NZ Oil & Gas (NZO)

[Mr Tommy]

At 6am yesterday it was at 3692, target is 3820, just 128m to go, so they must have covered that by early afternoon yesterday.

Looking at trades today, volume of just 18K, definitely no leaks here.

Maybe the drill bit jammed ....

[Bilo]

Mr T A lot of maybes but if it was me I would have shut off all communication until after the markets close this afternoon and take the weekend to provide a full and careful report. AWE, NZO, PPP must all be feeling that their Shares are unloved at present but that is no reason to rush to market with a scrap of good news. Kahu was never going to be a company maker, why would it become a company breaker?

[digger]

Is this official drilling report an official drilling report?

I thought i was being very clear that it is Digger official drilling report until more evidence become available.Something to do instead of just biting your nails,but i still think it will turn out to be rather accurate. Given a good week to an-alise all data and we should know next thursday.

[Balance]

I thought i was being very clear that it is Digger official drilling report until more evidence become available.Something to do instead of just biting your nails,but i still think it will turn out to be rather accurate. Given a good week to an-alise all data and we should know next thursday.

And the Digger report on PRC?

Considering that PRC is now the single biggest investment for NZO?

PRC has to perform for NZO to perform?

BTW - based upon past track record, sp fall suggests dry-holes ahead.

[digger]

BTW - based upon past track record, sp fall suggests dry-holes ahead.

That is only true because on average there are about 10 dry wells for every economic one. So it becomes true that a falling SP coming up to next thursday report will leave jitters and punters will get out as early as possible.It tells us nothing thought about the well. If completely dry AWE would want that out before the weekend and out of the road.
I am betting it is another Tieke. A good show but not quite enought. Probably be told we are now looking at another side drill sometime in the future.
Balance ,PIKE will indeed be a winner but you will not find that in past preformances.Mining to NZ is a bit like the All Whites.We are starting at the bottom and slowly finding out what we are suppost to do.By the end of 2011 if we are not up to full speed by then,then we probably never will be and need to sell to Canadians who know how to Mine.

[Bilo]

Considering that PRC is now the single biggest investment for NZO?

PRC has to perform for NZO to perform?

The last time I looked at it Kupe was worth more than Pike and Tui together...

[Paint it Black]

That is only true because on average there are about 10 dry wells for every economic one. So it becomes true that a falling SP coming up to next thursday report will leave jitters and punters will get out as early as possible.It tells us nothing thought about the well. If completely dry AWE would want that out before the weekend and out of the road.
I am betting it is another Tieke. A good show but not quite enought. Probably be told we are now looking at another side drill sometime in the future.
Balance ,PIKE will indeed be a winner but you will not find that in past preformances.Mining to NZ is a bit like the All Whites.We are starting at the bottom and slowly finding out what we are suppost to do.By the end of 2011 if we are not up to full speed by then,then we probably never will be and need to sell to Canadians who know how to Mine.

I think you're right it is likely to be marginal. After the Tui SW2 initially positive and ultimately disappointing announcements AWE is being cautious on raising false hopes again before getting the wire logs fully analysed.

[Sideshow Bob]

Any thoughts about dividends this year? They've obviously spent a bit of cash with drilling and propping up Pike, while revenue from Tui is down. On the positive side the commissioning of Kupe will provide some more income.

May a lower dividend, or maybe keep the same with more income from Kupe to come. Or may keep the divvy the same level to pacify shareholders and help the shareprice................??

[fish]

Kupe cashflow will be strong and longlasting hence no need to have so much cash stacked away in eroding us dollars . A 5 cent dividend with full imp credits should be the minimum to expect -will cost only $20 m . I would really like a 10cent dividend-and this is easily affordable-but suspect we will have to wait until next year !

[shasta]

Kupe cashflow will be strong and longlasting hence no need to have so much cash stacked away in eroding us dollars . A 5 cent dividend with full imp credits should be the minimum to expect -will cost only $20 m . I would really like a 10cent dividend-and this is easily affordable-but suspect we will have to wait until next year !

Good point Fish

A 5c dividend only costs ~$20m - & i see that as being fairly stable from NZO.

But they need to step up there exploration to increase there reserves & production, personally there minimum annual exploration budget should be $20m, if not more, as i assume most shareholders would want a mixture of dividends (income) & exploration for growth.

The PPP investment now seems like a non core asset to me, either NZO has to take it over (while the share price is depressed), or sell it's stake & make a capital return to shareholders.

Down the track the sale of PRC, could & probably should be used for another acquistion/farm in on a permit at development stage.

Perhaps a small capital return/special dividend could also be made from the PRC sale, this way NZO can maintain it's dividend policy @ say 5c.

I'm sure the market would respond postively to any "capital return/special dividend" over & above the normal 5c final dividend

[digger]

Talking about dividends now is getting the months mixed up.Dividend month is August,appro the 26th. This month is all about winding up the drilling program.Last AGM TR said it would all be finished in Janurary.So to be smart i said finished by end of March. At the time that seemed a bit cynical but i thought it might be a good idea to have a few months up our sleeve. Dividend is just at this moment jumping the gun.I want the eventual word fron the Kahu-1 drill to come next.

[notie]

good points digger. nzo needs to stop giving away money in divis and reinvest the money in some decent exploration. up to now they have been very shy into getting into any thing. To make discoveries you have to drill, and not just take a small stake in an awe well either.

That said nzo is sitting on 40% in barque offshore canterbury and a decision is due on drilling this in august. I don't think they will committ to anything and it is likely the other partners will pull out. What will nzo do? Grow some and drill it.....past experience will say they won't

[Logen Ninefingers]

nzo needs to stop giving away money in divis and reinvest the money in some decent exploration.

Companies need to return a percentage of profits to their owners, otherwise there is no incentive to become a shareholder. A return on investment is required, otherwise it is pointless investing.....you might as well keep your money at the bank. NZO is doing well, they have good assets and good income from those assets - hence shareholders will expect regular dividends. NZO have obviously invested in a drilling program. It's only with hindsight that you can judge the success or failure of it, and they have not had the crucial element of good luck to date.

[gambier33]

Companies need to return a percentage of profits to their owners, otherwise there is no incentive to become a shareholder.

Not exactly true Notie. Shares in Warren Buffet's Berkshire Hathaway have never paid a dividend but the common stock last traded for US$115,815 per share. Share holders withdraw 'profits' when they sell stock.

[Logen Ninefingers]

Not exactly true Notie.

Yeah Notie.

[percy]

I would much sooner NZO drilled.I believe the "peak oil" arguement, and I have never seen NZO as a divie yield company.

[fish]

I would much sooner NZO drilled.I believe the "peak oil" arguement, and I have never seen NZO as a divie yield company.

They have so much money they can afford to do both .
You should be aware that it is company policy to pay a reasonable proportion of income/profits out as an annual dividend .
If you want a company with good prospects and no dividend have a look at cue
The problem is the market doesnt always get its valuations right-especially with oilers-look at the volatility . So you cant guarantee any return for the future unless they pay divies .
cheers

[percy]

I do have an indirect holding in Cue through my OXX holding.Old Geoff Albers has been around a long time.Clever old fox.

[winner69]

They have so much money they can afford to do both .
You should be aware that it is company policy to pay a reasonable proportion of income/profits out as an annual dividend .
If you want a company with good prospects and no dividend have a look at cue
The problem is the market doesnt always get its valuations right-especially with oilers-look at the volatility . So you cant guarantee any return for the future unless they pay divies .
cheers

Fish - NZO shareprice volatility is not that different from the market - hence you cant 'blame'the market for getting the valuation of oilers (ie NZO) .... maybe, just maybe, the current market valuation is 'spot on' ... of course it is

[RRR]

Interesting and action packed week ahead. To buy or not to buy is the difficult choice to make. I am not moaning, it is good to be in a situation like this.

[digger]

Interesting and action packed week ahead. To buy or not to buy is the difficult choice to make. I am not moaning, it is good to be in a situation like this.

Hey i agree with the need for a reasonable dividend as well as a drilling program. Notie is trying to misquote me ---suprise,suprise. It it is just at the moment i am more interestwed in the drill results---hopefully on Thursday.

[blockhead]

Should be an ann before Thurs I think Digger ??, drilling and logging must be all done and the workers will be just fishing over the side of the rig till they move on

[blockhead]

NZO
19/07/2010
MINE

REL: 0933 HRS New Zealand Oil and Gas Limited

MINE: NZO: Kahu-1 Exploration Well Disclosure Notice

NZOG (New Zealand Oil & Gas Ltd) advises that as at 0600 hours today (NZ
time) plug and abandonment operations were starting at the Kahu-1 exploration
well.

Wireline logs were acquired after reaching a total measured depth of 3,835
metres.

The targeted Kahu valley feature was located as prognosed but was not
reservoir quality sandstone. No significant hydrocarbons were found.

The Kahu-1 well was an exploration well within PMP 38158, located
approximately 3 kilometres east of the producing Tui oil field.

At the conclusion of operations at Kahu, the Kan Tan IV drilling rig will be
released to the joint venture drilling the Tuatara-1 exploration well.

[BigBob]

The targeted Kahu valley feature was located as prognosed but was not
reservoir quality sandstone. No significant hydrocarbons were found

[blockhead]

Don't be too depressed Big Robert, remember this from just last week,................."At current prices, the additional NZOG reserves have a sales value of nearly NZ$100 million."

It aint all bad

[Balance]

That is only true because on average there are about 10 dry wells for every economic one. So it becomes true that a falling SP coming up to next thursday report will leave jitters and punters will get out as early as possible.It tells us nothing thought about the well. If completely dry AWE would want that out before the weekend and out of the road.
I am betting it is another Tieke. A good show but not quite enought. Probably be told we are now looking at another side drill sometime in the future.
Balance ,PIKE will indeed be a winner but you will not find that in past preformances.Mining to NZ is a bit like the All Whites.We are starting at the bottom and slowly finding out what we are suppost to do.By the end of 2011 if we are not up to full speed by then,then we probably never will be and need to sell to Canadians who know how to Mine.

Falling share price ahead of drill report = usually dry well.

You cannot beat the mobile phones on the drilling platform when it comes to getting the news out ahead of market announcement.

If it's a gusher, their mates will be in like you pensioners going for the refreshments at an AGM.

[BigBob]

Don't be too depressed Big Robert, remember this from just last week,................."At current prices, the additional NZOG reserves have a sales value of nearly NZ$100 million."

It aint all bad

Indeed... would have been a nice little booster though.... :o)

[777]

With current production, more drilling action to come and Pike to contribute in the future there is little downside in the the share. And while this happens 5c dividend a share is a gross return of over 6%.

[arjay]

Pity really, before the curent drilling round there was considered to be an 80% chance of at least 1 of the 4 wells coming in.

[digger]

4 bugger. That say it all but need to be longer for posting
4 bugger

[neopoleII]

""And while this happens 5c dividend a share is a gross return of over 6%.""

tell that to the many folks who paid $1.50 many moons ago.
i belive a special divi was paid then....... to get the sp to option conversion price.

only folks making money in NZO are management and speculators.
its the longterm investor that keeps this co afloat.
kupe could easily pay for 10c pa for here on out.
gee! nzo's last divi was partly funded by ppp divi last time.

i see a big fat cash cow called Kupe running full swing and NZO sitting there like a lame duck waiting to be taken over and having its own cash used against it.

[Corporate]

Bit of a shame really that this drilling campaign has come to nothing. AWE and NZO's mistake was that they should have purchased companies/assets that were in the development stage during the GFC, instead of blowing there loot on such a large drilling program. Nice to say in hindsight though.

[arjay]

No one can deny that Kupe and Pike represent substantial assetts for NZO (and given the low share price it won't be surprising if the conspiracy theorists start trotting out their takeover talk again). Nevertheless, two dry campaigns in a row does suggest that with a theoretical 1:10 strike rate, the JV may need to re-examine their modellling assumptions.

[KentBrockman]

Bit of a shame really that this drilling campaign has come to nothing. AWE and NZO's mistake was that they should have purchased companies/assets that were in the development stage during the GFC, instead of blowing there loot on such a large drilling program. Nice to say in hindsight though.

Hindsight? Didn't they say that they were 'evaluating opportunities' during the GFC in virtually every quarterly?

[friedegg]

i think they should make a play on ppp right now

[Balance]

i think they should make a play on ppp right now

Yes, throw good money after bad.

[notie]

oh dear. another dry well for nzo-what a surprise.

so where do they do from here? something reckless now like elect to go it alone on Barque? Most likely judging by past mistakes they have made

[friedegg]

i dont see it as bad,the price is around cash atm anyway and i bet most ppp holders dont have a positve outlook ahead of them including radford,it would give nzo a 22.5% stake in the rest of tui,a little bit from vietnam in the future and thier licences.At least the management would have increased work to justify thier pakages

[Corporate]

i dont see it as bad,the price is around cash atm anyway and i bet most ppp holders dont have a positve outlook ahead of them including radford,it would give nzo a 22.5% stake in the rest of tui,a little bit from vietnam in the future and thier licences.At least the management would have increased work to justify thier pakages

Problem is NZO would have to pay far to much to get the substantial holders to sell. TR won't hand his shares over for 15c.

[friedegg]

Problem is NZO would have to pay far to much to get the substantial holders to sell. TR won't hand his shares over for 15c.
well someone offloaded 5mill today,could be a wife of someone wanting retirement

[digger]

well someone offloaded 5mill today,could be a wife of someone wanting retirement

PPP has come down soooo much that at this stage you have to ask is it all overdone.Should the underlying stand out be that someone unloaded or that someone grabed 5 million. 10% of TUI is still worth something as well as 5% of PPPV.

[Balance]

PPP has come down soooo much that at this stage you have to ask is it all overdone.Should the underlying stand out be that someone unloaded or that someone grabed 5 million. 10% of TUI is still worth something as well as 5% of PPPV.

Simple - if the sp is down, it's someone unloading. If the sp is up, it's someone grabbing.

If it's an insider selling, run!

[Mr Tommy]

oh dear. another dry well for nzo-what a surprise.
so where do they do from here? something reckless now like elect to go it alone on Barque? Most likely judging by past mistakes they have made

Notie - Just a couple of days ago (post 9804), you said ...
That said nzo is sitting on 40% in barque offshore canterbury and a decision is due on drilling this in august. I don't think they will committ to anything and it is likely the other partners will pull out. What will nzo do? Grow some and drill it.....past experience will say they won't

So which side are you on? Should they grow some, or would that be reckless. Looking at the permit map around Barque there have been gas shows but nothing major found, I wouldnt think it wise to go alone on this one.

[arjay]

Mr Tommy - Please refrain from giving the hamster a wheel.

[Mr Tommy]

Mr Tommy - Please refrain from giving the hamster a wheel.

Sorry, I heard it squeaking.

[notie]

Notie - Just a couple of days ago (post 9804), you said ...
That said nzo is sitting on 40% in barque offshore canterbury and a decision is due on drilling this in august. I don't think they will committ to anything and it is likely the other partners will pull out. What will nzo do? Grow some and drill it.....past experience will say they won't

So which side are you on? Should they grow some, or would that be reckless. Looking at the permit map around Barque there have been gas shows but nothing major found, I wouldnt think it wise to go alone on this one.

deary deary. things much be bad with nzo if all you can do is disect my posts.

might be better to ask the nzo directors what is their strategy as it appears they don't have one and the 4 dry wells in this season (not mentioning last years standout drilling season) indicates that the strategy of being carried along by other joint ventures is not working.

You might also want to ask why they are spending so much on G&A and why their hundreds of years of technical experience has yielded nothing.

Comparable sized and smaller OG EP companies overseas have much smaller teams and manage to actually come up with their own exploration ideas, work up areas and farm things out. Ask when nzo sucessfully farmed out a drilling oppotunity recently. Mangatoa and Felix permits were both areas nzo failed to farm out and they handed it back in to the government.

They talk a big story, but really nzo has not done any decent exploration or development by themselves for a long time, but are relient on their partners to do that, in the case of AWE (mainly).

[geezy]

nzo shud take a serious look at cue as it has producing assets in nz too

[digger]

nzo shud take a serious look at cue as it has producing assets in nz too

For me Geezy your post hurts. I did take a look at Cue just before the cash issue at 15 cents. Bought 1/4 million at 14 cents and now it is the only oil stock up from that time. Would you believe i looked at selling all my PPP shares at the top and going into CUE big time.The rational in hindsight was 100% but talked myself out of it on the now very weak excuse that as the directors of PPP had a big stake they must know what they are doing.Boy was that 100% wronge .
Nog and PPP will have some very serious thinking to do before hoping into more drills.Most likely finding the size of Kupe and TUI is the now better way to go and leave out the wild card get rich [get poor] stuff until we have a better understanding of what we are trying to do. Clearly our it is back to the drawing boards.In fact now i am thankful we have no more drills coming up as that means no more falling SP. Today the SP is lower than if we had never done these wells and given the same monies to the poor.
This will be a discussion for the AGM. To drill or not to drill,where to drill,or even how to drill.Are we any better than a map on the wall and a dart.After our 4 nil drilling outcome of this season these questions have to be asked before any more money is thrown at dry holes.
So Geezy maybe your post is the best way to go. Cue is still under valued and better to buy the resource than to go off on our blind search looking for it.

[fabs]

Quite some time ago i expressed concern on this forum, that failing to produce something substantial in the near future, a point which we have now reached, the retention of the present management must be seriously questioned, especially the so called experts hired in the last 4-5 years.
There is still a window of opportunity, the sooner Kupe & PRC achieve max. prod. to get a smaller but more potent and focused team in place.
It is also possible that the co. will have more difficulty in farming out some share of there existing pemits as they are now maybe considered losers.
On the positive side??? NZO has seemingly not done as bad as AWE,s RE. S/P as they are now just about worth half of not so long ago.

[Casa del Energia]

Quite some time ago i expressed concern on this forum, that failing to produce something substantial in the near future, a point which we have now reached, the retention of the present management must be seriously questioned, especially the so called experts hired in the last 4-5 years.
There is still a window of opportunity, the sooner Kupe & PRC achieve max. prod. to get a smaller but more potent and focused team in place.
It is also possible that the co. will have more difficulty in farming out some share of there existing pemits as they are now maybe considered losers.
On the positive side??? NZO has seemingly not done as bad as AWE,s RE. S/P as they are now just about worth half of not so long ago.

Whilst it would be nice to have found commercial reservoirs during this season - it is the nature of the game that it is high risk. I don't share the same view that the management team should be made to walk the plank for dry wells - - if there are no problems with judgement, governance and strategic planning then it would be irrational to make radical changes in the management team.
No prospector has any control over what is actually in the ground and I cannot see any problems with the choices to drill - there is no problem.
Suggest to those who prefer a more sedate investment, every bank offers fixed term deposits.

[fabs]

Fully aware of the strike-rate regards drilling and i am not particular hung up about that, but combined with the performance in the other 3 mentioned not very impressed.
All of them, Judgment, Governance & Strategic Planning have been trashed quite extensively on this forum over some time by quite a large and diverse number of contributors and i feel that this Public co. is not beyond improvement let alone criticism.

[geezy]

hi digger,

indeed. i do own both those stocks and did sell out some nog before their drilling campaign started as i was starting to have little faith, i do like their producing assets but chasing for another hopeful TUI well started to seem like a bad decision by them. Why not look at producing well in its infancy stage e.g. cue? well i m no expert but it just seemed sensible with the ready cash they already have.

i do own awe too and it has hurt me alot. i hope for happier days for nog but i m sure not all is lost.







For me Geezy your post hurts. I did take a look at Cue just before the cash issue at 15 cents. Bought 1/4 million at 14 cents and now it is the only oil stock up from that time. Would you believe i looked at selling all my PPP shares at the top and going into CUE big time.The rational in hindsight was 100% but talked myself out of it on the now very weak excuse that as the directors of PPP had a big stake they must know what they are doing.Boy was that 100% wronge .
Nog and PPP will have some very serious thinking to do before hoping into more drills.Most likely finding the size of Kupe and TUI is the now better way to go and leave out the wild card get rich [get poor] stuff until we have a better understanding of what we are trying to do. Clearly our it is back to the drawing boards.In fact now i am thankful we have no more drills coming up as that means no more falling SP. Today the SP is lower than if we had never done these wells and given the same monies to the poor.
This will be a discussion for the AGM. To drill or not to drill,where to drill,or even how to drill.Are we any better than a map on the wall and a dart.After our 4 nil drilling outcome of this season these questions have to be asked before any more money is thrown at dry holes.
So Geezy maybe your post is the best way to go. Cue is still under valued and better to buy the resource than to go off on our blind search looking for it.

[dsurf]

Get a grip - Kupe is a 20 year project that is performing. Tui still has 22m barrels versus 27m when project first mooted. PRC will perform at some point and the costs are already sunk. NZO has enough money from existing projects to pay a 5c divi and do 5 wells for probably 10 to 20 years. I do not like a falling SP but the world is very risk averse and liquidity is tight. That will change for all the same reasons that applied when the SP was $1.85, ie the world is running out of cheap energy

[digger]

Get a grip - Kupe is a 20 year project that is performing. Tui still has 22m barrels versus 27m when project first mooted. PRC will perform at some point and the costs are already sunk. NZO has enough money from existing projects to pay a 5c divi and do 5 wells for probably 10 to 20 years. I do not like a falling SP but the world is very risk averse and liquidity is tight. That will change for all the same reasons that applied when the SP was $1.85, ie the world is running out of cheap energy

Your view in my mind is only one path and it is time to consider if it is the best one.The facts about KUPE and PIKE are well known and i agree with completely.The problem is how best to spend that money and just drilling has a risk reward outcome which might not be as favorable as buying a distressed asset as CUE was during the last cash issue. The issue needs to have considerable airing at the AGM. Certainly this year we do not need to have another free gift to the the CE[DS] over and far above his income from NZO. This year we have all lost so no one needs insulating from that fact.

[Corporate]

This quarterly report will be an interesting one. We will get to see how Kupe is performing and how much net cash is left in the kitty.

[Bixbite]

This quarterly report will be an interesting one. We will get to see how Kupe is performing and how much net cash is left in the kitty.

Copy from NZO web-site

>>>>>>>>>>>>>>>
KUPE

A detailed reserves review was completed in 2010. The initial 2P reserves were increased to:
• 273 petajoules of sales gas (NZOG's share 41PJ)
• 18.6 million barrels of light oil/condensate (NZOG 2.8 mmbbls)
• 1.11 million tonnes of LPG (NZOG 167,000 tonnes)

Remaining 2P reserves as at 30 June 2010 were:
• 263 PJ of sales gas (NZOG's share 39.5PJ)
• 17.6 mmbbls of light oil (NZOG 2.6 mmbbls)
• 1.08 million tonnes of LPG (NZOG 162,000 tonnes)

<<<<<<<<<<<<<<<<<

From these figures, we can do our own calculations and estimate NZO’s revenues from Kupe.

[dsurf]

I hope management increase the dividend to say 6c or 7c a share. With a SP of $1.23 and even below $1.50 NZO is trading uncomfortably near NTA and IMO is in takeover target territory. Just as PPP, CUE etc are "cheap" relatively compared with the previous year / s trading range so is NZO and a cheaky takeover offer of say $1.50 could get a large % stake. To make matters worse a conditional offer for 100% could be mostly debt funded with the interest paid using NZO's existing cash! Shortly KUPE will be proven and producing 40? million or more per year. IF TUI contributes another 30million then without PRC there is 70million available for the next couple of years. With 390 million shares on issue at $1.50 a 100% offer would cost 585 million assuming the usual creep to tidy the "hold outs" the offer may be increased to say $180 for the last say 20% so all up would cost say $700million. These numbers are not meant to be accurate and I suspect the real cashflow will be much higher. For illusttative purposes though 70mill will fund interest costs at 10% for 700mill. Looks very doable to me.

The next question is why? Answeris to get a free carry for the 30% of PRC. There are doubters but I think that most people would accept that PRC will be profitable in 2 years time and if it is producing even 500K tonnes per year will generate substantial cashflows on SUNK costs. So PRC should be far more valuable in a coupkle of years time at which point the 30% stake could be sold, reducing the loan and keeping the Kupe earnings stream.

An increased dividend of 6c would send an important message to the market that the future earnings are very likely to grow. Increasing the annual dividend by an extra two cents would cost 7.8 million - the same as an expensive drill? The SP would rise since yield investors would become more attracted to NZO. At $1.50 SP a 7c dividend gives an investor a return of nearly 8%.

The executive / board need to carefully consider how important retention of ownership is and whether a fate of possibly becoming a private company is desirable. Most posters here may say that they would not sell at $1.50 but in times of tight liquidity and recession like conditions a substantial many might take it. The board needs to ask themselves whether 8million is a lot of money when compared to the risk of losing ownership? Also I do not think many shareholders would disagree with a decision to increase the dividend so it should not be an onerous decision to make or communicate. If the board truly believe that PRC will be profitable in the future then they should not hesitate as there will be plenty of money for further exploration and / or acquisitions. But the decision needs to made very quickly as NZO is substantially de-risked with long term earnings and is looking very cheap.

Discl long term holder

[boysy]

the question remains why buy into a oiler for a yield play they are inherently risky raising the divi by 1 or 2 cents isnt going to stop a takeover attempt. The real question holders have to ask is what managements plans are so far they have paid a special divi only to get far more cash back which they couldnt use in the middle of the GFC. If NZO couldnt find a value creating opportunity in the GFC what makes people thing management will be up to the task when competing with other players with more money and vision in the world of today ?

[Bilo]

dsurf - are you suggesting that NZO should just stop drilling, sell down licences, sit on existing investments, manage currency properly, reduce staff to an accountant and a secretary and pay plenty to long term holders for the next 20years as Tui, Kupe and Pike deliver?

We could just produce a mimimum amount if the price wasn't deemed sufficient. Makes sense while all small holders are having their liquidity constrained. The GFC certainly contributes towards a situation where long term holders are less important than new sources of capital to management. Seems to have more value creating potential than is currently on show to small long term holders being squeezed by bigger players.

[neopoleII]

i agree with your comments dsurf.
nzo passed the stage of speculative oiler where all its cash goes into drilling wildcats.
it has 3 very good income producing jewels....... one just needs some more polishing.
look at BP.... its an oiler and pays divies to its long term loyal shareholders on a very regular basis (except for what it going on now).
management has said they will pay a portion of profits each year in divies....... but the last divi has so many clauses and thingamejigs added on or subtracted that the 5cent divi was not a 5 cent divi........ so why was that?
then there was the shares in leu of cash arrangement..... with what..... a 2 or 3 % discount to a high share price........ price is what now?

it seems that management is bending over backwards to avoid or restrict cash going to it shareholders.
and that could easily explain the low sp, along with other things of course.

i remember reading here some 4 or 5 years ago about every one talking about the wealth they will have.
turbin hats 10 gallon hats, ferraris, and someone mentioned that 20 to 50 cent divis arent too far away.

instead, we have "sort of 5 cent" divies a low sp and the oil is flowing and the gas is flowing, and no where near the $2 to $3 sp like we all hope for.
cash is coming in so we cant blame the gfc, traders dont care about companies, they just want sp volitility to make a profit, so that leaves the loyal long term shareholder to carry the company with very little reward.
nzo is no longer a spec oiler its a producer first, prospector second, and as a producer should act as one......
also......... why not spend money on buying shares in one of the kupe partners? or for that matter maari or tui.
well that was my bleat ........ im happy to sell my lot now if a good take over offer appears.
ive held for 6 years, and was really hoping for some good returns now that nzo is a producer.

[fish]

dsurf - are you suggesting that NZO should just stop drilling, sell down licences, sit on existing investments, manage currency properly, reduce staff to an accountant and a secretary and pay plenty to long term holders for the next 20years as Tui, Kupe and Pike deliver?

We could just produce a mimimum amount if the price wasn't deemed sufficient. Makes sense while all small holders are having their liquidity constrained. The GFC certainly contributes towards a situation where long term holders are less important than new sources of capital to management. Seems to have more value creating potential than is currently on show to small long term holders being squeezed by bigger players.
Bilo-I am surprised you have misinterpreted The post from dsurf which plainly only suggests a larger dividend because the money currently banked is in excess of current drilling requirements and with current cash flow and the future contribution from prc funding further drills is not a problem .

A 6 cent dividend would cost a mere 24m but it would send a message to the market that nzo is on a good wicket,it would enable imputation credits to be used.
Dont forget 1/2 the money in the bank is earning no interest and is depreciating in us dollars -the other 1/2 is earning low interest

[Balance]

Bilo-I am surprised you have misinterpreted The post from dsurf which plainly only suggests a larger dividend because the money currently banked is in excess of current drilling requirements and with current cash flow and the future contribution from prc funding further drills is not a problem .

A 6 cent dividend would cost a mere 24m but it would send a message to the market that nzo is on a good wicket,it would enable imputation credits to be used.
Dont forget 1/2 the money in the bank is earning no interest and is depreciating in us dollars -the other 1/2 is earning low interest

Now why would NZO want to do that? It knows full well that it is hard to get the money back if it has a bad drilling program. Miners love drilling - it's what they live for. It's also what keeps them in perennial employment.

[friedegg]

i agree with dsurf as well,and im for buying a cheap tui partner.buying up a small producing company seems better sense than drilling IF you bank on the theory that oil prices will be far far greater in say 5 years time,**** nzo could buy awe atm with a top up loan

[shasta]

Bilo-I am surprised you have misinterpreted The post from dsurf which plainly only suggests a larger dividend because the money currently banked is in excess of current drilling requirements and with current cash flow and the future contribution from prc funding further drills is not a problem .

A 6 cent dividend would cost a mere 24m but it would send a message to the market that nzo is on a good wicket,it would enable imputation credits to be used.
Dont forget 1/2 the money in the bank is earning no interest and is depreciating in us dollars -the other 1/2 is earning low interest

If NZO are listening to its shareholders, then why not buyback some of there own shares, rather than lift the dividend, if the Board think the share price doesn't reflect true value (& it wouldnt hurt for NZO board members to buy on market either, but i'm sure they are awaiting the annual handout)

[dsurf]

It is good to see discussion - All my post was intended to do is suggest that the SP weakness has left NZO in a vulnerable position. I hope management see this as the most important issue currrently and address the situation by taking steps to increase the SP to a point where any takeover cannot be funded by NZO's own money.

[digger]

If NZO are listening to its shareholders, then why not buyback some of there own shares, rather than lift the dividend, if the Board think the share price doesn't reflect true value (& it wouldnt hurt for NZO board members to buy on market either, but i'm sure they are awaiting the annual handout)

I find a buyback a little hard to see as a positive for NZO compared to keeping the dividend rate . A buyback has shares heading to two directions at once,as the buyback will be running at the same time as the dividend reinvestment scheme.Shares coming and going at the same time would not increase market awarenesss or respect for the company.
I favor just keeping the div at 5 cents. To increase it looks like you are trying to buy respect and attention from the market when that years income and results did not support it. You will fool noone.In such a situation you can not tell in advance how the market will react. Keeping the div at 5 cents shows together with the DRS shows that the company can continue with the drilling program and the still meet other requirments. For me i would not increase the div until income from PIKE and KUPE are supporting it.Another small point about maintaining the 5 cent div is that banks love long term unbroken dividend policies as anyone approaching the bank for investment funds will testify.

[Bilo]

I find a buyback a little hard to see as a positive for NZO compared to keeping the dividend rate . A buyback has shares heading to two directions at once,as the buyback will be running at the same time as the dividend reinvestment scheme.Shares coming and going at the same time would not increase market awarenesss or respect for the company.
.
I think some companies undertake to buy back shares on market to ensure that the dividend re-investment scheme doesn't dilute existing holdings.

[fabs]

Kupe. 40-50 mil. [ GROSS] P/A 3-4 years. then steady decline over 10 yrs plus.
TUI. 20-25 mil. [GROSS] P/A 4-5 YEARS then AAB
PRC 3-5 mil. on 10% Div.Assuming full prod. by FYE 2014.
Assuming present commodity prices & ex. rate.
Nearly 400 mil. Shares on issue.
BTW. Like the part of NEOPOLES comment regarding Managements attitude, namely seemingly bending over backwards, not giving to much to S/H.
And do not worry S/p will do the perennial thing, rising on brilliant worded rhetoric around AGM only to go into hibernation shortly after.

[Bixbite]

Buy back share from market is not a direct benefit to its shareholders because the money not goes to their pockets unless they sell their shares.

I wish the company to maintain a net 5 cents dividend this year. How good is it: -
• Most of its shareholders (including me) could be living on these dividends without selling their shares.
• Shareholders have spare money to buy the company’s shares when share prices are being smashed, that can help “the downtrend reversed ………”.

[the machine]

nzo are being punished big time for the investment in ppp - the value of the investment is just over half of the buy in [including the div] at one stage they could have doubled their money.
don't fall in love with a stock rings a bell

as regards pike investment, in 3-6 months that should have turned the corner for the better, but meanwhile is also holding nzo back

nzo have lucked out re the drill bit as well.

above reasons are all well known.

where to now?

they need success with the drill bit and to achieve that they need to drill - bring on bahamas and west of kupe - sure it will cost a loty, but as a proportion of the cash flows and compared to drilling tui it is maybe the same percentage.

if they are not going to drill then whats the point of holding their stock [i only hold 10,000 @ aud20c each]

last year when I swapped all of my ppp for kas, part of my thinking was would would success bring to ppp - could they double from 50c to $1.00 in 12 months - NO
could kas double over same time frame - YES and and poised to triple.
[kas was my pick but could be many other stocks that are poised to triple since july 2009]

a sharebuyback by nzo = they have nothing better to do with our money

M

ps, tin is the best perfoerming metal on LME this year and sorry no prizes for guessing what kas are into

[Doyle]

Buy back share from market is not a direct benefit to its shareholders because the money not goes to their pockets unless they sell their shares.

I wish the company to maintain a net 5 cents dividend this year. How good is it: -
• Most of its shareholders (including me) could be living on these dividends without selling their shares.
• Shareholders have spare money to buy the company’s shares when share prices are being smashed, that can help “the downtrend reversed ………”.

Fundementally wrong.

It benefits you because less shares on issue means each individual share will receive a greater proportion of future profits.

Why buy out PPP f they believe their own company is more undervalued at the moment.

A share buyback is the second biggest vote of confidence directors can give a company.

Get your head read.

[Bixbite]

Fundementally wrong.

It benefits you because less shares on issue means each individual share will receive a greater proportion of future profits.

Why buy out PPP f they believe their own company is more undervalued at the moment.

A share buyback is the second biggest vote of confidence directors can give a company.

Get your head read.

Good morning Sir,

Just a short note, I have class today from 9:00am till 2:00pm, got to prepare to go now. I’ll get my head read again, promise!

Bixbite

[upside_umop]

Doyle, its not worth trying to explain fundamentals. A lot of people are emotionally attached to this stock.

As people have said earlier, oil stocks usually aren't big dividend payers as they need to reinvest.

To suggest that NZO and its JV should never have undertaken it's latest drilling campaign is ludicrous!

[notie]

Doyle, its not worth trying to explain fundamentals. A lot of people are emotionally attached to this stock.

As people have said earlier, oil stocks usually aren't big dividend payers as they need to reinvest.

To suggest that NZO and its JV should never have undertaken it's latest drilling campaign is ludicrous!

too true. so emotionally attached that they don't realize there are some real problems with this company. oil stocks are risk investments, not divi payers and this company is on the wrong track.

I think people are starting to realize that nzog had a ton of money in the bank and they had a big oppotunity to do something with it during the financial crisis and they didn't do anything with it except bail out their own coal mine on the coast and merrily follow along behind AWE in some of their wells.
Albacore was NZOG big investment in drilling this year at ?40% and it was dry, as was Hoki.

What now, and to sit around counting the money from Kupe is not the answer.

[Bixbite]

Some like to trade as busy as bees, some like to enjoy their life as free as butterflies. Is it emotional?

Are we wrong if we wish the company to pay about half of its revenues’ profits to rebate its shareholders and the rest for reinvestment?

[h2so4]

Some like to trade as busy as bees, some like to enjoy their life as free as butterflies. Is it emotional?

Are we wrong if we wish the company to pay about half of its revenues’ profits to rebate its shareholders and the rest for reinvestment?

Na...nothing wrong with that:) Management may do something else and nothing wrong with that either:)

[friedegg]

too true. so emotionally attached that they don't realize there are some real problems with this company. oil stocks are risk investments, not divi payers and this company is on the wrong track.

I think people are starting to realize that nzog had a ton of money in the bank and they had a big oppotunity to do something with it during the financial crisis and they didn't do anything with it except bail out their own coal mine on the coast and merrily follow along behind AWE in some of their wells.
Albacore was NZOG big investment in drilling this year at ?40% and it was dry, as was Hoki.

What now, and to sit around counting the money from Kupe is not the answer.

if you have the money why cant you be both risk taker and divi payer?they said that not many good opportunities abounded in the gfc and theres probably quite a few companies now with a worse sp now than in the gfc.theyve taken a few risks this year and lost,pike was a big investment this year and is still a risk too, but if that comes right nzo are in the box seat there and we should know that by xmas.
at around $60mill a year from kupe they have a solid base of income to play further

[fish]

They certainly have the money to do both
I wish they would look at other mining possibilities in nz-such as the ironsands of whanganui-http://www.sharechat.co.nz/article/ebdc8d44/billion-dollar-ironsands-ipo-in-prospect.html

[darksentinel]

Maybe they can smelt iron from the ironsands using PRC coal and export steel! Yeah, right [Tui].

[Doyle]

Maybe they can smelt iron from the ironsands using PRC coal and export steel! Yeah, right [Tui].

Don't Laugh to Hard, there may be some serious money to be made doing just that.

[darksentinel]

Don't Laugh to Hard, there may be some serious money to be made doing just that.

I believe in the ironsands, but I reserve judgement on the PRC component until I see some coal.

[Mr Tommy]

Theres a webcast about the quarterly results at 11:30 this morning if anyone is interested

http://www.nzog.net/webcasts

[Sideshow Bob]

Quarterly results obviously provoked alot of discussion.....

[friedegg]

At 30 June 2010, NZOG’s cash balance was the
equivalent of NZ$143m. NZ$63m has been drawn
from a NZ$75m debt facility with Westpac, giving
NZOG a net cash position of NZ$80m.
had too many beers but can someone tell me in semi-drunk form whats been done with the $63m?but as a posiivte they reckoned at last agm they gauged about $60m pa from kupe, and atm its on track for $72m

[shasta]

At 30 June 2010, NZOG’s cash balance was the
equivalent of NZ$143m. NZ$63m has been drawn
from a NZ$75m debt facility with Westpac, giving
NZOG a net cash position of NZ$80m.
had too many beers but can someone tell me in semi-drunk form whats been done with the $63m?but as a posiivte they reckoned at last agm they gauged about $60m pa from kupe, and atm its on track for $72m

The $63m was for the Kupe costs

Over $40m of NZO funds were used for Pike River as well during the quarter

Cashflow report
http://www.stocknessmonster.com/news-item?S=NZO&E=ASX&N=339397

Activities Report
http://www.stocknessmonster.com/news-item?S=NZO&E=ASX&N=339396

Am tucking into a rather nice chinese beer Tsingtao (640ml)

[friedegg]

so theyve always had the kupe $63m debt and just decided to pay it off? or it was an extra kupe cost from recently?

[Corporate]

so theyve always had the kupe $63m debt and just decided to pay it off? or it was an extra kupe cost from recently?

NZO simply had a debt facility for the purpose of developing Kupe. At 30 June 2010 they owe $63m.

Anyone know the life of kupe?

[the machine]

NZO simply had a debt facility for the purpose of developing Kupe. At 30 June 2010 they owe $63m.

Anyone know the life of kupe?

20 years on reserves thus far, but more discoveries could tie in and extend field

m

[Snapper]

Good news for NZO, they've just been turfed out of First NZ Capital's NZ Growth Portfolio and replaced by RBD. Talk about shutting the stable door after the horse has bolted - on both sides of the equation!

[dsurf]

Oversold signal

source: From NZHerald Stock picks article

DOWN IN THE DUMPS

"Yesterday's quarterly briefing by New Zealand Oil & Gas failed to find much favour with shareholders.

NZOG chief executive David Salisbury told investors the company made $31.3 million in operating revenue for the June quarter, putting its revenue for the full year at $99 million.

It shelled out $38.9 million to support its investment in Pike River and a further $11 million on exploration.

Salisbury said it was "very disappointing" commercial discoveries were not made in two wells drilled to the southwest and east of Tui, but the results overall had, with one exception, validated the geological modelling of Tui.

"So we continue to look at prospects around the Tui field," Salisbury said.

But despite talking up prospects of its offshore Taranaki field at Kaupokonui, NZOG's share price fell, adding to a tough year in which the shares have fallen by more than 26 per cent.

NZOG is now the biggest decliner in the main listed companies outstripping even Telecom's poor performance."

In a recessionary cash strapped world I would have thought $99mill revenue was a positive - obviously not - funny world.

[mistymountain]

I struggle to see why the market does not rate NZO with its income stream that will last for the next decade and continuing exploration.

[shasta]

I struggle to see why the market does not rate NZO with its income stream that will last for the next decade and continuing exploration.

Kupe is the main thing holding NZO up at present, & thats mostly a gas project + light condensate

Tui is in decline & the lack of success with there drilling program hasn't helped, as these were meant to increase there reserves & be able to be tied back to existing tui infrastructure.

The money NZO have recently put into PRC wasn't planned, due to Pike's inability to meet forecast production targets , but in saying that when Pike River is in full swing NZO should do quite well when they eventually sell, in the short term that money could have been utilised better for NZO shareholders, but i see the longer term focus with this investment.

NZO missed a trick with PPP, & the share price is lower than NZO's entry price - this is surely a non core asset & should be divested at the best possible price, the market is aware of this.

NZO get the premium Tapis price for Tui oil & this has been quite stable in the $US70-80/bbl range (with the NZD/USD around the 0.71/0.72), so they should still be making a decent margin, they just need to have more exploration success to replace existing reserves.

NZO has the cash, but is still largely a minor player in there permits which are operated by larger companies (AWE mainly).

NZO needs to farm into some more prospective permits to boost reserves & production.

Remember the NZO board has the ambitious targets of having 2mmboe annual production, & 25mmboe reserves

A small increase in the final dividend may appease some shareholders, but NZO needs to be more actively drilling to really capture the markets attention.

[notie]

NZO has the cash, but is still largely a minor player in there permits which are operated by larger companies (AWE mainly).

NZO needs to farm into some more prospective permits to boost reserves & production.

Remember the NZO board has the ambitious targets of having 2mmboe annual production, & 25mmboe reserves

A small increase in the final dividend may appease some shareholders, but NZO needs to be more actively drilling to really capture the markets attention.

Minor player alright and I can't see it changing as nzog are so risk adverse they will never get into anything that has a faint bit of risk associated with it. Sorry, that is the nature of oil and gas exploration. nzo runs only a couple of permits and has talked a big story on one in South Taranaki, but chances are they will never drill a well there.

nzog have blown the 200 million war chest on buying some of PPP which they have now lost money on and bailing out Pike. Pike will probably make them some money in the long run, but did nzo investors really give them their money so they could bail out a coal mine?

[mistymountain]

Yes but given recent dividends, future income stream and upcoming exploration surely NZO is taking small steps forward. It's almost as if investors are super greedy and want the jackpot, cake and porsche all in the one hit.

[blockhead]

Won't matter if the cake is missing

[dsurf]

I hope NZO announce a market buyback of "up to $50m" over the next year at prices below $1,50. I would not expect them to spend more than 10% of this. This will immediately increase the SP even if they do not buy one share. It gives them the ability to manipulate the SP upwards on low volume days and also counteract any leveraged shorting plays. It is the best insurance against opportunistic takeover available and rarely is a financial mechanism in the interests of both shareholders & management & NZ like this one.

[BigBob]

I hope NZO announce a market buyback of "up to $50m" over the next year at prices below $1,50. I would not expect them to spend more than 10% of this. This will immediately increase the SP even if they do not buy one share. It gives them the ability to manipulate the SP upwards on low volume days and also counteract any leveraged shorting plays. It is the best insurance against opportunistic takeover available and rarely is a financial mechanism in the interests of both shareholders & management & NZ like this one.

Hear, hear...!! IMHO this is a total no brainer.....

[neopoleII]

yup..... its no brains all right when a company that produces and sells oil and gas has to buy its own shares to increase its sp to lift it to a level of value that it had before it even produced anything.

its a traders paradise and an investor money sink.
offer a divi better than bank rates and watch the investors support the company, and enjoy hand in hand with management long term capital gain.

if this is going to be a regular event........... sell millions of barrels of oil at top price and give its shareholders a few cents.......... whats the point?

it would seem from past performance that only a monster whale would make shareholders wealthy.
any other strike would only equal a few cents divi and a few cents increase in sp.

whats it going to take to get to $1.80?......... and further in the future?
a lucky strike whale?
and what percentage of that would NZO retain?

NZO is traders paradise.

[Hoop]

[QUOTE=dsurf;313707]I hope NZO announce a market buyback of "up to $50m" over the next year at prices below $1,50...... [/QUOTE

Hmmm...Buying your own shares worth $1.19 (NTA 30/12/2009) for anything below $1.50.....
>
>
Hey guys if I buy a sh**load of NZO tomorrow,... will you all buy them off me for $1.45 on Wednesday..that will make the NZO shareprice rise.;)

[the machine]

yup..... its no brains all right when a company that produces and sells oil and gas has to buy its own shares to increase its sp to lift it to a level of value that it had before it even produced anything.

its a traders paradise and an investor money sink.
offer a divi better than bank rates and watch the investors support the company, and enjoy hand in hand with management long term capital gain.

if this is going to be a regular event........... sell millions of barrels of oil at top price and give its shareholders a few cents.......... whats the point?

it would seem from past performance that only a monster whale would make shareholders wealthy.
any other strike would only equal a few cents divi and a few cents increase in sp.

whats it going to take to get to $1.80?......... and further in the future?
a lucky strike whale?
and what percentage of that would NZO retain?

NZO is traders paradise.

IMO 12 months is what it will take to see nz$1.80

M

[Hoop]

I sure will hoop!

I have a spare $20 note, so can I get a volume discount and buy 14 shares for it? That'd be just under $1.43 each. :)

Nice rise today at opening up 2 to $1.24 :)


Hmmm..... lets see....Buy at market 14 shares @ $1.26 = $ 17.64 + $29.50 (broker fee) = $47.14
.............................Sell to Yankiwi for $20......$47.14 - $20 = ($27.14) loss

Hmmm... Hoop suffers a $27.14 loss

Yankiwi thanks for your most generous offer but... nahhh;);)

[dsurf]

yup..... its no brains all right when a company that produces and sells oil and gas has to buy its own shares to increase its sp to lift it to a level of value that it had before it even produced anything.

its a traders paradise and an investor money sink.
offer a divi better than bank rates and watch the investors support the company, and enjoy hand in hand with management long term capital gain.

if this is going to be a regular event........... sell millions of barrels of oil at top price and give its shareholders a few cents.......... whats the point?

it would seem from past performance that only a monster whale would make shareholders wealthy.
any other strike would only equal a few cents divi and a few cents increase in sp.

whats it going to take to get to $1.80?......... and further in the future?
a lucky strike whale?
and what percentage of that would NZO retain?

NZO is traders paradise.

I think you are missing the point - increasing the SP is about reducing the chances of takeover, ability to raise capital (and cheaper), generating +ve press, and reducing the odds of unfavourable SP manipulation.

[pietrade]

Did anyone else see the excellent Aussie-made documentary "Crude" on Maori TV the other night? Really telling it like it is.......

[skid]

back to 1.22. Dang,this market is a dangerous beast!

[digger]

Did anyone else see the excellent Aussie-made documentary "Crude" on Maori TV the other night? Really telling it like it is.......

Yes i certainly watched and liked it. Very graphic way of putting it all.Much of it you can also get from New Scientist and from reading energybulliten etc but nevertheless was good to have it on TV. It deals with the carbon atom and how under the right conditions get trapped under pressure to form oil.Also deals with climate change after 100 millions of years.
If it comes on again you should watch it if possible. Too hard to explain but well worth the while to veiw.

[digger]

At 30 June 2010, NZOG’s cash balance was the
equivalent of NZ$143m. NZ$63m has been drawn
from a NZ$75m debt facility with Westpac, giving
NZOG a net cash position of NZ$80m.
had too many beers but can someone tell me in semi-drunk form whats been done with the $63m?but as a posiivte they reckoned at last agm they gauged about $60m pa from kupe, and atm its on track for $72m

Sorry about the very late responce it this question.Been busy---no excuse.
I read this as much in the same light as i handle may business monies.

NZO has 143 million equivalent in cash balances at 30/6/10 and now still has 143 million cash balance.The fact that they drew down 63 million to put into KUPE from the 75 million facility only efects the net cah position.Tomorrow NZO could spend 143 million as all that money is available to spend without seeking any bank approval.
The fact that nzo did not pay the KUPE costs directly from cash balances tells me they are still looking alternative investments and if a good one comes up the 143 million is available. Well i hope only 123 million is available as a div should be paid.
Well that is how i read it anyways.

[fish]

Dangerous for short -term traders but good buying at present for those prepared to invest for 1 year plus horizons .
. Tapis is creeping up - now $86 us .

[geezy]

NZO is losing its shine, its not even on the first page anymore :)

and wheres the divi? surely a little divi would be nice with all that money made?

[777]

NZO is losing its shine, its not even on the first page anymore :)

and wheres the divi? surely a little divi would be nice with all that money made?

It will be announced the same time as last year and the year before and be payable in October.

[blockhead]

Announced last year on 26th Aug.......05c

[arjay]

Matt Simmons has died (champion of peak oil and author of Twilight in the Desert). Apparently he had a heart attack in the bath (age 67).

[dsurf]

Matt Simmons has died (champion of peak oil and author of Twilight in the Desert). Apparently he had a heart attack in the bath (age 67).

Another victim of GFC?

[winner69]

Another victim of GFC?

Prob climate change .... or maybe peak oil itself

[digger]

Matt Simmons has died (champion of peak oil and author of Twilight in the Desert). Apparently he had a heart attack in the bath (age 67).

After Twilight in the Desert Matt Simmons took on a view point on any oil subject going and got sucked in to believing himself an expert even when his guess was little better than yours or mine might be. The comments he made about the Deepwater Horizon spill going for the next 24 years.and the spill poluting the entire east coast must have cost his health dearly,given that the well is now entirely sealed. This is sad as he was one of the first to make us aware of Peak Oil.

[upside_umop]

After Twilight in the Desert Matt Simmons took on a view point on any oil subject going and got sucked in to believing himself an expert even when his guess was little better than yours or mine might be. The comments he made about the Deepwater Horizon spill going for the next 24 years.and the spill poluting the entire east coast must have cost his health dearly,given that the well is now entirely sealed. This is sad as he was one of the first to make us aware of Peak Oil.

I had a quick search and came up with this article (http://www.theoildrum.com/node/6789). Something seemed to be wrong with Simmons...didn't it?

[Oiler]

I had a quick search and came up with this article (http://www.theoildrum.com/node/6789). Something seemed to be wrong with Simmons...didn't it?

LOL after reading that report " a definite YES" That said he did have "20 minutes of fame" when he wrote Twilight in the Desert.

[Crypto Crude]

I heard,
I hope simmons will be remembered for all the right reasons, and not the ones that were at the end of is distinguished career...
It is really not that uncommon for people to lose it in their old age...


Legend...
:cool:
.^sc

[dsurf]

Agree totally - peak oil or not - what he did point out and is true for other energy & metals etc is the marginal cost of production going up which has huge ramifications - hope he gets a nobel prize? in economics or similar.

[notie]

I would not say 67 is that old....

[blockhead]

I hear DS on the wireless this morning saying NZO is considering taking the drilling rig operators to court over the poor state of repair the rig was in for the recent drills, not surprised if NZO were a little narked about the delays for maintenance while drilling was (not) going on.
He also mentioned the rates for contracting rigs for the end of next summer could be way less than previous contract rates.

[notie]

maybe ds should look at getting some more action for nzo rather than bugging the operator (AWE) about taking the rig contractor to court. A disaster of a drilling season for nzog, so all they manage is to sue the rig contractor...great idea.
maybe that is why their share price has dropped 4c today...

[blockhead]

Yer, I was thinking that Notie, what were the damages ???, bit slower than planned, shareholders getting p..p off waiting, but in the end the result was the same, sorry boys, no oil.

From memory they told us at the time of the delay ann there was no added cost to NZO.

Perhaps the contract to drill says a drill will take "x" number of days and the cost is negotiated based on that, if it takes longer, then yes there might be a case for compensation.

If they get a mil or so back I suppose it could pay Directors fees for a year or two and thus justify their pay packets

[Logen Ninefingers]

maybe that is why their share price has dropped 4c today...

....price of oils dropped, globally sharemarkets are tanking, our sharemarkets tanking. More vaild reasons.

[J R Ewing]

....price of oils dropped, globally sharemarkets are tanking, our sharemarkets tanking. More vaild reasons.

That's a relief, I feel much better knowing that there are valid reasons!

[LJB]

If the price of oil drops x% and the NZ$ depreciates the same % against the US$, doesn't that mean nil effect on NZO earnings? If so, aren't selloffs in NZO, like today, illogical? Just thinking aloud so if my logic is wrong comments welcome.

[J R Ewing]

If the price of oil drops x% and the NZ$ depreciates the same % against the US$, doesn't that mean nil effect on NZO earnings? If so, aren't selloffs in NZO, like today, illogical? Just thinking aloud so if my logic is wrong comments welcome.


I think your logic is fine, the sell off is more likely just general market sentiment. But for me, declining oil price is a worrying trend for NZO and it wouldn't necessarily ALWAYS be matched by a lower NZD. Also, I guess the price of oil is going to be less relevant going forward than the local gas price and the coal price - unless we have some drilling success!

[upside_umop]

If the price of oil drops x% and the NZ$ depreciates the same % against the US$, doesn't that mean nil effect on NZO earnings? If so, aren't selloffs in NZO, like today, illogical? Just thinking aloud so if my logic is wrong comments welcome.

The answer is risk. If the global economic back drop is percieved to be more risky, or less than rosey outlook, then the market risk premia will increase. Thus, the present value of cashflow are affected downwards.

[bermuda]

I think your logic is fine, the sell off is more likely just general market sentiment. But for me, declining oil price is a worrying trend for NZO and it wouldn't necessarily ALWAYS be matched by a lower NZD. Also, I guess the price of oil is going to be less relevant going forward than the local gas price and the coal price - unless we have some drilling success!

JR,
The price of oil has been trending upwards since the begining of 2002. Unless there is a major depression ( which could happen...ironically because of the continuing increase in the price of oil ) then I see oil prices continuing to firm. World Oil Production is declining at over 5% per annum.

The price of oil will continue to be very relevant to NZO as despite declining Tui production increasing Kupe condensate reserves are proving to be very valuable. I dont know whether the Kupe Gas prices are linked to the price of oil but I would assume the LPG was.

If only they could get Pike up and running. Things would then really improve.

[J R Ewing]

JR,
The price of oil has been trending upwards since the begining of 2002. Unless there is a major depression ( which could happen...ironically because of the continuing increase in the price of oil ) then I see oil prices continuing to firm. World Oil Production is declining at over 5% per annum.

The price of oil will continue to be very relevant to NZO as despite declining Tui production increasing Kupe condensate reserves are proving to be very valuable. I dont know whether the Kupe Gas prices are linked to the price of oil but I would assume the LPG was.

If only they could get Pike up and running. Things would then really improve.

All true, I'm just feeling a bit peeved cos I might have to sell a few shares to avoid a minor cashflow issue - and I don't approve of the current market price!

[LJB]

Ditto all your last sentence JR.

[fish]

Got me thinking why anyone would sell shares at the current sp ?
If it is for provisional tax due on the 27th have you thought about margin lending-current interest rate is about 6.5 % pa and no arrangement fee - with asb-and the interest is tax deductable .
Hopefully the dividend-assuming the same as last year - would also hope with cash flow .

[the machine]

Got me thinking why anyone would sell shares at the current sp ?
If it is for provisional tax due on the 27th have you thought about margin lending-current interest rate is about 6.5 % pa and no arrangement fee - with asb-and the interest is tax deductable .
Hopefully the dividend-assuming the same as last year - would also hope with cash flow .

price can stay where it is for a couple of weeks as am hoping to buy some then.

M

[friedegg]

im with asb on margin lending with this,im still safe but i suspect the bad news might be-no dividend.
but if there is one its a reasonbly attractive yield compared to bank rates atm

[Sayce]

In my opinion, If NZO did not pay a dividend it would be “flirting with the hearse”.

[fish]

There surely can be no excuse for holding onto surplus shareholders capital in these difficult times . We have great cashflow ,lots in the bank.lots invested in other companies and some lent to prc . I am hoping for a capital return plus a dividend .However a capital return is unlikely but surely a return on capital invested is a must -eg at least a 5 -but wouldnt a 7 cent dividend do wonders for shareholder sentiment and lead to some recovery in the sp . It would only cost nzo a mere $28m plus tax credits could be put to good use .

[the machine]

There surely can be no excuse for holding onto surplus shareholders capital in these difficult times . We have great cashflow ,lots in the bank.lots invested in other companies and some lent to prc . I am hoping for a capital return plus a dividend .However a capital return is unlikely but surely a return on capital invested is a must -eg at least a 5 -but wouldnt a 7 cent dividend do wonders for shareholder sentiment and lead to some recovery in the sp . It would only cost nzo a mere $28m plus tax credits could be put to good use .

7c is very ambitious

5c maybe

M

[upside_umop]

My 2 cents is it will be 5 cents. The board shouldn't go lower because it will be a bad indication/signal and they shouldn't go higher because there is no underlying 'cashflow' to support it in the future (as per their indication of 'reasonable proportion of profits'). 5 cents is sustainable for the time being.

Maybe it would go higher if they had struck at Tui for the quick tie in....but that doesn't look the case. I'd expect 2011 to have a few drills around the Taranaki to replace those declining reserves and production rates. Therefore a nice cash buffer is needed.

[digger]

There surely can be no excuse for holding onto surplus shareholders capital in these difficult times . We have great cashflow ,lots in the bank.lots invested in other companies and some lent to prc . I am hoping for a capital return plus a dividend .However a capital return is unlikely but surely a return on capital invested is a must -eg at least a 5 -but wouldnt a 7 cent dividend do wonders for shareholder sentiment and lead to some recovery in the sp . It would only cost nzo a mere $28m plus tax credits could be put to good use .

Fish i do not know where you are coming from. No to a capital return for now. Maybe that could make since after PIKE is up running and NZO has sold its stake at a good profit. I want 5 cents and no more.Further profits should be divided between drilling and buying undeveloped oil discoveries,and if again necessary into PIKE. Pike can not be toooo far from production.The biggest hurdle here might be a second big recession,but then a second recession will open up buying opportunies as of above.
So my 2 cents worth is 5 cents as poster above has said.

[the machine]

just hope nzo stays cheap for another week as hoping to flog some kasbah that bought last year for $8100 and buy 30,000 nzo - thats right - buy kasbah for 3c - sell hopefully for 14c buy 30,000 nzo and still have $8,000 left over.

then pick up an nzo dividend for my trouble

M

[Marilyn Munroe]

AWE plugs and abandons Tuatara-1[1]

Whew! dodged a bullet there.

Meanwhile according to the latest quarterly report, tomorrow is the drill or drop deadline for the Barque prospect.

Boop boop de do

Marilyn


[1]http://www.sharechat.co.nz/article/dc964411/awe-confirms-dry-well-at-tuatara-1.html

[rainey]

In July 2010 NOG applied for a6 month extension to the commitment time, Whether this was granted, I do not know

[neopoleII]

so if a producing company like NZO with jewels of the likes of kupe is only paying 5cents per share, whats it going to take to get 10cents?
a whale of a discovery?.......... no........ nzo always farms outs 80 odd percent of its find.
buy into a whale?......... no..... kupe is a whale, and its 15% share seems to equal 5cents divi.
it seems that 5 cents is about all nzo will ever dish out from here on out, which means the share price will never really grow.... except for drill and thrill.
thats ok for the folks that bought 10 years ago, but anyone who bought in the last 3 to 5 years is earning less than bank rates, with the possibility that their entry price was more than it is today.

i bought in 5 years ago......... im lucky...... im a little bit up on my investment. but 5cent divis wont cut it in the future, and i cant see nzo striking a whale which is 100% owned.
kupe is the jewel of nzo's crown......... and is worth less than bank rates.....................
lucky that TR has lots of free or cheap shares........ thats all that matters.

wonder when the next option offering is?

time to move on for me, will cash in my divi....... if it happens, wait a few days for the sp to recover and bail.

might invest in an electricity company........ shareholders seem to get looked after with them.

[digger]

neopole11 i feel you have mixed up the facts a little here and there. First KUPE in this finanical year just ended has only been a producer for less than half the time considering the commisioning period. You forget all about PIKE. True in this year it has been a start up drain but that will not always be the case. I would also hope that the directors will look hard at the drill success rate and compare it with buying into undeveloped oil finds.
I know the market has written off NZO but i think the next 12 moths will show how wrong the market is.I AM CERTAINLY NOT GOING TO SELL OUT.

[Balance]

neopole11 i feel you have mixed up the facts a little here and there. First KUPE in this finanical year just ended has only been a producer for less than half the time considering the commisioning period. You forget all about PIKE. True in this year it has been a start up drain but that will not always be the case. I would also hope that the directors will look hard at the drill success rate and compare it with buying into undeveloped oil finds.
I know the market has written off NZO but i think the next 12 moths will show how wrong the market is.I AM CERTAINLY NOT GOING TO SELL OUT.

Love to correct you, Digger - PRC has been a cash drain for the last 3.5 years - not just the last year - 2.5 years of which are unexpected for by NOG.

Agree with you though that it is extremely lucky for NOG (and PRC) shareholders that NOG has the cash from Tui and the options exercise (perfect timing on the sp there by NOG) to carry PRC and fund Kupe.

Question is when (if ever) does PRC become cash flow positive as all the other 'ventures' by NOG have gone nowhere in a big hurry.

[dsurf]

Question is when (if ever) does PRC become cash flow positive as all the other 'ventures' by NOG have gone nowhere in a big hurry.

Thats easy - Feb 2011 - read about it Mar 2011 - (management forecast it would be mid 2008 ? ) - well & truly overdue!

[fabs]

Lets see what will give our management some bragging rights come the AGM.
First 1/4 report sometime in Sept.
5 cent interim Tax free Div.
Kupe, better than $25 mi. or more Rev.Gross
News from PRC.
Another 20000 Tonnes of the good coke by end of Sept. to beginning of Oct.
Hydro Mi. well on the way.

[Mr Tommy]

Full year results webcast at 11:30 am this morning


http://nzog.net/webcasts

[Mr Tommy]

Results are out, with a 5c divvie

http://nzog.net/fy10release

[777]

And shares about to trade at opening time at an 11 month low.

[dsurf]

And shares about to trade at opening time at an 11 month low.

The gross profit from operating activities was $67.6 million. Significant
items affecting the bottom line result included; $30.7 million of exploration
costs expensed; unrealised exchange rate losses at 30 June 2010 of $8.0
million; and an $11.5 million share of associate company Pike River Coal's
loss.


i.e. no value added unfortunately - things are about to change - PRC has leased a real machine that can actually achieve budget advance rates ( don't mention the germans whio fixed the continuous miners so they now achieve 25% of budgeted production ) and will buy one in 4 months when they have some cash - Feb 2011 profitability forecast looking good.

[BigBob]

And shares about to trade at opening time at an 11 month low.

It's OK with me if it stays at these lows for the next month or so... I'll get more through the DRIP...

[blockhead]

And reading the posts above, the 05c div is satisfactory.

I'm happy with that. It has not slipped my mind that the forex loss is unrealised (could go either way from where it is) and the loss on Pike should be recouped plus on a sale of the PRC investment.

Plenty of room for upside in my mind !!

[777]

My guess is they will be up over the next 5 days trading which will affect you DRP. You would be better to buy on the market today.

[BigBob]

My guess is they will be up over the next 5 days trading which will affect you DRP. You would be better to buy on the market today.

Yes - but I'm a bit short on readies, so here's hoping for a continuation of the irrational market sentiment for a little while longer... :o)

[Arbitrage]

If only the price of oil would increase...

[Mr Tommy]

It has not slipped my mind that the forex loss is unrealised (could go either way from where it is)

NZD dropped below 70c USD this morning, lowest for 7 weeks. Maybe most of the 'unrealised' loss has just evaporated.

[Beagle]

If only the price of oil would increase...

I think oil is at the bottom of its trading range - broadly speaking $70-80 a barrell for some months and is likely to have hit a bottom yesterday. Long term I have a fair bit of time for the peak oil theory and as this company is paying a nice divvy and after what would appear to be some positive news on hydro mining starting at PRC, with NZO's very strong balance sheet, the recently announced increase in Kupe reserves and so on, at $1.19 or thereabouts it must be worth a punt.

[digger]

NZD dropped below 70c USD this morning, lowest for 7 weeks. Maybe most of the 'unrealised' loss has just evaporated.

Yes i to did not think it was 100% right to put the unrealised loss in. Some decades ago back before the 1987 crash companies were including these unrealised profits to inflate very small profits and in some cases to bury losses.In a way this is creative accountanting even if it is going against us.
Overall NZO has done well this year dispuite the 4 well drill failure. No small achievment to now be sitting on nearly three incomes. The market reaction is nuts but this will turn around this year once reality comes home from the bank deposits. Markets like proof and not just promices and i believe in the coming year that is what it will get.The only cavit is the world finanical situation going further into a depression.
Thanks for keeping up the 5 cent div. NZO should be able to say that that is the minium for the next 20 years.
The only negative apart from drilling failure is that i am not in favor of selling PIKE or even talking about it.To hell with what the market thinks and past delays in production PIKE will be a winner given world demand and coal quality.In a two horse race between pike and NZO for the next 12 months my money would be on PIKE,and that NZOs rise will be on the back of PIKE. Now i know i can hear it already that NZO fall this past year is because of PIKE. True but that is at last looking like it is all about to change.
Cheers and spend your div wisely. Most of the population will not be getting one. In short the buying power of this 5 cent div is the greatest of the 4 we have now had.

[Bixbite]

...........
Thanks for keeping up the 5 cent div. ..........
The only negative apart from drilling failure is that i am not in favor of selling PIKE or even talking about it...........
Cheers and spend your div wisely. Most of the population will not be getting one. ........

Thanks NZO the helpful 5 cent div.

I don't wish NZOG to sell its PIKE holdings though, I would like NZO to distribute its PRC shares to its shareholders instead of paying 5 or 10 cent dividend. (To avoid affecting PRC's share prices on this issue, they can do this as packages, but it is another story.)

If big buyers wish to get big slices of PIKE to secure their coking coal supply, they can take NZO's PRC convertible bonds plus the right to purchase 30% of PRC's coal production.

Bixbite

[Logen Ninefingers]

If they can pay a 5c divie when they make a loss, what will they pay when they make a big profit?
NZO, just take a year off from drilling to consolidate and carefully plan your next moves. The picture should be radically different in a years time, Pike and Kupe are 20 year life span projects, rake in the cash and stack it in the bank.

[dsurf]

I am very against NZO publicly saying they will sell there stake in PRC. It adds a negative connotation that is unneccessary.
I
NZO is an energy company. It produces Oil, LPG, Gas and Coal.

I thinks a better strategy for NZO would be to keep PRC and re-invest the large dividends from PRC in exploration and / or acquisitions.

[LJB]

There should be no negative connotation since NZO has stated for some time that their PRC stake would be sold when the time was right. This intention was made public even when the PRC shareprice went ballistic immediately (or there abouts) after floating.

[shasta]

If they can pay a 5c divie when they make a loss, what will they pay when they make a big profit?
NZO, just take a year off from drilling to consolidate and carefully plan your next moves. The picture should be radically different in a years time, Pike and Kupe are 20 year life span projects, rake in the cash and stack it in the bank.

If you take away the NZO share of the Pike River loss, the ($3.3m) loss becomes an $8.2m profit (after FX losses & exploration costs being expensed)

[Beagle]

If they can pay a 5c divie when they make a loss, what will they pay when they make a big profit?
NZO, just take a year off from drilling to consolidate and carefully plan your next moves. The picture should be radically different in a years time, Pike and Kupe are 20 year life span projects, rake in the cash and stack it in the bank.

I agree, just rake it all in and pay a 10 cent divvy next year.

[digger]

If they can pay a 5c divie when they make a loss, what will they pay when they make a big profit?
NZO, just take a year off from drilling to consolidate and carefully plan your next moves. The picture should be radically different in a years time, Pike and Kupe are 20 year life span projects, rake in the cash and stack it in the bank.

Logen Ninefingers,two years ago they did make a hugh profit but wisely paid only two lots of 5 cents div. On results then it could have been about 40 cents.What we are now getting is not income from this loss year but a dividend from the past and from reasonable expected improvements in the future.With three incomes next year i would be happy if again only 5 cents is paid,the balance into growth by acquistion and drilling after the we work out what went sooooo wrong this year.Others will want a greater div but i want a long term stable income at 5 cents and then grow the company.

[Beagle]

Logen Ninefingers,two years ago they did make a hugh profit but wisely paid only two lots of 5 cents div. On results then it could have been about 40 cents.What we are now getting is not income from this loss year but a dividend from the past and from reasonable expected improvements in the future.With three incomes next year i would be happy if again only 5 cents is paid,the balance into growth by acquistion and drilling after the we work out what went sooooo wrong this year.Others will want a greater div but i want a long term stable income at 5 cents and then grow the company.

I'm sure i'm not alone in wanting to see a decent divvy, hey they've had these projects in the pipeline for absolutly ages, (Kupe over 20 years), so if they're not going to pay a decent divvy over the next few years when the heck are they ? I don't think its unreasonable for investors to expect more than 5 cents for a $1,20 outlay which is only just over 4%, allbeit fully imputed ?

What do other people think ? When we get a convergance of three major projects all striking paydirt at once, all of which have had extremly long lead times to production, isn't it reasonable for the company to pay out at least half the profit ?

[upside_umop]

isn't it reasonable for the company to pay out at least half the profit ?

In that case, I think you owe NZO some money for this latest result. It would have to work both ways, right? :eek2:

[Unicorn]

I'm sure i'm not alone in wanting to see a decent divvy, hey they've had these projects in the pipeline for absolutly ages, (Kupe over 20 years), so if they're not going to pay a decent divvy over the next few years when the heck are they ? I don't think its unreasonable for investors to expect more than 5 cents for a $1,20 outlay which is only just over 4%, allbeit fully imputed ?

What do other people think ? When we get a convergance of three major projects all striking paydirt at once, all of which have had extremly long lead times to production, isn't it reasonable for the company to pay out at least half the profit ?

I don't see dividends as being particularly relevant. The idea is for the company to increase in value. Whether it retains that value (which should increase share price) or passes it on as dividends (which should equally decrease share price) does not make a lot of difference in the end. If you want income you can either take a dividend or sell a few shares - either way reduces your investment in the company.

[fish]

I don't see dividends as being particularly relevant. The idea is for the company to increase in value. Whether it retains that value (which should increase share price) or passes it on as dividends (which should equally decrease share price) does not make a lot of difference in the end. If you want income you can either take a dividend or sell a few shares - either way reduces your investment in the company.

Whilst accepting that lots of shareholders hold your view personally I have a very different viewpoint .
Dividends are importantas -
1 Enables tax credits to be used
2 Is money in the hand-to spend or invest and stimulate economies
3 If you rely on selling shares for income you will be shortchanged at times like this -the market does not reflect fair value-I remember you making a very good argument in your TTP submission .
4 Many investors invest for dividends-if you dont the interest
on any loan to buy shares is not tax deductible-I have a large margin loan which is tax deductible as i buy shares for the dividend .

The proof of my belief is that I started buying nzo again this morning -at 119-less 5 cent dividend= net cost 114cents .

[Bilo]

I am right with you Fish. Without dividends the bar for companies is lowered as past investments or capital raisings keep managers in the manner they expect despite performance - did anyone mention ponzi schemes? Without dividends traders take all the profits and buy and hold is even more dead as a paying share market option. Well, not even all traders because you have to trade well and beat your banker's dabbling, Goldman Sachs and their ilks manipulations - not many do without their command of derivatives, off market instruments, and liquidity. With out adequate dividends the share market as a source of investor funds is likely to die.
Great in theory Uni but "no dividend" hasn't worked in NZ.

[friedegg]

yes apart from my cash of around $8000 i get about $4000 in tax credits,this enabled me this year to pay no tax plus tax credits to the value of $2163,and after this years div it will happen all over again

[blockhead]

Yes Blocky likes the tax credits as well, maybe a share buyback is a possibility ??

NZOG spokesman Chris Roberts said the use of capital was "constantly under review and that particular idea (a buyback) is certainly given consideration, but there is nothing we can announce at the moment".

[digger]

I am all for dividends as well to soak up the tax credits and over time keep both the directors honest and bankers happy.The difference here is how much of a dividend.Remember it all started by one poster saying NZO could make a loss and still pay a dividend. That only happens in companies that are careful in good times with there money,so when a leen times comes they can carry on pretty much as usual.My comment about next year with three incomes leaving the div at 5 cents allows us to then find ways to grow the company and build up some fat for the next inevitable hard patch the company will face further down the track.
The dairy industry is a case in point. Years ago incomes were smothed out and over time things worked pretty well. Then a few load mouths started pushing for income to be payed out much in the year earned.The arguement here was that the farmer could smooth out his own income.But as i see it that did not happen.Instead a wild grab for dairy land sent the price of property through the roof and now in the last 18 months values have fallen about 40% in correction. So you see from where i am coming from a steady dividend seems more attractive with the balance of company earnings going into company growth on several fronts.I could ask would it have been better two years ago if nZO had paid out all earnings to say 40 cents,with none now.The answer in hindsight could well have been yes as much of the surplus went into dry wells and into US dollars going backwards.However it is only in hindsight that we know the wells are dry and the exchange rate unfavourable.
So for me it is slow and steady.Lets use the new monies finding out the size of TUI and KUPE near areas,and buying into oil developments. While 5 cents steady will keep me happy i realise others will have different ideas.

[winner69]

Whilst accepting that lots of shareholders hold your view personally I have a very different viewpoint .
Dividends are importantas -
1 Enables tax credits to be used
2 Is money in the hand-to spend or invest and stimulate economies
3 If you rely on selling shares for income you will be shortchanged at times like this -the market does not reflect fair value-I remember you making a very good argument in your TTP submission .
4 Many investors invest for dividends-if you dont the interest
on any loan to buy shares is not tax deductible-I have a large margin loan which is tax deductible as i buy shares for the dividend .

The proof of my belief is that I started buying nzo again this morning -at 119-less 5 cent dividend= net cost 114cents .

It just doesn't seem to make much sense Fish .... you borrow money (and pay interest on it) and give that cash to NZO to find some more oil or something to make you rich .... but also want NZO to give some of that cash back to you by way of a dividend

I don't know that much about NZO but I was rather surprised about how small they really are ... all this hype and revneues less than $100m last year .... must be huge future expectations built into those analyst valuations of $1.75 ... even allowing for the cash sitting on the sidelines gradually being frittered away

All this does seem to support the views of some on this thread that NZO is just something to play around for a selected few

[bung5]

It just doesn't seem to make much sense Fish .... you borrow money (and pay interest on it) and give that cash to NZO to find some more oil or something to make you rich .... but also want NZO to give some of that cash back to you by way of a dividend

I don't know that much about NZO but I was rather surprised about how small they really are ... all this hype and revneues less than $100m last year .... must be huge future expectations built into those analyst valuations of $1.75 ... even allowing for the cash sitting on the sidelines gradually being frittered away

All this does seem to support the views of some on this thread that NZO is just something to play around for a selected few

Valuations make lots of sense. With the 3 main investments they already have two of which will be generating income for the next 20 years. plus the cash to invest in more prospects...
They will probably sell PRC for over 150 million which is already 1/3 of their market cap.

[digger]

Valuations make lots of sense. With the 3 main investments they already have two of which will be generating income for the next 20 years. plus the cash to invest in more prospects...
They will probably sell PRC for over 150 million which is already 1/3 of their market cap.

bung5,that is the worst post i have read in ages. The first sentence is spot on but what is that junk about selling PIKE for 150 million. You clearly mean virtually give it away at that price and lament the fact a few years down the track.Pike once it starts earning will be a good little source of income for decades,so why give it away.The hard yard is virtually finished with the cream about to flow in the next 6 months ,so why sell.Why even think about it???

[Bixbite]

I don't know that much about NZO but I was rather surprised about how small they really are ... all this hype and revneues less than $100m last year ....


Small company, yes it is, a very small company. Eh, is NZO still sitting in the list of NZX 15!!!!????

[bung5]

bung5,that is the worst post i have read in ages. The first sentence is spot on but what is that junk about selling PIKE for 150 million. You clearly mean virtually give it away at that price and lament the fact a few years down the track.Pike once it starts earning will be a good little source of income for decades,so why give it away.The hard yard is virtually finished with the cream about to flow in the next 6 months ,so why sell.Why even think about it???

Digger , sorry I change my mind we won't be selling PIKE then. It's not my idea to sell PRC !!

[LJB]

Small company, yes it is, a very small company. Eh, is NZO still sitting in the list of NZX 15!!!!????

NZX 15 means institutional investment which (correct if I'm wrong) requires income stream from the investment to pay interest/dividends to debenture holders. Institutional buying/holding supports shareprice so logically, dividends are important, even to natural resource exploration companies focussing on growth.

[fish]

Winner
Margin lending at current sp of nzo tel cen and vector means i am making a profit on dividends only . Take vector for example -current dividend and tax credits per share is close to 10%-i pay 6.5 % interest on my margin lending .This interest is tax deductable and as i have substantial professional earnings it reduces my tax .
However most companies will grow in time-I think 3 of the 4 companies above that i am heavily invested in will grow over time . That capital gain will be free and provide me with substantial income to enjoy retirement . When I retire I will also retire all my margin lending debt

[fish]

Digger I will be going to the agm-my first ever .
I do not want nzo to sell prc .
Of course there will be a price that would be acceptable but I cant see anyone making such a high offer in the next 12 months .
Do you think a motion not to sell prc for at least 12 months wouldbe a good idea .?

[blockhead]

Tend to agree, if its up and running and turning a good $$$ it must be worth hanging onto, oil gas or coal, I don't really mind where the divies come from.

[Mr Tommy]

Do you think a motion not to sell prc for at least 12 months wouldbe a good idea .?

Fish, I think NOG are well on the way in planning to flick PRC within the next 18 months. They now have a contract to take 30% of production which Im sure they do not intend to take up themselves. So they can sell their shares off to the highest bidder who automatically gets access to that coal.


The coal contract option was issued as part of an agreement for the Group to participate in Pike's May 2010 equity issue and subscribe for a convertible bond facility. The contract grants the Group an option to purchase an amount of Pike coal for the life of the mine. The coal contract option is exercisable at any time until 31 March 2012. The coal option enables the Group to enter into an offtake agreement to purchase Pike coking coal at market prices that are agreed on an annual basis. The maximum volumes which may be purchased under the offtake agreement would be the currently uncontracted coal quantities until 31 March 2013 and up to 30% of annual coal production for the remaining life of mine.

[Beagle]

When I first started out in the Accounting profession in 1980 I stumbled across a note on one of the partners desks regarding a conversation he had with his stockbroker. it read NZOG strong buy at $1.40. Lesson, people can B.S. you all you like about growth this and expansion that, blah, blah, blah, I am sure we have all heard it countless times before from many companies, but paying out half your profit when it comes keeps Directors honest and keen. According to the Reserve Bank inflation calculator $1.40 in 1980 should be worth over $6 now.

Since 1980 I think they've paid four dividends.....I rest my case regarding the merits of dividends...

[bung5]

When I first started out in the Accounting profession in 1980 I stumbled across a note on one of the partners desks regarding a conversation he had with his stockbroker. it read NZOG strong buy at $1.40. Lesson, people can B.S. you all you like about growth this and expansion that, blah, blah, blah, I am sure we have all heard it countless times before from many companies, but paying out half your profit when it comes keeps Directors honest and keen. According to the Reserve Bank inflation calculator $1.40 in 1980 should be worth over $6 now.

Since 1980 I think they've paid four dividends.....I rest my case regarding the merits of dividends...

$1.40 and I'm sure there were not 389,092,572 shares on issue....

[remy]

craigs latest report on NZO out today..

"NZO has three key assets and NZ$80m of net cash. We view the Tui oil field and Kupe oil and gas
field as attractive plays on a positive oil price expectation. We value the 31% stake in PRC as a
key coking coal asset with meaningful upside potential. We believe the company is trading at a
20% discount to "NAV" which ascribes no value to its exploration capability. We set a target price
of NZ$1.48 and initiate with a BUY."

[Chris Roberts]

When I first started out in the Accounting profession in 1980 I stumbled across a note on one of the partners desks regarding a conversation he had with his stockbroker. it read NZOG strong buy at $1.40. Lesson, people can B.S. you all you like about growth this and expansion that, blah, blah, blah, I am sure we have all heard it countless times before from many companies, but paying out half your profit when it comes keeps Directors honest and keen. According to the Reserve Bank inflation calculator $1.40 in 1980 should be worth over $6 now.

Since 1980 I think they've paid four dividends.....I rest my case regarding the merits of dividends...

NZOG didn't exist in 1980. It issued 40 million 50 cent shares in August 1981 (nominal market cap $20m).
In 2000, NZOG had a market cap of approx $40m (135m shares, share price 30c).
2005 approx $180m (200m, 90c each).
2007 approx $280m (255m, $1.10 each).
Today approx $465m (390m, $1.20 each).
The 5c dividend to be paid 1 October will make it 20c in dividends since April 2008.

[J R Ewing]

NZOG didn't exist in 1980. It issued 40 million 50 cent shares in August 1981 (nominal market cap $20m).
In 2000, NZOG had a market cap of approx $40m (135m shares, share price 30c).
2005 approx $180m (200m, 90c each).
2007 approx $280m (255m, $1.10 each).
Today approx $465m (390m, $1.20 each).
The 5c dividend to be paid 1 October will make it 20c in dividends since April 2008.

The return is not so flash if you got on board through converting OD's @ $1.50 though...

[Believer]

The 5c dividend to be paid 1 October will make it 20c in dividends since April 2008.

You are "wrong" Mr Chris Roberts.

[Bixbite]

[QUOTE=Chris Roberts;317181
The 5c dividend to be paid 1 October will make it 20c in dividends since April 2008.[/QUOTE]

You are "wrong" Mr Chris Roberts.

Edit: Yes, you are "right" "since April 2008:.

[gambier33]

Thanks for the comment Chris Roberts. We all need to be reminded of history at times.

I was one of those investors in the original float of NZO in 1981. I have never regretted it. The oil floats at the time were where the action was - Petro Taranaki, Horizon etc - and they were highly sought after. I think the orginal maximum NZOG allocation (highly scaled back) was 400 shares for the mum-and-dad investors.

I've never sold a NZO share and between my wife and I have now built up what is a large number for us over the intervening thirty years. I'm way ahead, and think the company and its staff have done well for all shareholders to be where they are in 2010. I am always an optimist when a well is being drilled, but realistic enough to know that they don't always deliver. I never complain at the result - smarter people than me have chosen the target - if I didn't like it I'd move on.

I now see an exploration company become a long term producer. Tui excites, but Kupe (and, yes, I remember when it was discovered) is what will put this company in a great position to be even greater - regular income for years to come. Whether NZO use it to pay dividends or find more oil or both - I'm happy to leave it to them to decide.

Be happy :-)

[Grimy]

I now see an exploration company become a long term producer. Tui excites, but Kupe (and, yes, I remember when it was discovered) is what will put this company in a great position to be even greater - regular income for years to come. Whether NZO use it to pay dividends or find more oil or both - I'm happy to leave it to them to decide.
Be happy :-)

A refreshing post after all the BS you can read through this (and other) thread(s). It seems to me that some people like to post for the sake of reading their own comments, or upping their post score. So great to read a comment from someone who is probably very representative of the majority of investors. If you like the share you're in. If you don't get out!

[Beagle]

A refreshing post after all the BS you can read through this (and other) thread(s). It seems to me that some people like to post for the sake of reading their own comments, or upping their post score. So great to read a comment from someone who is probably very representative of the majority of investors. If you like the share you're in. If you don't get out!

Okay I conceed I may have got the year wrong but I can assure you that just after the original float the share price was $1.40. Some would like to give the misleading impression that NZO has shown a steadily improving share price over time. Nothing could be further from the truth. They may have paid 4 dividends in recent years but they are the only dividends ever paid in nearly 30 years of the company's existence.

Having said that I think they are now getting to the the point where they are bearing fruit so at $1.19 cum a 5 cent divvy and with concerns regarding peak oil at some stage in the future they're probably good buying at these sort of prices.

[Zito]

Roger the share price alone is meaningless if not taken together with number of shares on issue (ie capitalisation) and returns to investors over time. I doubt that investors such as Gambier33 would be happy with their investment in NZOG if there had been little or no capital appreciation over the past 29 years.

[Beagle]

NZOG didn't exist in 1980. It issued 40 million 50 cent shares in August 1981 (nominal market cap $20m).
In 2000, NZOG had a market cap of approx $40m (135m shares, share price 30c).
2005 approx $180m (200m, 90c each).
2007 approx $280m (255m, $1.10 each).
Today approx $465m (390m, $1.20 each).
The 5c dividend to be paid 1 October will make it 20c in dividends since April 2008.

So by your own admission Chris, in the 19 years from listing date in August 1981 to the year 2000, the share price went from 50 cents, (par, down to 30 cents). In that time the company paid how many Dividends ? let me tell you, NONE !! As we can see during that period of time the company issued significantly more shares and although my memory fails me as to the terms thereof, I think we can safely assume those new investors also lost a significant chunk of their capital.

http://www.rbnz.govt.nz/statistics/0135595.html

NZOG's performance from listing in Aug 1981 to the year 2000 was absolutly appalling. From the inflation calculator we can see that 50 cents in Q3 1981 should be worth $1.42 in 2000, but the share price was only 30 cents and in real terms investors lost 79% of their money over those two decades.

Performance since then has thankfully been better but it should be noted that the above mentioned substantial decline in value over the first two decades was against a back-drop of booming sharemarket's which far exceeded the inflation rate so in risk adjusted terms NZOG investors were really burned to a far worse extent than the simple inflation analysis suggests.

Long term the company has been an extremly poor performer, I would love to see a relative performance graph of NZO's price compared to the N.Z. sharemarket index since 1981, perhaps if your feeling extremly brave Chris you could enlighten us.

So you'll excuse me for beiong a cynical old investor and treating company claims of growth this and expansion that with a grain of salt. All your projects are now, or will hopefully shortly be bearing fruit, (assumming the boys can FINALLY get the coal mine cranking along) and I reckon its long overdue that the company paid out consistent decent dividends. I personally don't think 8-10 cents a share is an unreasonable ask going forward.

[777]

Roger, who were you before you were Roger? Your whinging sounds familiar. If you don't like the company feel free to sell a p... off.

[Beagle]

Roger, who were you before you were Roger? Your whinging sounds familiar. If you don't like the company feel free to sell a p... off.

I wasn't any other identity before as you suggest 777, a dose of reality is obviously too tough for you to take in an objective manner. I don't mind the company as it currently stands, (so with your permission of course, I might stay invested for a while seeing as there's such a paucity of other mining stocks on our N.Z. market), but anyone pretending they have been a great long term investment is sadly mistaken.

[digger]

Interesting Roger and some truth in your comments about the realy history,but unless your a historian i fail to see the relevance going forward.Over all these many years quite a few wells have been drilled.KUPE was discovered in 1986 but of little use until 6 months ago due to being overshawed by Maui. After that only TUI was found and we all know that history. Still my point here is that investers did have many opportuities to strike it rich. Going way back to the beginning as you have done please remember NZO is the only suriver from that era of which there were a far few,most i which i played with and made money but they all fell by the wayside.
I entered NZO about 91 or 92 so on those first purchases the DIV is now just equalled that first outlay. Last year to balance things out i took shares in lui of dividend so with 4 dry wells and coal harder to get out than those Chilean miners i have taken a knock this year.

Still Roger i do not understand where you are coming from by digging up the past.We were an explorer than and mostly and forever more now a producer.What is this hangup with the past??

[RRR]

Any views about DRP. I participated last time and took a hit(share price was higher-1.60 was the strike price for DRP). I will be reinvesting again this year due to the low share price and they better make good use of my reinvested dividends.

[fish]

Last year I took it in cash-ended up not needing most of it so reinvested at a profit to the drp-but with the negativity of the market ended up making a loss recently-but only a paper one as i will not sell at todays ridiculously low low price .
If the sp stays this low i might make a last minute decision to reinvest and sell other companies if i need the cash .

[friedegg]

although i hate to say it,the only real potential for nzo sp increase in the upcomming year is prc, wouldnt it be prudent to sell and load everything into prc?

[RRR]

although i hate to say it,the only real potential for nzo sp increase in the upcomming year is prc, wouldnt it be prudent to sell and load everything into prc?

I will not sell. NZO owns 1/3rd of PRC-they will benefit from 1.increase in share price of prc(if that happens) 2. dividends from prc 3. coal contract from prc 4. Bonds to prc. One can argue that nzo is much more diversified than prc. We already know that both these companies have above average risks and hence one is not superior to the other. It is up to individual investor to decide.

[Bixbite]

I'm waiting for Roger I, Roger II, Roger III, Roger.... to talk down the share prices. Will it be a dollar? I love it!!

I don't worry much about the share prices low as I will have the 5 cent dividend to pay for the extravagance bills.

[the machine]

although i hate to say it,the only real potential for nzo sp increase in the upcomming year is prc, wouldnt it be prudent to sell and load everything into prc?

ome would expect a siummer drilling campaign as rigs are a tad cheap at present

m

[lissica]

I'm waiting for Roger I, Roger II, Roger III, Roger.... to talk down the share prices. Will it be a dollar? I love it!!

I don't worry much about the share prices low as I will have the 5 cent dividend to pay for the extravagance bills.

I find it ridiculous to think someone could talk down or up the shareprice on a forum -_-

How big are your trading accounts?

[RRR]

It is perfectly ok to talk down or up the share price. This is an open forum and people share views-positive or negative. Nothing wrong with that. It has nothing to do with one's size of trading accounts-I dont see the logic of the post.

[Bixbite]

I find it ridiculous to think someone could talk down or up the shareprice on a forum -_-

How big are your trading accounts?

As a small shareholder or a small share buyer, I don’t have the power to manipulate the share prices but I can catch the good situations to buy a little to please my share broker.

How big is my trading account?
It is shame to tell publicly, I might be being removed by my share broker from his clients' list because of my small and non-active trade account.

[lissica]

It is perfectly ok to talk down or up the share price. This is an open forum and people share views-positive or negative. Nothing wrong with that. It has nothing to do with one's size of trading accounts-I dont see the logic of the post.

What I was implying was that I find it hard to believe you'd make much difference to the shareprice just by talking about it, unless you have some ST readers with big accounts acting on opinions expressed on here.

And anyway, the whole point of a forum is to hear different views. The day everyone agreed on what NZO is worth I'd probably do the opposite.

[lissica]

How big is my trading account?
It is shame to tell publicly, I might be being removed by my share broker from his clients' list because of my small and non-active trade account.

It was a rhetorical question ~_~

[gambier33]

Okay I conceed I may have got the year wrong but I can assure you that just after the original float the share price was $1.40. Some would like to give the misleading impression that NZO has shown a steadily improving share price over time. Nothing could be further from the truth. They may have paid 4 dividends in recent years but they are the only dividends ever paid in nearly 30 years of the company's existence.

Roger, I may not have adequately conveyed just how popular the early 1980s O&G gas floats were. They were hugely oversubscribed. And when I say huge, I don't don't think I've seen anything like it since. The first day stags made profits of huge proportion. It was just a supply and demand thing. I can remember borrowing $10,000 (it seemed a lot of money then!) for the up-front application money knowing I'd get scalled back enormously - to a bare minimum as it proved, but you don't know that at the time. A lot of my frends and work-mates were doing the same thing. It doesn't surprise me if you now tell me the par 50 cent share went to $1.40 just after the float. It was a meaningless artifact - just the market madness at the time. Petro Taranaki and the others (was there a Great Southern Petroleum as well? Memeory is getting bad!) all did the same - stags made a killing. Then the first duster wells brought everyone back to earth.

Roger, I never bought NZO expecting a steadily increasing share price for the next 30 years. It's not like buying into a manufacturer's float, where a steady annual ROI can be expected once the plant has been built with the money raised. Minnow O&G explorers are about as raw an investment gamble as you can get. NZO has been the great survivor out of all those 1980's floats and, as I said in the previous comment, is now moving into that exciting producer territory. Big companies come out of that cohort. I've been around long enough to remember working in the stinking hot sun on the public wharf in Port Hedland in the 1970s, mixing dry cement and clay that was going offshore to an island I'd never heard of (Barrow Island) for a unknown two-cent company called Woodside. Look it up.

Ironically, if you want more regular shareholder value growth out of an oiler, you're now onto a winner. I reckon this is the time to be buying into NZO if that's your investment goal - the gamble component has diminshed significantly in the last few years.

I'm with Digger.

[gambier33]

I doubt that investors such as Gambier33 would be happy with their investment in NZOG if there had been little or no capital appreciation over the past 29 years.

Hi Zito, turning it around somewhat: while I'm happy with how it's worked out, it wouldn't have been a case, either, of being "unhappy" if NZO had faded away. I knew the risks and was happy to be invested knowing what all the possible outcomes could be. I'd not have invested if I couldn't accept the "gamble".

[Beagle]

Digger / Gambier33.

Hi Guys. Thanks for your comments. I guess I just wanted to debate another angle on the performance of the company, more so to shadow some perspective on the dividend payment's recently made. Lots of positive talk about recent divvy payments and the forthcoming one, but I just for the sake of playing Devil's advocate wanted to throw some light on how NZOG's share price performance has evolved over time.

I also want to continue to evolve the debate about dividends. When you get a convergance of the 3 main assets plays all bearing fruit, or hopefully about to do so in the case of PRC, it makes sense to me that shareholders share in the reward to a fair level, I would suggest a payout ratio of not less than 50% going forward. In the past, and I suppose many have shared this pain, i have found that talk of capital growth this or development that, is cheap, dividends on the other hand in the current environment of low interest rates are most enjoyable and if they were at a more rewarding level such that an investor might enjoy say an 8% return taking into account the value of imputation credits, the company may find it may get significantly more support from investors, a classic, win-win ?

It strikes me as rather odd that the team at NZOG have spent so much valuable management time reviewing what I would imagine have been a wide range of investment opportunities regarding utilization of Tui cash, yet at a time when the share price appears to be woefully under-performing havn't undertaken a share buy-back. Surely seeing as they appear to have rejected every other investment / almagamation / merger / takeover opportunity out there, perhaps their greatest opportunity, the one that would add the most net value per share is an on-market buy-back of their own shares which is staring at them right in the face. Sometimes the thing that would add most value to shareholders is the most obvious but perhaps they can't see the wood for the trees ?

Of course an extremly cynical view might be that share buy-back's don't grow the company per se, so there's no opportunity for management to boost their own remuneration as the company itself doesn't grow, but I couldn't possibly suggest such a cynical viewpoint would have any validity otherwise I'd really be in trouble...

I'm interested in what others think. Is it a good idea to instigate a significant on market share buy-back or should management as they suggest be looking overseas for growth oppotunities and we change the name to say Pacific Oil, Coal and Gas ?

[Unicorn]

I also want to continue to evolve the debate about dividends. When you get a convergance of the 3 main assets plays all bearing fruit, or hopefully about to do so in the case of PRC, it makes sense to me that shareholders share in the reward to a fair level, I would suggest a payout ratio of not less than 50% going forward.

Surely seeing as they appear to have rejected every other investment / almagamation / merger / takeover opportunity out there, perhaps their greatest opportunity, the one that would add the most net value per share is an on-market buy-back of their own shares which is staring at them right in the face. Sometimes the thing that would add most value to shareholders is the most obvious but perhaps they can't see the wood for the trees ?


NZO earnings cannot be expected to be regular over the coming years, so linking dividends to a fixed percentage of profits would be unhelpful. Returns would be irregular, and that would upset more people than it would please. You will note that there was a "loss" this year, so what such a formula suggests is no dividend!

PRC dividend contribution cannot be expected for a while yet, as PRC will want to pay down debt once (if) they become profitable. NZO return from PRC is likely to come in the form of a one off return on sale of the cornerstone stake. Return to NZO shareholders from this oneoff windfall profit is better handled via a capital return or special dividend, rather than distorting the annual dividend.

A share buyback is something I have favoured, because I believe it is in shareholders best interests that the share price be protected from the sort of extreme swings that we see on the somewhat illiquid NZX. The failure of the last summer exploration program has seen a heavy loading of the sell side, and the lack of buyers means that the shareprice has a downwards inertia that inevitably takes it well below fair value. Conversely, as another potentially rewarding drilling campaign gets under way the share price will probably get a bit overheated. These excessive swings lead to NZO being seen as a risky speculative share, when the reality is that there is a solid income stream behind the company now.

The Chairman has previously expressed the view that he does not feel it is right to buy shares back at a lower price than the company previously sold them at. I take the contrary view that it is better for the company to offer say 125c for a share bought at 150c than to leave a shareholder at the mercy of the illiquid market and having to accept perhaps 115c.

I don't think it is fair to say that the Board has rejected every opportunity out there. What I think they have done is to be patient and wait for an appropriate opportunity. We live in uncertain times, and it would have been very easy to waste shareholders wealth by leaping into something risky. There is no indication that they have given up the search. Recent announcements indicate quite the opposite.

[digger]

Hi Unicorn,
Good post and well put. Several comments. First the Waikato Times has a big piece the other day saying DS was looking into a share buy back. Also your comment that the chairman feels he can not buy back shares at lower value than he prevoiusly bought them at might now be a bit outdated.I remember several years ago TR did say that not recently to my knowledge.And then at the time i wondered if it was a soft option as he did not like the idea anyways nor intended to act on it.
Frankly the CEO or Chairman can not and should not imlpy that a comment can stand for all time.As we all know the only perminate thing is change and things are sure changing around NZO. The idea needs looking at as buying back shares might well be the best investment on the NZX.
Cheers

[digger]

Oh yes and at what rate should NZO offer for its shares in any buyback. I would say at the best and cheapest rate you can get them at just like any other buyer.The fact that they were purchased at a higher rate is all part of the sharemarket business. No one is required to sell but if you must then having NZO in the market is surely better than not having them in the market.

[Bilo]

I think a bald share buyback is a waste of time and money as it will only buy up shares from a few disgruntled holders who have a better place to invest. (Read most long term investors in NZO) The problem is lack of support for the share price. It only takes maybe one person to short NZO when it has risen above recent levels and there is plenty of selling support to develop downwards share price momentum, to have potential buyers stand back, and trap the majority into holding an undervalued illiquid and stagnant share – while the shorter goes and uses his money elsewhere.
Unless there is some way of managing a buy back in a similar manner to the way shorters can manipulate share prices downwards all a buyback will achieve will be to allow some long term investors to quit the company. Any buyback has to be prepared to trade up and down, to use derivatives, to use margin tools – otherwise shorters always win. There has to be a potential downside for this negative activity and with such a small and activity transparent company it will take time to establish a realistic share price. There is a difference between providing share price support and a share buy back. The difference is in how the buyback trading is performed. What NZO needs is share price support not necessarily a buy back.
If this sort of “dirty” buyback isn’t legal then there are a lot of tools that are in use that shouldn’t be legal either. Why else have we had companies trading at less than their cash backing and with sound producing assets?
Share prices haven’t reflected underlying value while liquidity in the economy is so tight.

[Bixbite]

Totally agree with you Bilo.

Let's do some calculations for the actual gain from a share buyback @1.25:-

Assume the buyback is 5% of the total shares = 19.5m shares
19.5M shares x $1.25 = $24.5M

Two years ago, the company got $1.50 per share from NZOOD, totally paid out $0.15 for dividends, if the buyback price is @$1.25, it only end up with 10 cents per share - the total gain is $1.95M. Does it worth to spend $24.5M for a book profit gain of $1.95M?

Moreover, after buyback finished, could the company guarantee that the share prices would not again lower than the buyback price $1.25? If the share prices go lower again, will the company do a buy back again?

[Snapper]

I don't know if its in a board's mandate to agonise about where the share price should be. Their focus should be on maximising medium-long term profit and allocating resources to where they will receive the best return. I think share buybacks should only be done in extraordinary circumstances; if a company has a surfeit of cash then they can give it to me as a shareholder and I can decide which shares I want to buy.. A dividend reduces my net cost of investment and makes a stagnant or undervalued share price a bit more palatable.

[dsurf]

I don't know if its in a board's mandate to agonise about where the share price should be. Their focus should be on maximising medium-long term profit and allocating resources to where they will receive the best return. I think share buybacks should only be done in extraordinary circumstances; if a company has a surfeit of cash then they can give it to me as a shareholder and I can decide which shares I want to buy.. A dividend reduces my net cost of investment and makes a stagnant or undervalued share price a bit more palatable.

These are extraordinary circumstances!!!

Protecting the SP protects all stakeholders. The whole point of buying at sub $1.20 is to make sure any offer has to be for substantially more. Also If NZO state (but most likley do very little or nothing) that they will buy "up to" $50 million worth of shares on market at prices of $1.50 or below- that would stop any shorting activity sub $1.50 wouldn't it. U.S. companies do it all the time because it is a good idea!!

[dsurf]

Hard to fathom the current SP & at reasonable volume- Cum a 5c dividend suggesting real price of $1.12. All brokers have a buy or accumulate & higher valuation. Oil up today, US$ down, General market rebound. PRC stronger.

Sentiment very bad for this stock unfortunately!

[digger]

Hard to fathom the current SP & at reasonable volume- Cum a 5c dividend suggesting real price of $1.12. All brokers have a buy or accumulate & higher valuation. Oil up today, US$ down, General market rebound. PRC stronger.

Sentiment very bad for this stock unfortunately!

Early today John Keys was on morning report saying that South Canterbury Finance could use up all the monies set aside under the quarantee scheme and it looks like needing a lot more. As i got it 800 million was set aside but that was suppost to be for all companies under the scheme.It seems South Canterbury Finance[SCF]might need up to 1.8 billion. All i am hearing on business reports sounds like NZ has its own TOO BIG TO FAIL Problem.
General finanical problems world wide and SCF here in NZ are having a hugh effect on NZO. It remains a share you can sell to get some money even if you do not want to.This i think is dragging down NZO.This company has now fallen too much to be explained away by 4 dry wells only. So to tie this all in with our share buy back we have been talking about i stand by yesterdays comments but now NZO should not do anything until things settle down. If my assumption is correct this SCF things is too big a train to stand in front of and for now we should just let things take there coa-rse.

[Beagle]

Thanks guys for your opinions. My opinon remains that the best buy and best use of some of its cash resource for NZOG out there at present is it own shares, thus boosting the net earnings per remaining share for all shareholders who decide not to sell.

I agree the SCF matter is a massive train wreck and the effect on the N.Z. economy will be profound. Having said that NZOG sells internationally priced commodities so is the potential share price performance over the coming days if the SCF matter goes completly pear shaped an interesting opportunity, especially cum a 5 cent divvy ?

[Corporate]

The way I see it. NZO market cap is currently $455m

Made up of $80m cash, Pike $120m (30% of $400m), PPP $20m (15% of $130m), Pike loan $40m. Giving a total of $260m.

$445m less $260m = $195m

So what is left over.. well reserves in the ground of 13mmboe valued at $15 per boe (195m/13mmboe).

I don't see there being much upside here. Value hinges on rising oil price and pike being successful.

I could be wrong.

[Bilo]

I am broadly in agreement with your numbers corporate but NZ$15 per barrel of producing asset 2P is a steal if you could buy it. Worth over a billion in time...13M * NZ(100-15) = 1,105M

[Bilo]

And corporate PRC will be worth at least 3x the 120M (cost price)- all they have to do is prove that they can dig the coal out safely..

[Unicorn]

The way I see it. NZO market cap is currently $455m

Made up of $80m cash, Pike $120m (30% of $400m), PPP $20m (15% of $130m), Pike loan $40m. Giving a total of $260m.

$445m less $260m = $195m

So what is left over.. well reserves in the ground of 13mmboe valued at $15 per boe (195m/13mmboe).

I don't see there being much upside here. Value hinges on rising oil price and pike being successful.

I could be wrong.

Damn. That $130M odd that NZO put into the Kupe infrastructure appears to be worthless now!

[digger]

Damn. That $130M odd that NZO put into the Kupe infrastructure appears to be worthless now!

Unicorn you beat me to it.Best we informed the directors before any more money gets thrown away into KUPE. In fact i am so far behind the ape ball i thought KUPE was up and running and the cream was just starting. Seems i was completely wrong and it is all worthless.

[Beagle]

Yeah Corporate, you'd better jump on board here too. Its going to be a wild ride but hey, all three projects are converging and just maybe if DS can read the tea leaves properly NZOG might see the merits in buying back its own shares.

Jump in mate, cum a 5 cent divvy and with the long term prospect for oil, where the world is running out, there must be medium term potential.

[Mr Tommy]

The upcoming dividend of 5c will cost nearly $20m.
Since the dividend was announced the shareprice has still dropped.
Using that $20m for a buy back instead might have had a better result.

[Corporate]

Damn. That $130M odd that NZO put into the Kupe infrastructure appears to be worthless now!

It is covered in whatever value is ascribed to the 13mmboe of reserves. I am just trying to simplify things.

[Bilo]

I think they were just taking the Mickey, Corporate. And yes the share price dropped but was that a poor South Canterbury finance investor scrambling for cash, or currency dropping or CFD suppliers correcting things to pay the dividend. Or all of these plus ?

[777]

NZO is now trading at 1.15

I guess when I topped up my holding yesterday at 1.18, I was a day early. :(

Oh well, there's always tomorrow. :)

Yeah at $1.14 :)

[digger]

The upcoming dividend of 5c will cost nearly $20m.
Since the dividend was announced the shareprice has still dropped.
Using that $20m for a buy back instead might have had a better result.

Mr Tommy, if we lived in two parallel worlds it would be interesting to see which approach was the better. If we were to go down the track you suggested and the buy back held the price at 1-20,it would be only a matter of seconds before it got posted here that it was a waist of money as no positive effect would be evident.Should have given a dividend would be the cry in that scenario. Frankly i think NZO will go down no matter what management do or don't do. Larger finanical issues are pulling it in an undersible direction,at least for now.
This SCF thing is a big problem. Like all govt nose ins it rapidly become an unfair system. Investers there get all their money back but none for investers that take a loss on the market . These are troubled finanical times and a lot of changes will have to take place.I would say if the govt is to continue 100% supporting funds investments that money will leave others areas where rish is soley carried by invester.
With this happening train wreck i do not think NZO should even look at a buy back now.The monies will have to be saved to get through this crazy time.

[777]

I have buckets of them( overweighted) but am feeling very tempted to buy at these levels. Cum dividend, regular cash flow, PRC approaching production etc. Keep having to walk away from my computer so I don't buy any.

[geezy]

someone mooted the idea earlier about selling NZO and buying PRC since NZO SP only hope now lies in PRC ,as there arent any other upcoming activities.

Will NZO go up in tandem of PRC sp, shud it rise?

[Arbitrage]

yes, someone calculated a 1 cent rise for NZO every 3 cents PRC

[bung5]

yes, someone calculated a 1 cent rise for NZO every 3 cents PRC

What a complex calculation that must of been

[Bilo]

yes, someone calculated a 1 cent rise for NZO every 3 cents PRC
Not if people sell NZO to buy PRC....which would be my assessment of what has been happening...

[bung5]

Soon it looks like PRC may over take NZO's market cap

[swissboy]

At this very moment Pike +3c NZOG - 1

[percy]

At this very moment Pike +3c NZOG - 1

I note NZO is in a down trend,while PRC would appear to be in an uptrend.I would have thought PRC going up would have driven up NZO.
Could some one please tell me how much of a PRC share does 1 NZO share own,as I am thinking of increasing my NZO holding rather than buying PRC which I do not own any shares in .

[geezy]

its looking a bit tad positive today.

[Unicorn]

I note NZO is in a down trend,while PRC would appear to be in an uptrend.I would have thought PRC going up would have driven up NZO.
Could some one please tell me how much of a PRC share does 1 NZO share own,as I am thinking of increasing my NZO holding rather than buying PRC which I do not own any shares in .

In simple terms one NZO share owns about 30% of one PRC share.

NZO has about 390M shares on issue.
PRC has about 405M shares on issue.

NZO hold 30% of PRC.

There are also convertible notes that might mean an NZO share eventually ends up with a bit more of a PRC share.

[percy]

In simple terms one NZO share owns about 30% of one PRC share.

NZO has about 390M shares on issue.
PRC has about 405M shares on issue.

NZO hold 30% of PRC.

There are also convertible notes that might mean an NZO share eventually ends up with a bit more of a PRC share.

Thanks unicorn.That is substancial.

[digger]

Percy after the shares in lue of dividend from NZO there will be near enought to about the same number of pike shares as NZO. Near enough for simple cals here.Four things need to be considered IMHO.The 30% pike holding,the convertable notes and thirdly the right to purchase the coal not sold.Also NZO has been marked down serverly because of its imput into PIKE. The market is wrong with that one but NZO will not rerate until PIKE shows the investing public that NZO investment was wise. Given these four things i say NZO will go up somewhere between 60 to 70 % of the gain that PIKE makes. That should hold until all the downgrade of NZO investing in PIKE is reversed[my guess here is 1-60] After that if PIKE should continue to climb to 2 or3 dollars NZO gain will only be the direct effect of its holding in PIKE. About 35% to 40%
That is how i see it and i have no doubt thta pIKE will deliver regardless of the past so if we file this away somewhere we shall see how accurate it is with time .

[percy]

Percy after the shares in lue of dividend from NZO there will be near enought to about the same number of pike shares as NZO. Near enough for simple cals here.Four things need to be considered IMHO.The 30% pike holding,the convertable notes and thirdly the right to purchase the coal not sold.Also NZO has been marked down serverly because of its imput into PIKE. The market is wrong with that one but NZO will not rerate until PIKE shows the investing public that NZO investment was wise. Given these four things i say NZO will go up somewhere between 60 to 70 % of the gain that PIKE makes. That should hold until all the downgrade of NZO investing in PIKE is reversed[my guess here is 1-60] After that if PIKE should continue to climb to 2 or3 dollars NZO gain will only be the direct effect of its holding in PIKE. About 35% to 40%
That is how i see it and i have no doubt thta pIKE will deliver regardless of the past so if we file this away somewhere we shall see how accurate it is with time .

Thank you digger.I respect your opinion and think you have given me sage advice.NZO have certainly strenghtened their position.I have NZO and was trying to figure out how to increase my exposure to PRC.I have looked at PRC and PRCOA and it seemed to me you have a free ride via NZO to Pike.It certainly looks more likely that Pike will start producing substancial amounts of coal shortly.I appriciate your reply.

[BigBob]

For what it is worth, today's price action was a "key reversal" in TA speak. The open was a new low and lower than yesterday's low and the close was higher than yesterday's high.

This is a very powerful trend reversal signal - the stronger the trend, the stronger the signal.

[RRR]

Couldn't resist the temptation-added some more today.

[fish]

Wise move RRR .
Did you notice the error in mondays nz herald-business page B15 has the dividend at just 5c with no imputation credits

The correct amount is-


APPNDX7: NZO: Appendix 7 - Dividend Details

NZO
31/08/2010
APPNDX7

REL: 0957 HRS New Zealand Oil and Gas Limited

APPNDX7: NZO: Appendix 7 - Dividend Details

Nature of event: Full Year Dividend

Description of the class of securities: New Zealand Oil & Gas Limited
Ordinary Shares

ISIN: NZNOGE0001S6

Monies associated with event
Amount per security: 0.05
Currency: NZD
Total Monies: $19,454,629

Supplementary dividend
Amount per security: $0.008824

Credits: $0.021429

Record date: 17 September, 2010
Payable date: 01 October, 2010
End CA:00199091 For:NZO Type:APPNDX7 Time:2010-08-31:09:57:39

[friedegg]

yes last year i got imputation credits plus withholding tax,all good if you do ir3 for your tax return but i spose people who are on normal wages or superannuation cant claim the credits?im not sure but arent all dividends payed out with credits?