dont like is the way that the ESOP, other perks, consultancy work (not only to TR) is given out. Like it or not there is a lack of transparency. I hope i am wrong but Kropotkin looks to be pretty much OTM. If you disagree with his comments then lets debate what the issues are.

Feel very dissapointed now and one thing i do agree with DM is some are becoming blinded by reality.

[shasta]

Bit unfair on Kropotkin are some of you.

He has given his/her opinion and i most agree. As long as he/she doesnt play the smae record day after day then i am not sure what the problem is.

In all fairness i was unable to attend the AGM so i am have got some things wrong here.

Since most of us are shareholders here, how do you feel if money is easily given away through ESOP or through consultancy work (which can be a away to write your own cheque).

To me i have no problem with the way the company has deveopled ove rthe last couple of years. Cost blowouts are par for the course and will continue to be so. What i dont like is the way that the ESOP, other perks, consultancy work (not only to TR) is given out. Like it or not there is a lack of transparency. I hope i am wrong but Kropotkin looks to be pretty much OTM. If you disagree with his comments then lets debate what the issues are.

Feel very dissapointed now and one thing i do agree with DM is some are becoming blinded by reality.

I agree Nita

Krotopkin/Macdunk & others (not "Unbalanced" though) are allowed there pessimistic view on NZO, so long as it contains "factual" points & not ex - shareholder sour grapes, continually looking back into the past!

Whilst i'm optimistic about NZO's future, i'm fully aware of the inherent risks, ie, delays & costs blow outs etc...

BUT then, delays & costs blowouts are industry wide & all explorers/producers succumb to them, else get "lucky" to avoid them.

IMO, The biggest risk at present in the O&G game is securing drilling rigs for future exploration at "reasonable" costs.

In this regard NZO have done well, & have the drill here for the Kupe tie in gas prospects.

The O&G industry isn't for the risk intolerant, but can have HUGE upside on finding new commercial discoveries...

[Kropotkin]

Thank you Nita + Shasta.
I'm glad you support my right to hold That I clearly stated was a personal opinion.

In no post have I said that NZOG does not have massive potential. What I have been clear on is my gut feeling for the men at the top.
If don't have a good feel for a company I wont invest - simple as that.
I intend to downsell based purely on this impression (not at all based on fundamentals) but by no means intend be to be a future "sour-graper".

Wiremu - I suggest you read the posts and hold a little less dogmatic viewpoint. It's tiresome.
For the record, I voted for the Salisbury's reappointment, abstained from the others, and voted against any additional remuneration - both for non-exec raise and employee option schemes.

[tim23]

I think you are confused; one minute you own the stock next minute you don't, why did you buy in the 1st place if you did your management assessment??

Duncan - can you tell us again about your experience at last years AGM; you will have RSI at the rate you rattle on - you are simply boring.

[bermuda]

Thank you Nita + Shasta.
I'm glad you support my right to hold That I clearly stated was a personal opinion.

In no post have I said that NZOG does not have massive potential. What I have been clear on is my gut feeling for the men at the top.
If don't have a good feel for a company I wont invest - simple as that.
I intend to downsell based purely on this impression (not at all based on fundamentals) but by no means intend be to be a future "sour-graper".

Wiremu - I suggest you read the posts and hold a little less dogmatic viewpoint. It's tiresome.
For the record, I voted for the Salisbury's reappointment, abstained from the others, and voted against any additional remuneration - both for non-exec raise and employee option schemes.

Regarding your comment about Ray Meyer ( a very talented man)

Probably what you meant to say was

" I shouldn't judge a book by its cover"

[Nitaa]

Could some who were at the AGM report on the positives or new information that we were not already on about. Perhaps by recent AGM's this one may have been a little flat. In the past there has been quite a bit of hype but often has been filled with a few dissapointments. Maybe this time around no real promises but a few nice surprises in store.

Was there any mention on how NZO hope to get the op's over the line? On a seperate not it is mentioned that DS said that they may have to go to the market for funding (for aquisition). this means that in the next 12 months or so we can expect further dilution. That is of concern to me.

I have already expressed my dissapointment on the AGM report and the feedback so far. I have yet to hear any poster say what it is that is going to propel this company to the next level. DS has left this area to general to convince me that he has a solid road map to get to his target. So where is the road map?

Been a holder for 4 plus years and have done reasonably well out of this stock. Plenty of potential ahead with some direction but no plan.. Time to sell.. Very soon for me imo. The only thing holding me in is the Kupe potential with possible explorations close to Tui.

[shasta]

Could some who were at the AGM report on the positives or new information that we were not already on about. Perhaps by recent AGM's this one may have been a little flat. In the past there has been quite a bit of hype but often has been filled with a few dissapointments. Maybe this time around no real promises but a few nice surprises in store.

Was there any mention on how NZO hope to get the op's over the line? On a seperate not it is mentioned that DS said that they may have to go to the market for funding (for aquisition). this means that in the next 12 months or so we can expect further dilution. That is of concern to me.

I have already expressed my dissapointment on the AGM report and the feedback so far. I have yet to hear any poster say what it is that is going to propel this company to the next level. DS has left this area to general to convince me that he has a solid road map to get to his target. So where is the road map?

Been a holder for 4 plus years and have done reasonably well out of this stock. Plenty of potential ahead with some direction but no plan.. Time to sell.. Very soon for me imo. The only thing holding me in is the Kupe potential with possible explorations close to Tui.

Nita

I did write a longish reply, but the site didnt like it & i lost it.

DS has stated as a priority to get the options converted & i believe its crucial for NZO's future success they do get it.

Go back & read from page 94, Boysy (among others) had a good summary of how NZO will get there.

[Mick100]

Nita

The meeting was a fairly dreary, ho-hum affair - nothing was discussed that you are not already aware of
Not sure if people know - it sounds as though pike will be sold off once it's up and running
The company is going to focus on near field exploration in taranaki

nothing really to report

I have found that sometimes the best thing to do in a situation, as we find ourselves in with NZO at the moment, is to do nothing at all
I certainly won't be buying more shares but I'm not selling either.
.

[Nitaa]

My take on Pike is/was that NZO have been looking to sell Pike for quite some time. If im not mistaken is that NZO have a contract with at least one of the major stakeholder in Pike to see it through to a certain stage. This may have changed or i might have misread the "between the lines" comment a year or so ago.

One thing with NZO is i have more often that not got the short term sp wrong. If i was day trader i would have been killed ages ago. For that reason i will never think that the SP is certain to go a particular way. Ill leave that to the experts like Macdunk, Jo King and co

[duncan macgregor]

NITA, I dont know about JOEKING but macdunk got it wrong as well. However it taught me a lot about what to look for in a company served me really well with my trading in other companies. I feel sure TIM 23 will forgive me when i say the alarm went off at the 2006 AGM. I have never heard bullsh*t and waffle like it since my three year stint in the army.
I think once the nests get fully feathered there might be enough left to drill a few more holes in the ground before they ask for more money. Macdunk

[Kropotkin]

I think you are confused; one minute you own the stock next minute you don't, why did you buy in the 1st place if you did your management assessment??


Dear oh dear! I shouldn't really bother but here goes.
Not quite sure where confusion should be apportioned here, but I have been quite clear that I own ops but intend to downsell at a little loss (already downsold my heads at a minor profit).

My initial assessment to purchase was based on what I saw as market potential.
My subsequent decision to sell is based on actually seeing the management face to face and how they present/respond to stockholders.
In short, I don't trust them to represent shareholder value. End of story.

If I lose out in the long ran bad luck for me. I won't be crying about it though.

Anyway, enough of this sidetracking. Back to the real stuff.
I think Mick100 + shasta covered off the actual news of the AGM pretty succinctly with the addition of:

a) actively look at onshore exploration
b) wouldn't speculate (for commercial reasons) about picking up assets being shed post govt carbon announcement

[dsurf]

MacDunk - did you say anything at the 2005 AGM?

[Nitaa]

Oil bursts through another record
New 3:30PM Monday October 29, 2007

Oil prices set a new all-time high today, lifted by heightened tensions between Turkey and Kurdish rebels in northern Iraq, as well as a second wave of abductions in major oil producer Nigeria.

US light crude leapt more than half a dollar to a record US$92.43 in early electronic trade, adding to Friday's US$1.40 surge. It was trading up 52 cents at US$92.38 a barrel by midday (NZT).

London Brent crude rose 41 cents to US$89.10. It hit an all-time high of US$89.30 on Friday.

"There remain concerns that oil market conditions are tightening and geopolitical tensions are continuing to add a premium to oil prices," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
.................................................. .................................................. ...............

Can someone explain to me how the call options work with regards to NZO. I have bought call options before on the Aus futures and when i came in the money i really came in the money. Thoughts please

[Mick100]

Oil bursts through another record
New 3:30PM Monday October 29, 2007

Oil prices set a new all-time high today, lifted by heightened tensions between Turkey and Kurdish rebels in northern Iraq, as well as a second wave of abductions in major oil producer Nigeria.

US light crude leapt more than half a dollar to a record US$92.43 in early electronic trade, adding to Friday's US$1.40 surge. It was trading up 52 cents at US$92.38 a barrel by midday (NZT).

London Brent crude rose 41 cents to US$89.10. It hit an all-time high of US$89.30 on Friday.

"There remain concerns that oil market conditions are tightening and geopolitical tensions are continuing to add a premium to oil prices," said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
.................................................. .................................................. ...............

Can someone explain to me how the call options work with regards to NZO. I have bought call options before on the Aus futures and when i came in the money i really came in the money. Thoughts please

Nita

Nzo sold calls
so when they come in the money NZO lose
only 100,000 bbls over the next three yrs though - so nothing to worry about
.

[Mingeathinaikos]

I exited NZOODs today... never like to agree with macdunk too much, but would have been a significant amount of pinger lost had the music stopped and I couldn't find a seat.
I was slightly worried at how many were traded in the 20-30c range a few months back, those punters will be off-loading at anything above current price in the next couple of months I reckon.

Now the decision to put it all back into NZO, or scope something else.....

[shane_m]

I got out on the oil spill ann, waiting for the outcome. I reckon all oilers will get a re rating if turkey attacks PKK.

[Dr_Who]

Nita

Nzo sold calls
so when they come in the money NZO lose
only 100,000 bbls over the next three yrs though - so nothing to worry about
.


Mick, how much will this impact on their bottom line?

[boysy]

good article in the herald this morning talking about how TUIs oil helped our decrease our trade deficit last month

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10472869

[Bilo]

Mick, how much will this impact on their bottom line?
I'll have a go for you.


The company could have and should have answered this one properly when asked. Dismissive of the effect OK, but an explanation was requested and not provided. In any other forum I might have expected the Chair to ask the shareholder if the question was satisfactorily answered, particularly where it was a point where the company had everything to gain and nothing to lose, no reason to be seen to withhold info, no reason to race the meeting to a close having already got their bonus shares.

To me the answer required a $ figure put on it. It was answered by the CFO and he would have been very capable of putting a figure on it. My understanding is that NZO don’t “lose”. They only don’t get paid for the difference between ~USD85 and the oil price for 100,000 barrels spread over three years. The difference is unlikely to be over USD10 per barrel.

On the high side then, we are talking about USD1M over three years but remember that we are getting a decent return before this occurs.

Over that period NZO should sell in excess of 2.5M barrels and if it is priced over USD85 =USD212M. So much less than the 1pc - I think the reply was "less than 1pc" of revenue over the period.

(NZD110 at today’s exchange rate this would be NZD275M – sounds pretty good with Tui recovering NZO capitalisation within three years – the Tui operating costs were also low).

[Dr_Who]

Thanks Bilo. :)

Why did NZO hedge the oil in the first place? Why bother with only such a small amount? It is a blessing that it was only a small contract compare to their overall output.

[clearasmud]

Dr Who ,NZO sold those calls to pay for the hedges(puts) required by the lenders.
Clearasmud

[bermuda]

Thanks Bilo. :)

Why did NZO hedge the oil in the first place? Why bother with only such a small amount? It is a blessing that it was only a small contract compare to their overall output.

Dr Who
NZOG had to borrow some money for the development of Tui. The Bankers in their wisdom insisted that the loan be protected in the event that the oil price collapsed. So NZOG had to takk out some hedging; some at the low end and some at the high end. When these loans get repaid the company wont have to renew its hedging...it probably would protect itself against a slide but leave the upwards price open ended. Ok now that the price is over $US86 they will lose a little cream on a few barrels but they could use it all up now and enjoy the $US150/bbl when that madman strikes Iran.

Tis no big deal or loss.

The JV partners must be enjoying this huge oil price.

[Mick100]

I thought I explained this fairly well a couple of pages back but it seems some people still don't get it, except bermuda

if the oil price is above USD $86 then NZO lose the difference betweem $86 and whatever the oil price is - so if the oil price goes to $100, NZO lose $14/bbl on the hedged amount which is, as I have already said, 100,000 bbls over the next three yrs

put another way - NZO have sold forward 100,000 bbls at US $86. -
the amount of money NZO lose can't be determined because we don't know what the future oil price is going to be - NZO might not lose any money at all - if the oil price went to $200 tomorrow, then we lose $114/ bbl on 100,000 bbls
.

[Bixbite]

Sorry Mick100, I don’t see this price difference as a loss for NZO. I see this as NZO just not get the ultimate Cents of the profit.

Cheers
Bixbite

[Toddy]

I thought I explained this fairly well a couple of pages back but it seems some people still don't get it, except bermuda

if the oil price is above USD $86 then NZO lose the difference betweem $86 and whatever the oil price is - so if the oil price goes to $100, NZO lose $14/bbl on the hedged amount which is, as I have already said, 100,000 bbls over the next three yrs

put another way - NZO have sold forward 100,000 bbls at US $86. -
the amount of money NZO lose can't be determined because we don't know what the future oil price is going to be - NZO might not lose any money at all - if the oil price went to $200 tomorrow, then we lose $114/ bbl on 100,000 bbls
.

Mick
Maybe you should read a book or two on risk management. I hope that your house is insured.

[Mick100]

Mick
Maybe you should read a book or two on risk management. I hope that your house is insured.

What point are you trying to make?

[Mick100]

If NOG locked sales in at the current oil price (forward contracts) then the SP would more than likely be rerated. If they gamble that the oil price will stay high then the NZO SP will continue to under perform others in the same industry.

Its simple. Lock in the cashflows please.

This statment is looking rather dumb already
who in there right mind would want to lock in future oil prices at $75 / bbl
I'v watched on as two of my gold miners went bust because they sold forward future gold production at $400/oz. Problem is that costs keep going up and to top it off they didn't produce to the level expected so had to buy gold in the spot market at $650 to meet their forward sales

I know all about forward sales - they can be extremely risky, particuarly if there is a problem with production
Luckily NZO only have 100,000 bbls hedged
,

[Toddy]

This statment is looking rather dumb already
who in there right mind would want to lock in future oil prices at $75 / bbl
I'v watched on as two of my gold miners went bust because they sold forward future gold production at $400/oz. Problem is that costs keep going up and to top it off they didn't produce to the level expected so had to buy gold in the spot market at $650 to meet their forward sales

I know all about forward sales - they can be extremely risky, particuarly if there is a problem with production
Luckily NZO only have 100,000 bbls hedged
,

Mick

You sound a little upset about the prospect of management minimising risk and maximising value for shareholders. You should now be asking yourself why the NZO SP is what it is today and why institutional shareholders do not want a chunk of the NZO pie.

FYI, when hedging future cashflows you can hedge future income, expenses and capital expenditure.

[Dr_Who]

Mick

You sound a little upset about the prospect of management minimising risk and maximising value for shareholders. You should now be asking yourself why the NZO SP is what it is today and why institutional shareholders do not want a chunk of the NZO pie.

FYI, when hedging future cashflows you can hedge future income, expenses and capital expenditure.

Toddy, please enlighten us. I too would like to know why institutions are not buying into NZO.

[Toddy]

RISK - real and perceived

I'll start the list for you and posters can add to it. Then we can go through the risks one by one and work out how these can be minimised and the SP maximised. NZO management can then do all of the 'enlightening' for you.

1. Unknown future revenue streams. e.g at the agm management made a prediction that TUI oil income would be $100 million for this coming financial year based on no real facts. The shareholders like Mick love this kind of gamble predicition based on floating targets.

[Mick100]

Another example I can add to my hedging experiece is that of Petsec energy in 2005. They had a good chunk of their nat gas sold forward when the Katrina and Rita hurricanes came through the gulf of mexico and knocked out most of their production - It wasn't actually their instalations that got knocked out, it was the pipelines to thier installations.
They had to buy gas in the spot market imediately after the hurricanes when there was a desperate shortage of gas - The GOM infastructure was a shambles so prices were very high. But when you sell forward you have to supply - doesn't matter what happens.
It cost them many millions

[Nitaa]

RISK - real and perceived

I'll start the list for you and posters can add to it. Then we can go through the risks one by one and work out how these can be minimised and the SP maximised. NZO management can then do all of the 'enlightening' for you.

1. Unknown future revenue streams. e.g at the agm management made a prediction that TUI oil income would be $100 million for this coming financial year based on no real facts. The shareholders like Mick love this kind of gamble predicition based on floating targets.Toody

I disagree on a bit of your post.

Before i get into that, the dissapointment for me is no solid road map on how they are going to reach their target revenue. The most likely way as they have pointed out is through aquisition. Personally i dont want them to buy another similar company right now. Reasons being is they will have to pay a premium price for any producing or soon to be producing company. What i see is likely to happen is that capex will really start to kick in over the next few years as long as oil prices stay around these levels or go up. Also it is likely to mean that NZO will have to go to the market for the funds...further dilution. If there was any otakeover or merger then PPP would have been a good candidate imo. But that is too late or is not a consideration because NZO sold a big or all of their holding in the company. If they turned around and brought or mergered with PPP then that wouldnt make sense. It would mean that TR and AT are colluding.

Now to your comment on Tui revenue based on no facts. Well for this to achieve they need about $US77m. At present they are on about 40k bopd being pumped.
NZO equivalent (currently at call option price) is about 4.8k bopd ($NZ537,000 per day) is actually around $NZ196m. Is that correct? but with possible hedging, based on a conservative $US50 bopd then $100m is still easily achieved. Personally i think they are being way too pesimistic and may want to save the positive news as it becomes hard fact and when they annouce their quarterly cashflow report. Thats my guess.

Remember that oil from september exports were $NZ141m. At least 90% of that must have been from Tui. Meaning NZO share of the revenue for september is at least $15m. Of course we dont know exactly how these figures are measured but the next 2 months will give a clear picture on revenue streams from tui.

That is why PPP seems such a good buy and it was bloody crazy that NZO sold to AT. At least we know AT can do the maths

[tsb]

Bet it was an Ozzy bank!!

Read somewhere that OPEC was going to put an extra 500,000 barrels per day on the market from, I think, this coming Friday.
This could be starting a drop in forward prices and in 2 months time the oil companies may drop the price of petrol.
Sorry to be flippant - I filled my tank yesterday before the increase and that hurt!

The point - maybe the hedge will not be a big deal!

[tim23]

ACC would be deemed an institutional shareholder so theres at least one and some of the company comments suggests there are more; after all there are over 12,000 shareholders!

[sideline]

Bet it was an Ozzy bank!!

Read somewhere that OPEC was going to put an extra 500,000 barrels per day on the market from, I think, this coming Friday.
This could be starting a drop in forward prices and in 2 months time the oil companies may drop the price of petrol.
Sorry to be flippant - I filled my tank yesterday before the increase and that hurt!

The point - maybe the hedge will not be a big deal!

There may be a lot of talk about the 'extra' 500000 bopd by people interested in talking the price down,
however from memory the OPEC quota increase mainly sanctioned an already existing overproduction
by OPEC countries. So, will there actually be any additional barrels produced come NOV 1 ????

[Mingeathinaikos]

When is the next quaterly cashflow report due to hit our desks?
Thanks

[Unicorn]

When is the next quaterly cashflow report due to hit our desks?
Thanks

End of January.

[shasta]

When is the next quaterly cashflow report due to hit our desks?
Thanks

End of NEXT quarter will be 31 Dec - so late January

Oops didnt see Unicorn had answered that...

Also, do remember whilst NZO accrue around $5m per week, it is paid in arrears once sold by Mitsui on behalf of the JV.

The next quarter will show significant cashflow

[The BOWMAN]

I thought I explained this fairly well a couple of pages back but it seems some people still don't get it, except bermuda

if the oil price is above USD $86 then NZO lose the difference betweem $86 and whatever the oil price is - so if the oil price goes to $100, NZO lose $14/bbl on the hedged amount which is, as I have already said, 100,000 bbls over the next three yrs

put another way - NZO have sold forward 100,000 bbls at US $86. -
the amount of money NZO lose can't be determined because we don't know what the future oil price is going to be - NZO might not lose any money at all - if the oil price went to $200 tomorrow, then we lose $114/ bbl on 100,000 bbls
.

Mick100. From what I can remember, NZO did not hedge full production amount. They have hedged a percentage (vaguely remember 60%) of the daily production to $86. The other 40% can still be sold at a higher price.

[Mick100]

Mick100. From what I can remember, NZO did not hedge full production amount. They have hedged a percentage (vaguely remember 60%) of the daily production to $86. The other 40% can still be sold at a higher price.

I repeat - they have hedged 100,000 bbls over the next 3 yrs
Thats less than 10% of production

I'll also repeat that I have no worries about the current level of hedging
It was a smart thing to do at the time that it was put in place
What I don't want to see is more forward sales put in place and according to digger that's not likely to happen anyway.

I'm getting tired of this hedging discussion
.

[bermuda]

When is the next quaterly cashflow report due to hit our desks?
Thanks

Probably after the next quarter.

It will be the best Quarterley NZOG have produced.

[Mingeathinaikos]

Probably after the next quarter.

It will be the best Quarterley NZOG have produced.

Thanks all... i probably should have been slightly more specific, what date in jan.... but get the point.

[digger]

Thanks all... i probably should have been slightly more specific, what date in jan.... but get the point.

Very late in Jan if not early feb given the holidays. Be thankful it is not done by lawers or govt staff or it would come out in march.

[Toddy]

I repeat - they have hedged 100,000 bbls over the next 3 yrs
Thats less than 10% of production

I'll also repeat that I have no worries about the current level of hedging
It was a smart thing to do at the time that it was put in place
What I don't want to see is more forward sales put in place and according to digger that's not likely to happen anyway.

I'm getting tired of this hedging discussion
.

'no worries about the current level of hedging'

Ofcourse you wouldn't Mick, thats because 10% is not a hedge, this is just a banking arrangement. NZO management would rather leave themselves exposed, or more likely have not grasped the concept of good rational risk management. I guess that it is the drill and thrill attitude coming through.

Anyway, I'll leave you too it. After the agm I sold out again of my NZO position. I'll be back once the risks have reduced further, or atleast the management have worked out how to minimise some of the obvious market risks out there.

[Bixbite]

Quote:
Originally posted by Toddy
#1554 (P104)
RISK - real and perceived
“1. Unknown future revenue streams. e.g at the agm management made a prediction that TUI oil income would be $100 million for this coming financial year based on no real facts. The shareholders like Mick love this kind of gamble predicition based on floating targets.”

Toddy,

The answer can be found from NZO 26-10-07 ADDRESS
NZO: Chief Executives Address to 2007 Annual Meeting

Under the Tui heading: -
“The cash received by NZOG in the September quarter was US$7.5m. This is
significantly less than the revenues accrued to date. Payments are typically
received up to 30 days after delivery.
There are a number of variables - including oil price, production rate, and
the exchange rate
- which make forward revenue predictions difficult. However, a useful rule of
thumb is to say that each barrel of oil earns roughly NZ$100, and we expect
NZOG's share of production this financial year to be around 1.2 million
barrels. We therefore currently expect NZOG revenue from the Tui Area to
comfortably exceed $100m in 2007/08.”


The cash US$7.5m is related to the revenue of the August 07.

US$7.5m times 11 months (August 07 to June 08) = US$82.5m
(Today’s exchange rate 0.76)
US$82.5m / 0.76 = NZ$108.55m

Wish it could help!

Cheers
Bixbite

[Viking]

That makes perfect sense~ thanks Bixbite~

[Toddy]

This is exactly what I was talking about.

'There are a number of variables - including oil price, production rate, and
the exchange rate'................ non of which your board wishes to take any control over. So, therefore I am going to give you, the shareholders a 'stab in the dark'.

Question
Can NZO management put together a policy and procedures where they can minimise the negative impact of these variables on future earnings of NZO.

Would such a policy help clear the muddy waters of such financial estimates as presented at the agm.


Guys, dont beat me up about this. I'm just trying to help shareholders understand that if NZO Management want to ensure that the options are exercised, then a much clearer cashflow and funding policy direction should be presented to the market. If and when the oil price drops back, you can bet your bottom dollar that the NZO SP will follow.

[sideline]

This is exactly what I was talking about.

'There are a number of variables - including oil price, production rate, and
the exchange rate'................ non of which your board wishes to take any control over. So, therefore I am going to give you, the shareholders a 'stab in the dark'.

Question
Can NZO management put together a policy and procedures where they can minimise the negative impact of these variables on future earnings of NZO.

Would such a policy help clear the muddy waters of such financial estimates as presented at the agm.


Guys, dont beat me up about this. I'm just trying to help shareholders understand that if NZO Management want to ensure that the options are exercised, then a much clearer cashflow and funding policy direction should be presented to the market. If and when the oil price drops back, you can bet your bottom dollar that the NZO SP will follow.

Toddy,
why the presumption that above variables will have a negative impact only???
They can go both ways, and so far it's mainly been positive.
Of course, no guarantee that this will continue but if you lock in the price you not only remove the
downside but the upside potential as well.
Remember that when TUI was deemed viable an oil price around US$40 (or was it 35?) was assumed.
Even if poo pulls back a little from its current height I don't see any problem.

[Toddy]

Sideline

You are 100% correct, the price can go up. What I have been talking about is risk management and minimising the impact of a negative movement in the variables and giving certainty to the market place.

You do not have to use futures when forward selling. NZO could put into place a number of 'options', which act more like your home insurance policy or a stop loss on your share trading.

As for the oil price. The current spike does have a cap. Its only a matter of time before economic and political pressure dictates the cap on the short term oil price. Long term super inflation caused by inflated oil prices would harm world economic growth. I'm not going to debate the oil price as we would be here forever.

[macduffy]

Options, of course, have a cost.
Does anyone know how they are priced and what the cost of say, an option to sell at USD95 in 3 or 6 months would be?

[Anubis]

AWE have just posted their quarterly report on ASX. Here are their forward-looking comments on Tui:

The Tui Area Oil Project started production on
July 30, 2007. This was a major milestone for
AWE and the Tui joint venture with production
commencing only 19 months after the investment
decision. The project delivery represented only
a minor delay on the schedule defined at the
timing of the Final Investment Decision. Final
capital expenditure on the project is estimated
at US$269 million.

The offi cial opening of the Tui Area Oil Project was
celebrated on August 16, 2007. The Prime Minister
of New Zealand, the Right Honourable Helen
Clark, was present for the opening ceremony in
New Plymouth, which was coincidental with the
first oil lifting from the project.

The final development well in the project was
completed at the start of the quarter. The Pateke-
3H ST1 well was completed as a producer with
an 819 metre horizontal section drilled in the
Kapuni oil reservoir, as planned. Pateke-3H
was successfully brought into production in early
August.

Oil production for the quarter was approximately
2.4 million barrels (AWE share approximately
1.0 million barrels) or an approximate average
rate of 38,500 bopd for the 62 days since the
commissioning phase began. To the end of
October, the project has produced approximately
3.5 million barrels of oil, and based on this strong
performance, AWE confi rms its production target
to produce 10 million barrels for the project in the
fi nancial year ended June 30, 2008.

The four producing wells currently have substantial
surplus deliverability in excess of the processing
capacity of the Umuroa. The vessel has a
current oil processing capacity of approximately
48,000 bopd, which is slightly below the nominal
nameplate capacity of the vessel. Further
commissioning of the production system is
ongoing.

AWE’s net oil sales for the quarter was
approximately 0.5 million barrels. The difference
between production and sales was due to the
initial build-up of oil inventory, which is not
recognised as revenue until title and risk pass to
the buyer. This is a common situation with new
offshore projects. Accordingly, this production will
be recognised as revenue in the next quarter.
In August 2007, AWE announced the preliminary
review of the proved and probable oil reserves,
which increased from 27.9 million barrels to 32
million barrels. The 15% increase in the 2P
reserves is based on the preliminary post-drill
mapping of the Tui, Amokura and Pateke oil
fields. A more comprehensive reserve study
incorporating production trends from the wells
and the re-processed 3D seismic data has also
commenced and is expected to be completed by
the end of December, 2007.

AWE and Shell Todd Oil Services recently
executed a second “shared services agreement”
involving the use of helicopters by both operators
in the offshore Taranaki Basin. Following the
success of the agreement on offshore support
vessels, the new helicopter agreement is
expected to offer additional cost savings to both
joint ventures.

During the quarter, the Taranui-1 exploration well
was drilled to a total measured depth of 3,915
metres. Taranui-1 was located approximately 15
kilometres north east of the Tui Area Oil Project.
The well intersected oil shows in both the Kapuni
D and F sand sections, with an oil sample being
recovered from the D Sand. Initial interpretation
of these zones indicates that the oil zones are not
commercially significant. The well was plugged
and abandoned.

Subsequent to the end of the quarter, AWE, as
operator of the Tui Area Oil Project, was informed
by New Zealand authorities that degraded oil, in
the form of tar balls, has washed up on a stretch
of beach on the country’s Taranaki coast. AWE
has also identified an incident that occurred on
the Floating Production Storage and Offloading
vessel Umuroa on October 21, 2007, which
could be related to the oil which has been found
on the Taranaki coast. AWE is working closely
with New Zealand authorities, including Maritime
New Zealand and the Taranaki Regional Council,
to identify the nature and source of the oil and
continues to work closely with the authorities
to assist in the clean-up process. AWE is also
undertaking its own investigations, which are
continuing.

[Nitaa]

This post may have answered a previous poster on NZO's expected revenue from Tui. At current rate of about 37k bopd and an expected 10m barrels for the year then NZO's share is 1.2m. Based on $US63 for the price of oil (currently about $US90) NZO will easily reach their $NZ100m revenue for 12 months

[sideline]

Options, of course, have a cost.
Does anyone know how they are priced and what the cost of say, an option to sell at USD95 in 3 or 6 months would be?

Sorry, US$95 wasn't traded but some put options for Feb 08 that did trade on the NYMEX were:
92$ cost 6.52/barrel
100$ cost 12.67/barrel

Don't know whether you can click on this without 'agreeing' to all sorts of disclaimers
http://www.nymex.com/lsco_opt_csputs.aspx?product=LO&month=G&year=8&list1=G&list2=8&prefix=lsco
otherwise go to www.nymex.com the symbol for crude is CL and check american style options.

[the machine]

awe have also booked a rig for next round of drilling in nz

M

[Bixbite]

Vince (Admin),

How can I delete this post?

Cheers,
Bixbite

[Dr_Who]

Holy Shiat! Oil hit over $94! Looks like going to $100 soon!!!!

I am of to get myself a scooter ..LOL

[duncan macgregor]

Holy Shiat! Oil hit over $94! Looks like going to $100 soon!!!!

I am of to get myself a scooter ..LOL HEY DOC, That has nothing to do with anything. Its not how much you earn, or likely to earn, its what you do with it once you have got it. Some people end up with nothing on high salaries, others end up with a fortune starting on low wages, its what you do with it that counts. NZO have a great record of not telling you what they intend doing with it so dont get to excited, it might only be more perks for the boys. Macdunk

[sideline]

Holy Shiat! Oil hit over $94! Looks like going to $100 soon!!!!

I am of to get myself a scooter ..LOL

Yeah, $100 could be there by Friday US time?

[boysy]

well from ppp quaterly released yesterday aparently some 3.5 mmbo have been recovered from TUI so far up to end of october so NZO share of that is about 435,000 bo so far not bad

[bermuda]

Peter Stachan, a leading oil analyst is forecasting further tightness and is recommending investors buy energy stocks, in particular Australian and New Zealand oil stocks.

There arent too many oil stocks on the NZX so I presume he means NZOG.

The Tui economics are getting better everyday and with an oil price as high as $US94 /barrel the income from Kupe liquids will easily be more than half the revenue from this field.

Also if you would like a really good prognosis on what is happening to today's oil markets please read

www.energybulletin.net
Peak oil Oct29
Kenneth deffeyes "Feedback Loops"

[Bixbite]

Tui revenue - Adjustment

RE: my post #1569 (p105)

“Payments are typically received up to 30 days after delivery.”

And the first shipment was on 16th August 07.

The cash US$7.5m should be including some payments of the revenue of the September 07.

Cheers
Bixbite

[Dr_Who]

HEY DOC, That has nothing to do with anything. Its not how much you earn, or likely to earn, its what you do with it once you have got it. Some people end up with nothing on high salaries, others end up with a fortune starting on low wages, its what you do with it that counts. NZO have a great record of not telling you what they intend doing with it so dont get to excited, it might only be more perks for the boys. Macdunk

Thanks for your concern mate. :) I was only joking when I said I am gonna buy a scooter. I am pretty much cashed up right now and only play stocks like NZO and RPL for fun cos I get bored at home. :)

[arjay]

agreed McDunk. Dissapointed that NZO shareholders voted more fees to the same directors who are telling us to wait until after the bills are paid before they will reciprocate. Bad form.

[duncan macgregor]

Thanks for your concern mate. :) I was only joking when I said I am gonna buy a scooter. I am pretty much cashed up right now and only play stocks like NZO and RPL for fun cos I get bored at home. :) I thought you traveled in a ph box into time zones in the past. If you Buy a scooter get a chinese battery scooter, they are all the rage in china,[who needs oil]. I wonder how long before that is what happens in NZ when oil becomes to expensive. I only buy mining stocks on the ASX which have a much higher sp volatility for the self same reason. MRX look that one up I bought them in june sold them and bought them back, simply using the 30 day moving average as the buy and sell signal. I go off the thirty day moving average more and more lately with volatile stocks for buy and sell signals. Macdunk

[the machine]

from energy review
Kupe rig reports for duty
(Thursday, 1 November 2007)

THE jack-up Ensco Rig 107 has arrived at the Kupe gas field and is awaiting the arrival of the jacket from New Plymouth this weekend so it can start development drilling at the $NZ1 billion ($A900 million) offshore Taranaki, New Zealand project.
Full Story...
alas do not subsribe.

would have expect nzo/origin to spread the word of this, instead of leaving us guessing if still in admrilty bay

M

[shasta]

from energy review
Kupe rig reports for duty
(Thursday, 1 November 2007)

THE jack-up Ensco Rig 107 has arrived at the Kupe gas field and is awaiting the arrival of the jacket from New Plymouth this weekend so it can start development drilling at the $NZ1 billion ($A900 million) offshore Taranaki, New Zealand project.
Full Story...
alas do not subsribe.

would have expect nzo/origin to spread the word of this, instead of leaving us guessing if still in admrilty bay

M

Im looking forward to the glossy pics of the rig with the Taranaki Mountains in the background...Tui was a very nice entree, now for the main course...KUPE

[bermuda]

Shasta,
NZOG has got so much potential to be recognised on the NZX but New Zealand needs a dedicated Energy Reporter.

Until then we have to rely on actual cashflows.

Bit more patience required......as always.

[Nitaa]

Oil is still on the go. A correction is likely in the next 4 weeks imo.

Expect a rerating at some stage. The way the price is going it will be viable to drop a bucket down the hole and scoop up the oil that way.

[Balance]

Shasta,
NZOG has got so much potential to be recognised on the NZX but New Zealand needs a dedicated Energy Reporter.

Until then we have to rely on actual cashflows.

Bit more patience required......as always.

Love your patience.

Still singing that same tune - it was Kupe, then Tui, then PRC ... and now a dedicated energy reporter!

A few more years yet.

Meanwhile, other oil companies streak ahead. Millions are made. But not at NZO.

[boysy]

im not sure what plannet you have been living on Balance but NZO is making millions each week in the tune of about $5 million a week at current prices. Do the maths Balance before slagging off a share as its far easier to slag off a share than stick up for one. Though in this case its quite simple just look at the figures mate.

[duncan macgregor]

im not sure what plannet you have been living on Balance but NZO is making millions each week in the tune of about $5 million a week at current prices. Do the maths Balance before slagging off a share as its far easier to slag off a share than stick up for one. Though in this case its quite simple just look at the figures mate.
BOYSY, The only figures that i look at is the return in a higher share price, rise plus dividends. Its the return that i get that is the one and only consideration that i make when investing. I really dont care if they invented sliced bread, or manufacture weapons of mass destruction, make billions of dollars, its the return that i get on my investment dollar nothing more nothing less.
I hold no loyalty for any company competing for my investment dollar, will dump them at the drop of a hat. In return for my invested dollar, i want full and open disclosure about what they earn, plus what they intend doing with it once they have earned it. I wont stand being ripped off, will take my invesment dollar back, and invest elsewhere. NZO fall very short of my expectations for open disclosure, and sit near the top of the table as rip off merchants. You may think that the price of oil will save them i dont.
You may also think with all this money rolling in some of it will come your way i dont. Macdunk

[dsurf]

MacDunk you are entitled to your opinion but it is a bit slanted. The disclosure under the mangement has improved. They are talking to brokers etc. NZO are not the "operators" of Pike, Kupe or Tui - This means they can only issue "consortium agreed" info.

Also to be fair they have outlined a growth plan that includes acquisition, etc etc.

Under this plan the shareholder will never see any money as it must go into growth - meanwhile the management get shares options etc at a discount and are big porkers in the trough that has been kept full by the 10K investors who thought that they may see some sort of return when Tui was pumping.

Instead they are going to ask shareholders for more money maybe when the company will have 100m+ free cashflow? Also appalling is the timing of this when we have just seen 3 dry wells.

I have no idea why a buyback was not announced either - It would protect the shareprice downside that they keep on TALKING about raising.

[Balance]

im not sure what plannet you have been living on Balance but NZO is making millions each week in the tune of about $5 million a week at current prices. Do the maths Balance before slagging off a share as its far easier to slag off a share than stick up for one. Though in this case its quite simple just look at the figures mate.

Making $5m a week? Really? You sure you have your feet on the ground on planet Earth?

I think you are confusing revenue with profit. Also, confusing net cashflow (after paying off the banks etc) with gross cashflow.

Yes, it's simple. The figures say NZO has gone nowhere in the last two years whilst other oil companies have delivered billions to shareholders.

MacDunk - you have any take on why these NZOers are so confused?

[duncan macgregor]

Making $5m a week? Really? You sure you have your feet on the ground on planet Earth?


MacDunk - you have any take on why these NZOers are so confused? THEY ARE IN LOVE MY MAN. Nothing as blind as love just ask my missus. Macdunk

[boysy]

Balance NZO share of TUIs development costs have already been covered so almost all of the revenue being earnt is profit. And yes NZO hasnt returned billions to its shareholders for a simple reason none of it development were yet up and running. TUIs delivering results better than expected and the price of oil certainly isnt hurting NZO gross cashflow. And balance am interested to know what shares you are currently holding ?

[winner69]

Yes, it's simple. The figures say NZO has gone nowhere in the last two years whilst other oil companies have delivered billions to shareholders.

MacDunk - you have any take on why these NZOers are so confused?


Boysy - see Balance was talking about billions and millions or whatever to shareholders .....

[Balance]

THEY ARE IN LOVE MY MAN. Nothing as blind as love just ask my missus. Macdunk

Good one!

And I see Boysy is still confused! Man, they must be totally infatuated and incapable of rationale thinking!

Stocks I hold? BHP and more BHP.

[boysy]

mate go for gold having a crack at my character i dont know you and im sure i never will meet you but save the personal insults just back yourself up with facts. sorry for quoting the billions bit from your post but hey just read between the lines before trying to suck up to macdunk.

[jdg]

the only real problem with Duncan and Balance's argument is that they are quite right. NZO really has done nothing in a very long time. however, faithful noggers may well have the last laugh because odds are it will come right at some point (almost in spite of itself) as it does have the assets. however, what has the opportunity cost of holding during a time when a dart thrown at a board of commodities would have found you huge gains in the last couple of years?
but of all the stocks i'm not holding, i'd really like to see this one do well. god knows many posters here deserve some reward. good luck.

-j