NZ Oil & Gas (NZO)

[mistaTea]

Looks like not everyone is happy with our attempt to gain an extension...

http://www.scoop.co.nz/stories/AK1802/S00173/say-no-more-to-nz-oil-gas.htm

[peat]

You just have to say it is poorly managed that they have to go cap in hand to seek yet another extension. The world isnt an easy place for this industry. Its not a secret that public opinion is against you , and you open yourself up to this.

[mistaTea]

https://www.odt.co.nz/business/minister-explains-drilling-decision

[arjay]

They're an odd crowd down in Dunedin. While one part of the city was crowing about having divested in oil investments, another part was falling over itself to offer a base for drillers at Port Chalmers.

[Marilyn Munroe]

They're an odd crowd down in Dunedin.

Not just Dunedin. Timaru is repeating its southern neighbors public squabbles.

https://i.stuff.co.nz/timaru-herald/news/101391972/south-canterbury-encouraged-to-keep-telling-positive-story-about-oil-and-gas-prospect

https://i.stuff.co.nz/timaru-herald/news/101438898/greenpeace-warns-barque-resources-must-stay-in-the-seabed

Also I read an item on the internet discussing the American fracking boom. Two schools of thought were advanced;

1. The boom was the retirement party of the fossil fuel industry.

2. The fracking industry was making good gains in oil recovery rates and production cost reductions.

If No 2 is correct the chance of a drill bit with some form of NZO ownership hitting the sea bed is small.

Boop boop de do
Marilyn

[flyingmariner]

Looks like not everyone is happy with our attempt to gain an extension...

http://www.scoop.co.nz/stories/AK1802/S00173/say-no-more-to-nz-oil-gas.htm

I don't know why NZO even bothers with exploration now. Why subject yourself to all the harassment that comes with it.

NZO could just as easily buy Chevron stock (it's cheap right now), throw in a bit of Schlumberger and toss them in the bottom drawer and walk away from all the aggravation. I bet that in 10 years those two stocks will be worth more than what NZO gets back from any holes drilled.

Let all the greenies wear sack cloth and live in caves. I want them to be happy.

Everyone will be happy. I'll be really happy because as a 20 year holder of NZO I know it will make out like a bandit doing that.

[jumbo]

Well said; I dont beleive nzo will drill in nz and it wont be because off protest's,( but uneconomic's) With oil price moving between 40/60 dollars a barrel and with the oil trade so uncertain who would want to bring a rig all the way down here for risk, It's a shame but that's business.One only have to look at the field of Taranaki to see what benefit they bought to NZ. We are in very uncertain times

[mistaTea]

If No 2 is correct the chance of a drill bit with some form of NZO ownership hitting the sea bed is small.


I just keep thinking to myself... Ofer Global has looked at the Barque opportunity, and was prepared to shell out tens of millions of dollars to get a slice of the pie. It could turn out to be a blunder if nothing comes out of the test drill, but the data they have access to must indeed be interesting for them to make such a large bet. That makes me feel more optimistic.

Also, Cue Energy has the Ironbark prospect to explore. That is another large opportunity that, if successful, could make Cue worth many more times it's current value (Current market cap approx A$50 million).

In the meantime, they need to just not be stupid with the $80 odd million available for investing. Meeting the low hurdle of simply not being stupid would probably enable them to maintain some form of dividend in the absence of other investments.

[mistaTea]

Well said; I dont beleive nzo will drill in nz and it wont be because off protest's,( but uneconomic's) With oil price moving between 40/60 dollars a barrel and with the oil trade so uncertain who would want to bring a rig all the way down here for risk.

Don't forget, Barque is largely a gas prospect, not oil. Gas prices have been relatively stable compared to oil. As an excellent transition fuel, capturing a slice of a large gas field could be an intelligent move.

[jumbo]

Sure the Barque prospect might be a good gas field, The trouble is as I see it they have to have the confidence to go down there, and I don't Believe they will or should until the Govt comes out and fully support's all mining be it gas/oil /and all other mining within reason, or we will get left behind. jumbo

[fish]

Sure the Barque prospect might be a good gas field, The trouble is as I see it they have to have the confidence to go down there, and I don't Believe they will or should until the Govt comes out and fully support's all mining be it gas/oil /and all other mining within reason, or we will get left behind. jumbo

I thought they had already supported it-allowed a further 1 year delay before drilling has to start

Drilling is all about risk versus reward.
Although there is gas there and that is said to be the main aim its the condensate that really makes the big money at little extra expense

[Marilyn Munroe]

Things are corker for Beach Energy in the land of under arm bowlers.

Beach is a 50% partner with NZO in the Canterbury Bight prospect. Seems Beach has better things to do than be distracted by a frontier gas prospect on the far side of the world.

http://www.smh.com.au/business/energy/beach-energy-hits-profit-as-it-beds-down-lattice-acquisition-20180218-p4z0sq.html

Boop boop de do
Marilyn

[fish]

Things are corker for Beach Energy in the land of under arm bowlers.

Beach is a 50% partner with NZO in the Canterbury Bight prospect. Seems Beach has better things to do than be distracted by a frontier gas prospect on the far side of the world.

http://www.smh.com.au/business/energy/beach-energy-hits-profit-as-it-beds-down-lattice-acquisition-20180218-p4z0sq.html

Boop boop de do
Marilyn

Thanks for the link.
Beach certainly are doing well and are focused.
There is a lot of money to be made from well chosen offshore gas
I do feel that you may be making a false implication that they dont want to be involved in the CanterburyBasin.
Would you be kind enough to explain what information you derive from this.
My own take from this is that they have the money and experience to be involved

[Marilyn Munroe]

Thanks for the link.
Would you be kind enough to explain what information you derive from this.


I assume top management at Beach when presented with options of further development in the Cooper Basin for a break even price $US17 a BOE, or risky exploration in a frontier prospect on the far side of the world would choose to put their eggs in the Cooper Basin basket.

Boop boop de do
Marilyn

[fish]

I assume top management at Beach when presented with options of further development in the Cooper Basin for a break even price $US17 a BOE, or risky exploration in a frontier prospect on the far side of the world would choose to put their eggs in the Cooper Basin basket.

Boop boop de do
Marilyn

Assumptions of course can be wrong.
I was taught not to put all my eggs in one basket.
We dont really know about their canterbury intentions

[digger]

I assume top management at Beach when presented with options of further development in the Cooper Basin for a break even price $US17 a BOE, or risky exploration in a frontier prospect on the far side of the world would choose to put their eggs in the Cooper Basin basket.

Boop boop de do
Marilyn

interesting the conclusion you draw from Beaches good income from Cooper Basin. The question is does Beach draw the same conclusion. To me it could be argued that rather than going on paying all that tax they should expand when they feel the odds are in their favor.Well that is what I would do,so now it is how does Beach see the investing world---do you go inward or do you look for expansion.
If Beach wanted out why did they bother with NZO getting the year extension for drilling the permit

[Sideshow Bob]

From the ODT:

https://www.odt.co.nz/business/nzog-taking-toroa-prospect

[Marilyn Munroe]

From the ODT:

https://www.odt.co.nz/business/nzog-taking-toroa-prospect

Translation; An established explorer and producer with a good reputation thinks it is not worth their time or money so walks away.

I am sorry to be so negative but I can not see any exploration off the South Island Coast unless there is some game changing event.

Boop boop de do
Marilyn

[mistaTea]

Translation; An established explorer and producer with a good reputation thinks it is not worth their time or money so walks away.

I am sorry to be so negative but I can not see any exploration off the South Island Coast unless there is some game changing event.

Boop boop de do
Marilyn

Given your pessimism for the drilling prospects, is it safe to say that you sold any shares you had into the OGOG offer? And have not bought back in since?

[Sideshow Bob]

Half Year - https://www.nzx.com/announcements/314746

[Marilyn Munroe]

Given your pessimism for the drilling prospects, is it safe to say that you sold any shares you had into the OGOG offer? And have not bought back in since?

Yes and yes.

I am willing to buy back in if the exploration prospects improve, but at the moment I believe it is less risky to sit on the sidelines.

Boop boop de do
Marilyn

[mistaTea]

Yes and yes.

I am willing to buy back in if the exploration prospects improve, but at the moment I believe it is less risky to sit on the sidelines.

Boop boop de do
Marilyn

Well, then I guess you have nothing to worry about. If the company is going to Hell in a hand basket - as you imply - then you will be unaffected.

The more you shout it out, the more you pound it in.

[flyingmariner]

I reiterate what I said in a previous post. NZO should send all their cash offshore, buy large integrated oil companies and wait for the dividends to roll in along with capital appreciation.

It's not until the gas stoves in NZ go out will people realize that there is no living without fossil fuels. Solar panels are wonderful until you try running power tools or anything larger than a toaster. The "Birkenstock Wearers" are determined to stop any exploration in NZ and I believe that the Govt will listen to them and make it next to impossible to drill for oil and gas anywhere in NZ.

https://www.stuff.co.nz/business/opinion-analysis/102475250/prime-minister-jacinda-ardern-promised-intervention-but-is-delivering-uncertainty

[dodgy]

I reiterate what I said in a previous post. NZO should send all their cash offshore, buy large integrated oil companies and wait for the dividends to roll in along with capital appreciation.

It's not until the gas stoves in NZ go out will people realize that there is no living without fossil fuels. Solar panels are wonderful until you try running power tools or anything larger than a toaster. The "Birkenstock Wearers" are determined to stop any exploration in NZ and I believe that the Govt will listen to them and make it next to impossible to drill for oil and gas anywhere in NZ.

https://www.stuff.co.nz/business/opinion-analysis/102475250/prime-minister-jacinda-ardern-promised-intervention-but-is-delivering-uncertainty

Hi flyingmariner,
Was in and out of NZOG/NZO/PPP etc from 1988 until last year - never did any good - still have souvenir bottle of Kupe light crude from company . I saw Barque in its original form - pipe dream with good management returns only in my opinion.
Better options exist for exploring on the NZX - PPH , SKO , ERD - I currently hold shares in all 3.
Good luck with your optimism - mine cost me plenty - including PRC !.
Regards
-dodgy

[flyingmariner]

Hi flyingmariner,
Was in and out of NZOG/NZO/PPP etc from 1988 until last year - never did any good - still have souvenir bottle of Kupe light crude from company . I saw Barque in its original form - pipe dream with good management returns only in my opinion.
Better options exist for exploring on the NZX - PPH , SKO , ERD - I currently hold shares in all 3.
Good luck with your optimism - mine cost me plenty - including PRC !.
Regards
-dodgy

G'day Dodgy,

I suspect you might be right on better opportunities elsewhere. Maybe should have taken the 74 cent offer but I've stuck with NZO thinking that one day they just might strike oil in spite of all the senseless places they ended up drilling but for now its dead money unless oil goes to 80 dollars.
Now with the Trump factor re: trade tariffs there will be some screaming bargains outside of oil shares in the next few weeks I'm sure.

[jumbo]

Well said, as the gov't is keen to exit all fossil fuels I think the time is ripe for nzo and all other oil companies to hand back all oil and gas permit's and exit nz. There are plenty of other countries who would welcome them. It would be interesting to see what would develop from that. once they are gone it might take a massive job to get them back. I say the time is now for them to stand up and make a stand, then would we see thing's get really interesting. jumbo:confused:

[Marilyn Munroe]

Drill and thrill is back for NOG'ers

https://www.nzx.com/announcements/316503

Boop boop de do
Marilyn

[blackcap]

Drill and thrill is back for NOG'ers

https://www.nzx.com/announcements/316503

Boop boop de do
Marilyn

Yeah thinking of getting in again round the 61 mark after exiting at 74. Seems like a no brainer, especially when NTA is at 81 odd cents as well.

[freddagg]

Drill and thrill is back for NOG'ers

https://www.nzx.com/announcements/316503

Boop boop de do
Marilyn

Not any more.
I move we sell all assets, return the funds to shareholders and dissolve the company.

[blackcap]

Not any more.
I move we sell all assets, return the funds to shareholders and dissolve the company.

Check the announcement from NZO. No need to worry, existing permits are fine, and they can always go offshore... (ie Indonesia and Australia) Anyway I do not think OFER are going to dissolve the company for what its worth.

[RTM]

Not any more.
I move we sell all assets, return the funds to shareholders and dissolve the company.

30 months to go. I wonder if they will get a 2nd term.
I guess this may become an election issue. Be an interesting one for the Nats (Blue / Green) to grapple with !

[Marilyn Munroe]

The offshore exploration ban just announced by Prime Minister Jacinderella is cynical virtue signaling.

The real reason I reckon the exploration block round has been withdrawn is nobody was interested in making an offer.

We have already seen the the likes of Statoil and Woodside drop their existing permits

While NZO is still allowed to drill their existing Canterbury Basin permit the probable lack of other drills in NZ means they will have to bear the full costs of transporting a rig to and from NZ. This increases the financial risk.

Boop boop de do
Marilyn

[flyingmariner]

The offshore exploration ban just announced by Prime Minister Jacinderella is cynical virtue signaling.

The real reason I reckon the exploration block round has been withdrawn is nobody was interested in making an offer.

We have already seen the the likes of Statoil and Woodside drop their existing permits

While NZO is still allowed to drill their existing Canterbury Basin permit the probable lack of other drills in NZ means they will have to bear the full costs of transporting a rig to and from NZ. This increases the financial risk.

Boop boop de do
Marilyn

I see it as maybe a plus for NZO if they they do discover gas off Canterbury would they not have a product that could be priced at a premium seeing as limited drilling is going to take place in the future?

NZ "greenies" and in particular the current NZ Govt. which is really just trying to curry favour, I understand that, is completely living in La La Land if they seriously believe that the NZ economy can be carbon emission free by 2050. Does that mean vehicles are included, obviously not.

Everything is great right now but there is a worldwide recession coming not because of any particular event but because the business model is not extinct so there will be a recession and when that happens every job lost through this policy will be a nail in the coffin for any Govt. whatever party.

And tourism isn't going to save the day either.

[horus1]

A gas find of the SI is useless . There is no market or infrastructure. I remember talking to a VP of shell , they did not bid for the Great south basin and they are as good as you get. This is a very good decision.

[Kay]

Does that mean vehicles are included, obviously not.


Id say by 2050 driving a vehicle powered by petrochemicals will be the modern day equivalent of smoking a cigarette in a maternity ward

[Zaphod]

I see it as maybe a plus for NZO if they they do discover gas off Canterbury would they not have a product that could be priced at a premium seeing as limited drilling is going to take place in the future?

NZ "greenies" and in particular the current NZ Govt. which is really just trying to curry favour, I understand that, is completely living in La La Land if they seriously believe that the NZ economy can be carbon emission free by 2050. Does that mean vehicles are included, obviously not.

Everything is great right now but there is a worldwide recession coming not because of any particular event but because the business model is not extinct so there will be a recession and when that happens every job lost through this policy will be a nail in the coffin for any Govt. whatever party.

And tourism isn't going to save the day either.

The big issue from my perspective is that Labour don't have a plan for transition. They've made the decision pre-emptively, sending signals to the market which is have immediate impacts, and now must scurry around cobbling together a plan for transition. It is a perfect example of exceptionally poor management.

You're right; Tourism certainly won't save the day given the low wage industry it is, and spraying $20m for DOC track upgrades and $5m for a cathedral redevelopment in Taranaki certainly won't alter the country's economic fate. Good luck to Shane Jones explaining how the government are investing in regional NZ!

[JBmurc]

Id say by 2050 driving a vehicle powered by petrochemicals will be the modern day equivalent of smoking a cigarette in a maternity ward

If thats the case NZ will be building a Nuclear plant

[blackcap]

Whats not to like?

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/317289/278333.pdf

Cash flow positive and 54 cents cash in the bank. Might pick up a few more.

[Vaygor1]

Id say by 2050 driving a vehicle powered by petrochemicals will be the modern day equivalent of smoking a cigarette in a maternity ward

If thats the case NZ will be building a Nuclear plant

Not quite correct JB .... it will take at least two... one for the North Island and one for the South. :cool:

[Marilyn Munroe]

Link to a presentation by NZO at some conference;

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/317884/279073.pdf

The presentation has an optimistic tone. Gives the impression its definitely down there just needs a drill bit to send shareholders into an elevated state of nirvana.

The increasing price of crude oil makes a visit to NZ waters by a rig a little more likely.

The presentation makes no mention of the coalition governments negative attitude towards oil exploration or their bumbling introduction of the no more permits policy.

Boop boop de do
Marilyn

[RTM]

Link to a presentation by NZO at some conference;

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/317884/279073.pdf




The presentation makes no mention of the coalition governments negative attitude towards oil exploration or their bumbling introduction of the no more permits policy.

Boop boop de do
Marilyn

Not directly...but the charts say “Subject to Crown Approval”. I read this as referring the reader to the current governments attitude.

[mistaTea]

http://www.scoop.co.nz/stories/AK1805/S00429/nzog-and-omv-no-future-for-you-in-canterburygsb.htm

The ideologues are in fine form, I see.

[Joshuatree]

Great stuff, informing people that they can make a difference(they have to) ,from global warming to clean rivers and treasuring our flora and fauna, thousands of which are nearing extinction.The worst that can happen, a cleaner greener sustainable planet.

"Hands Across the Sand is a worldwide event began after the Gulf of Mexico Deepwater Horizon disaster, where people join hands across the beach in a symbolic gesture to say No to more fossil fuel exploration and YES to clean alternatives."

[blackcap]

http://www.scoop.co.nz/stories/AK1805/S00429/nzog-and-omv-no-future-for-you-in-canterburygsb.htm

The ideologues are in fine form, I see.

The Israeli's are not going to be too happy about being asked to surrender their permits. The ideologues are in fine form indeed. I think the new major shareholder got on board for these permits (paying 74 cents per share) so they will not give up without a fight. Seems they have many fingers in many pies, now including NZ.
https://en.wikipedia.org/wiki/Eyal_Ofer

[fabs]

The Israeli's are not going to be too happy about being asked to surrender their permits. The ideologues are in fine form indeed. I think the new major shareholder got on board for these permits (paying 74 cents per share) so they will not give up without a fight. Seems they have many fingers in many pies, now including NZ.
https://en.wikipedia.org/wiki/Eyal_Ofer

Bad idea to get into the cross-hairs of IDF Snipers.

[mistaTea]

https://www.nbr.co.nz/article/oil-exploration-ban-will-raise-greenhouse-emissions-mbie-says-ms-p-216175

A bit of pressure coming on the govt now. Not possible for them to about-face on the issue as they would lose face. Will be interesting to see what they do have to say though.

[tim23]

Had quick look at quarterly - if market cap is about 94 million and company has 98 million in cash what am I missing?

[tim23]

That $98m is the personal property of the managers and directors. It just takes time to move into their wallets. :p
I should have remembered that! Any chance of dividend then?

[mistaTea]

I should have remembered that! Any chance of dividend then?

Why on earth would anybody want a dividend right now?

Any money returned to shareholders at the moment would effectively just be a capital return.

I would prefer that the company uses the $98M to acquire excellent assets that will then allow dividends in the future.

[tim23]

Why on earth would anybody want a dividend right now?

Any money returned to shareholders at the moment would effectively just be a capital return.

I would prefer that the company uses the $98M to acquire excellent assets that will then allow dividends in the future.
Good point - but have paid dividend in recent years, 4c last year from memory.

[Lion]

Why on earth would anybody want a dividend right now?

- Ummm . . . me?! I've recently joined the super-annuitants and a little bit of extra regular income is welcome.

Any money returned to shareholders at the moment would effectively just be a capital return.

- Why? The company is still earning income, isn't it?

I would prefer that the company uses the $98M to acquire excellent assets that will then allow dividends in the future.

- Sorry to argue every point, but my view is that Barque will be the making of this company (and maybe also Ironbark owned by CUE in WA) Any capital the company has (and I can't see how it's in the pockets of the directors) would be best used to retain as big an interest in that (those) as we can, rather than sell out to some big multinational.

I've seen quite a bit of informed comment that LNG could be a very important bridge from coal and oil to renewables, therefore an important fuel in the next decade or two.

Incidentally, I see OGOG's Alastair McGregor is chairman of the board at CUE, and NZOG's Andrew Jefferies is also on their very strong board. I'd say NZOG and OGOG see quite some potential for CUE.

(Sorry about font change, I copied and pasted and can't change it back)

Cheers, Lion

[Joshuatree]

thanks for sharing your view and info Lion. Sitting on my small holding for now.

[Marilyn Munroe]

I am less enthusiastic about Barque than you Lion.

It is generally agreed that if it is a strike it is more likely to be gas rather than oil. If it is gas it will have to be a large field to justify the development costs

Pipping it ashore for Otagoites to cook their morning porridge is not sufficient to make it economic.

A development of the necessary scale to make it economic would involve a export floating LNG facility.

Product from this field on the far side of the world would have to compete with product from closer to the centre of demand in the Northern Hemisphere.

The cost of development is too high for NOG to handle. Shell spent $A12 billion on a floating production and storage platform alone in their recent Western Australian offshore development.

If a discovery is made the best thing for NOG to do would be an outright sale or a mining tenement to an oil major.

And all this is before worrying about the Coalition Governments lollipops and unicorns offshore exploration policy.

Boop boop de do
Marilyn

[mistaTea]

If a discovery is made the best thing for NOG to do would be an outright sale or a mining tenement to an oil major.




I would have thought that it was hardly in OGOG’s long term interests to go through all of the hassle of acquiring NZOG and Cue just to make a ‘few mil’ with a quick sale of a potentially huge asset (assuming a discovery is made).

OGOG is a huge company, and piss-willy transactions like that wouldn’t even move the needle for them.

Of course, OGOG could have made a mistake in their analysis. Until we find out for sure, I sure do enjoy being their junior partner.

[tim23]

Good point mistatea - I'm thinking of adding to my holding 98c cash for 58c seems like a deal to me!

[mistaTea]

Good point mistatea - I'm thinking of adding to my holding 98c cash for 58c seems like a deal to me!

Not sure where you get 98c cash per share?

I never ever give buy/hold/sell advice for any stock - but you may want to check your numbers again before making your next investment decision.

[Vaygor1]

I am less enthusiastic about Barque than you Lion.

It is generally agreed that if it is a strike it is more likely to be gas rather than oil. If it is gas it will have to be a large field to justify the development costs

Pipping it ashore for Otagoites to cook their morning porridge is not sufficient to make it economic.

A development of the necessary scale to make it economic would involve a export floating LNG facility.

Product from this field on the far side of the world would have to compete with product from closer to the centre of demand in the Northern Hemisphere.

The cost of development is too high for NOG to handle. Shell spent $A12 billion on a floating production and storage platform alone in their recent Western Australian offshore development.

If a discovery is made the best thing for NOG to do would be an outright sale or a mining tenement to an oil major.

And all this is before worrying about the Coalition Governments lollipops and unicorns offshore exploration policy.

Boop boop de do
Marilyn

I am an NZO holder and I agree with what you are saying Marilyn.

Why would any company risk injecting a large amount of capital into a potential development while a completely deluded government are making purely political Oil & Gas decisions without Cabinet's input or sanction?

Offshore LNG would be the only way to go (labour and the greens would LOVE that.. yeah right) unless a huge taker of gas (like Methanex) is established in the South Island near Oamaru... something the Labour/Green coalition would also be all in favour of... not.

I will be hanging onto my NZO shares and will patiently wait for the current coalition to either self-destruct or get ousted before getting them out of the bottom drawer.

[tim23]

Not sure where you get 98c cash per share?

I never ever give buy/hold/sell advice for any stock - but you may want to check your numbers again before making your next investment decision.
Got the $98 million from recently quarterly unless I read incorrectly?

[blackcap]

Got the $98 million from recently quarterly unless I read incorrectly?

$98m cash on hand, 164m shares on issue, 98/164 is about 60 cents per share in cash.

Effectively buying NZO now gives you Kupe, the prospects and Cue for free.

[tim23]

Not sure where you get 98c cash per share?

I never ever give buy/hold/sell advice for any stock - but you may want to check your numbers again before making your next investment decision.
My quote 31.7.18 was "Had quick look at quarterly - if market cap is about 94 million and company has 98 million in cash what am I missing?" So effectively you get all the other bits for free Cue, exploration permits etc

[mistaTea]

Good point mistatea - I'm thinking of adding to my holding 98c cash for 58c seems like a deal to me!

I was just replying to this comment.

$98M cash is different to 98c (per share).

Anyhow, sounds like everyone is on the same page in terms of how cash exceeds market cap at the moment. No real debt to speak of, so all producing assets plus future prospects are effectively free right now.

[Carpenterjoe]

Thinking NZO is pretty undervalued/hated atm. I think a lot of this is caused by NZ institutions greening their books.

[tim23]

Thinking NZO is pretty undervalued/hated atm. I think a lot of this is caused by NZ institutions greening their books.
Not sure if they've ever liked the company that much - well Tony Radford never seemed to be that popular.

[Marilyn Munroe]

Another negative for Barque is normally a discovery in a frontier exploration province sets off a new interest in exploration and hopefully production by other parties which would give NOG the option of tieing in to things like pipelines on-shore processing plants and oil services to bring down costs.

With the Coalition Governments no more permits policy this is no longer possible.

Boop boop de do
Marilyn

[mistaTea]

Another negative for Barque is normally a discovery in a frontier exploration province sets off a new interest in exploration and hopefully production by other parties which would give NOG the option of tieing in to things like pipelines on-shore processing plants and oil services to bring down costs.

With the Coalition Governments no more permits policy this is no longer possible.

Boop boop de do
Marilyn

There is absolutely no doubt, in anybody's mind, that the current Coalition Government has made exploration in NZ more difficult for NZOG.

It may well turn out that Barque/Toroa ends up being a missed opportunity for New Zealand because of current government misguided ideology. That remains to be seen.

I don't think that we can conclude from the current political challenges that NZOG is totally doomed to fail however.
They do have irons in a few different fires, a lot of cash, and a very wealthy and influential majority owner. In my view, that makes the company at least worth more than the cash it currently holds.

[JohnPagani]

Hello Sharetraders,

Given the comments above about the potential for commercial development of a Barque discovery, I thought you may be interested to read the detailed study that was completed last year by independent consultants MartinJenkin. You can read about it and access a copy of the full report here: https://www.nzog.com/news/study-shows-commercial-potential-for-south-island-discovery/ (https://www.nzog.com/news/study-shows-commercial-potential-for-south-island-discovery/)

The study was undertaken to demonstrate to potential investment partners that a commercial development is viable and the absence of existing infrastructure is not an impediment to an exploration well.

In summary - the nature of development potential depends on the composition of the discovery. Liquids could be produced to an FPSO and exported directly, which is the lower cost of the two scenarios. In a gas scenario, the study demonstrated a commercial market exists. The study authors worked with potential industrial customers for gas, and studied potential prices and competitiveness internationally. The commercial value to the jv is similar in either development scenario, although the benefit to the NZ economy is much greater in the onshore scenario.

The study is strong evidence that a development, in a discovery case, depends on neither Otago porridge being heated, nor an LNG mega development.


Hope that's helpful.


John Pagani.
New Zealand Oil & Gas.

[Lion]

Thank you John Pagani for clarifying that. Yes, it is helpful. I do recall that study about the uses for a decent gas discovery at Barque. That's good, solid research. I sometimes let my enthusiasm run away, thinking of an LNG project.
Did the MartinJenkin study consider methanol production from Barque? Gas production from the Taranaki fields is approaching maturity and decline and Methanex just might be looking at another long-term source of gas supply.
I hope there's enough gas left over to cook the porridge in Otago.

[Vaygor1]

Thanks for your post John.


I read and absorbed the MartinJenkin report upon its release. In terms of timing, this was prior to New Zealand’s 2017 General Election and prior to the formation of the current coalition. I doubt it was within the report’s brief to weigh up regulatory risk, and I can’t find a mention of it.


In noting the “… absence of existing infrastructure is not an impediment to an exploration well” , I agree. However, what about the impediment of regulation, law, and bureaucracy?


I remain bewildered and astonished at the current coalition-government's naivety, arrogance, and proven actions in bypassing due process regarding New Zealand's Oil and Gas developments. They cannot be trusted, and goodness only knows what on earth they might do next. I find it very difficult to envisage anyone forking out for an exploration well or two before 2020 while their is little chance of being allowed by the current regime to do anything with the field no matter how spectacular the test results might be.


Hopefully, I will find my ability to envisage lacking, and I do take comfort in the lengthy time-frame required to develop these fields, knowing the current bureaucracy in its current form will be long gone by the time the results of an exploration well or two will be known (assuming NZO is allowed to proceed if/when the crunch comes).


NB. My belief has always been that whether an onshore or offshore Barque gas development eventually took place, the first step would be to throw in a few wells with gas re-injection and take some low-hanging-fruit (aka oil) via FPSO.

[Enjay]

... However, what about the impediment of regulation, law, and bureaucracy?

I remain bewildered and astonished at the current coalition-government's naivety, arrogance, and proven actions in bypassing due process regarding New Zealand's Oil and Gas developments. They cannot be trusted, and goodness only knows what on earth they might do next. I find it very difficult to envisage anyone forking out for an exploration well or two before 2020 while their is little chance of being allowed by the current regime to do anything with the field no matter how spectacular the test results might be.

Hi Vaygor1

Picking up on regulatory / coalition government point this thread, the policy currently only applies to new grants of permits, rather than the progression from a PPP to PEP, or PEP to PMP - as I understand it.

So, for the Clipper / Barque prospect under PEP52717, NZOG and Beach have existing rights to carry out exploration activities until 2027 (including drilling wells as required under the permit). Then, in 2027 or earlier, they'll have the choice to progress to a PMP (if commercially viable plays emerge). These are unaffected by the current government's policy.

One extra piece of red tape to consider is OIO. NZOG and partner Beach being foreign owned would probably need OIO consent to construct on-shore production facilities - those facilities sitting on regulated land. With a FPSO arrangement, a sub $100M transaction will fly under the OIO radar but a $100M+ transaction would be caught.

On my reading, possibly a little less gloomy but not without regulatory risk / uncertainty. Hope that's helpful!

[Marilyn Munroe]

So, for the Clipper / Barque prospect under PEP52717, NZOG and Beach have existing rights to carry out exploration activities until 2027 (including drilling wells as required under the permit). Then, in 2027 or earlier, they'll have the choice to progress to a PMP (if commercially viable plays emerge). These are unaffected by the current government's policy.


I understood the Barque permit holders face a "drill or drop" pivot point in April 2019. Am I wrong?

Boop boop de do
Marilyn

[Enjay]

I understood the Barque permit holders face a "drill or drop" pivot point in April 2019. Am I wrong?

No, quite right. Haven't seen the permit document, but for each stage of the work programme, there is a commit or surrender point. However, given the new deep-pocketed shareholder (Ofer) and optimism of the company about Barque, I'd be surprised if they surrendered the permit. Once surrendered, they would be unable to apply for a new permit - only able to progress existing permits and buy participating interests in other existing permits.

[Vaygor1]

Hi Vaygor1

Picking up on regulatory / coalition government point this thread, the policy currently only applies to new grants of permits, rather than the progression from a PPP to PEP, or PEP to PMP - as I understand it.

So, for the Clipper / Barque prospect under PEP52717, NZOG and Beach have existing rights to carry out exploration activities until 2027 (including drilling wells as required under the permit). Then, in 2027 or earlier, they'll have the choice to progress to a PMP (if commercially viable plays emerge). These are unaffected by the current government's policy.

One extra piece of red tape to consider is OIO. NZOG and partner Beach being foreign owned would probably need OIO consent to construct on-shore production facilities - those facilities sitting on regulated land. With a FPSO arrangement, a sub $100M transaction will fly under the OIO radar but a $100M+ transaction would be caught.

On my reading, possibly a little less gloomy but not without regulatory risk / uncertainty. Hope that's helpful!

When the serious dollars come into play, I believe the purse-string holders will revert to the following two facts:

The government has the ability to change the law.
The current government in its current form cannot be trusted.

[Enjay]

When the serious dollars come into play, I believe the purse-string holders will revert to the following two facts:

The government has the ability to change the law.
The current government in its current form cannot be trusted.

The first point is quite true. Except in this instance, no law has changed. Block Offer (the means by which petroleum permits are 'auctioned') was a policy initiative, and not mandated or required to happen by law. Hence it could be changed simply with a few key decision-makers.

I'd also add that the effects of the "ban" are markedly over-stated for the short to medium term. Reported numbers of permits have exceeded 1,000 in the past. In the last two years, 1 offshore permit was granted and 1 onshore permit was granted. In previous years, sometimes as many as 7 or 15 would be granted. While numbers of permits are poor comparisons (acreage, field prospectivity, etc all vary), even on a generous estimate, only around 1.5% of existing permits are granted annually. On a conservative estimate, 0.1%.

Serious money, then, is likely to be continuing as per usual - assessing prospectivity and economic viability as measured against the now steadily increasing oil price.

Resources:
You can see permits these here: http://data.nzpam.govt.nz/permitwebmaps?commodity=petroleum

You can see Block Offer results here: https://www.nzpam.govt.nz/permits/petroleum/block-offer/previous/

[blockhead]

After being an NZO shareholder for many years I eventually became disillusioned and sold my holding, I ended up with 48 shares left over. Back on 13th April NZO advised me any holdings of 500 or less would be sold by them and the proceeds paid out. I duly received a statement from Computershare dated 20th July telling me my shares had now been sold and "the proceeds will be paid as soon as practicable into my bank account" As yet I haven't received a cent.
Now the amount is peanuts but that is not important, I imagine many small holders are in the same position and collectively the amount may be substantial.

I phoned Computershare and was told "the shares have not actually been sold yet as NZO "doesn't want to drop them on the market and depress the price" For me this is not good enough, according to my Computershare statement my shares have been removed from the register and I no longer own them, either I get the money or they should still show as my shares on the register.

I have emailed NZO for an explanation and look forward to their reply.

Do others have a similar experience ?

[JohnPagani]

Thank you John Pagani for clarifying that. Yes, it is helpful. I do recall that study about the uses for a decent gas discovery at Barque. That's good, solid research. I sometimes let my enthusiasm run away, thinking of an LNG project.
Did the MartinJenkin study consider methanol production from Barque? Gas production from the Taranaki fields is approaching maturity and decline and Methanex just might be looking at another long-term source of gas supply.
I hope there's enough gas left over to cook the porridge in Otago.


Yes, the study authors worked with Methanex methanol production. In a gas development case, methanol production for export is the first likely commercial production to begin.

[JohnPagani]

On the consents for development issue - the government has provided us with a written assurance that existing rights will be preserved, and that any future application for development will be considered under existing law. The substance of the decision and the manner in which it was made were not helpful in any way, but we remain confident that a commercial discovery at Barque would be consented.

[JohnPagani]

After being an NZO shareholder for many years I eventually became disillusioned and sold my holding, I ended up with 48 shares left over. Back on 13th April NZO advised me any holdings of 500 or less would be sold by them and the proceeds paid out. I duly received a statement from Computershare dated 20th July telling me my shares had now been sold and "the proceeds will be paid as soon as practicable into my bank account" As yet I haven't received a cent.
Now the amount is peanuts but that is not important, I imagine many small holders are in the same position and collectively the amount may be substantial.

I phoned Computershare and was told "the shares have not actually been sold yet as NZO "doesn't want to drop them on the market and depress the price" For me this is not good enough, according to my Computershare statement my shares have been removed from the register and I no longer own them, either I get the money or they should still show as my shares on the register.

I have emailed NZO for an explanation and look forward to their reply.

Do others have a similar experience ?

When you say 'for me this is not good enough' - what would you prefer? That the broker dumps all the shares on market at once, achieving a lower price for you and providing the buyer with an opportunistic gain? Or that we didn't pick up the brokerage charges on your behalf to enable you to get your $30 back?
You shares were not sold on 20 July - you were notified that they were transferred off the register then so that the broker could begin the sales process. This began the next day. The process is being managed carefully so that the sale of an unusual volume doesn't unfairly push the price down, which would not only disadvantage holders of small parcels that are part of the the process, but would also disadvantage anyone else trading their shares during the period (just for the sake of a few weeks in respect of shares that were anyway stranded).

The company is bearing the full cost of the brokerage, and to make this economic and fair to remaining shareholders the shares are being parceled together. At the conclusion of the sales process, you will receive the average price achieved. Therefore it is not possible to distribute proceeds to anyone at this time.

[blockhead]

Thank you John for your response, I understand what you have just explained, what makes me feel is aggrieved is the statement from Computershare (on your behalf) telling me "your shares have now been sold" not as you now tell me, "transferred off the register"..one or the other, can't be both !

Turns out they haven't been sold at all.

[Grimy]

The original letter I got was along the lines of the sales process would start on or after the 20th July. I can't remember the exact wording, but for our approx. $150 worth of shares I'm not worried about a bit of a delay. As John says, we were effectively stuck with them anyway-and I know that wasn't our doing, but I'm glad they weren't dumped on market (although if they had been I probably would have bought some...

[Sideshow Bob]

After being an NZO shareholder for many years I eventually became disillusioned and sold my holding, I ended up with 48 shares left over. Back on 13th April NZO advised me any holdings of 500 or less would be sold by them and the proceeds paid out. I duly received a statement from Computershare dated 20th July telling me my shares had now been sold and "the proceeds will be paid as soon as practicable into my bank account" As yet I haven't received a cent.
Now the amount is peanuts but that is not important, I imagine many small holders are in the same position and collectively the amount may be substantial.

I phoned Computershare and was told "the shares have not actually been sold yet as NZO "doesn't want to drop them on the market and depress the price" For me this is not good enough, according to my Computershare statement my shares have been removed from the register and I no longer own them, either I get the money or they should still show as my shares on the register.

I have emailed NZO for an explanation and look forward to their reply.

Do others have a similar experience ?

I'm obviously a large shareholder with my 555 NZO shares...…

[mistaTea]

I'm obviously a large shareholder with my 555 NZO shares...…

Yeah mate, I just hope Eyal Ofer keeps you on side so that you don't use your block of shares to veto his exploration plans :laugh:

[tim23]

When you say 'for me this is not good enough' - what would you prefer? That the broker dumps all the shares on market at once, achieving a lower price for you and providing the buyer with an opportunistic gain? Or that we didn't pick up the brokerage charges on your behalf to enable you to get your $30 back?
You shares were not sold on 20 July - you were notified that they were transferred off the register then so that the broker could begin the sales process. This began the next day. The process is being managed carefully so that the sale of an unusual volume doesn't unfairly push the price down, which would not only disadvantage holders of small parcels that are part of the the process, but would also disadvantage anyone else trading their shares during the period (just for the sake of a few weeks in respect of shares that were anyway stranded).

The company is bearing the full cost of the brokerage, and to make this economic and fair to remaining shareholders the shares are being parceled together. At the conclusion of the sales process, you will receive the average price achieved. Therefore it is not possible to distribute proceeds to anyone at this time.

This seems a fair process and makes sense to me, thanks John.

[mistaTea]

Pleasing results from Cue.

http://www.cuenrg.com.au/irm/PDF/2426_0/Appendix4EandAnnualReport

[Sideshow Bob]

From the ODT:

https://www.odt.co.nz/business/nzog-start-financial-year-98m

[mistaTea]

Unusual trading volume yesterday. Approx 250,000 shares traded before the NZX **** itself.

[Grimy]

Payment for our small remaining parcel of shares that was being sold by the company has come through today, so I guess everyone that was having their small-holding mopped up should be sorted too.

[mistaTea]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/324029/286949.pdf

I can only assume the final settlement price for the part-paid shares was higher than the current depressed share price. In which case it would make sense to surrender the part-paid shares (and rather buy shares on market for a cheaper price).

Ideally we want senior leadership to own a significant stake in the company to ensure their interests align with company owners. Will be interesting when the full annual report is released to see how many fully paid shares (if any) are owned by management.

[mistaTea]

https://www.stuff.co.nz/business/107341590/government-set-to-give-oil-industry-breathing-space-over-permits-potentially-boosting-exploration

Possible breathing room for existing permit holders. Certainly would be helpful to NZOG if a suitable farm-in partner is not secured by early 2019.

A successful drill in Barque would be instrumental in helping the Government achieve its aims of transitioning away from fossil fuel. You'd think they would be bending over backwards to help NZOG offer all of the right assurances etc to potential partners. Alas, this does not seem to be the case as they continue steamroll through with their misguided agenda.

[fish]

Exciting to see a new drill in taranaki started yesterday.
Just back from europe so a bit out of touch but good to see without knowing details.

[mistaTea]

Exciting to see a new drill in taranaki started yesterday.
Just back from europe so a bit out of touch but good to see without knowing details.

Hopefully we get a good Xmas present with some positive test results!

[tim23]

Hopefully we get a good Xmas present with some positive test results!
Agree be like the good old days!

[mistaTea]

Will be interesting to see what the High Court thinks of this:

https://www.stuff.co.nz/business/107412125/rich-lister-sues-energy-minister-and-coalition-over-oil-and-gas-moves

[mistaTea]

Bluntly put, the oil and gas ban is, politically, very very correct ... though ultimately an absolute scam for New Zealanders.

https://www.ogj.com/articles/2018/09/new-zealand-starts-to-focus-on-what-climate-piety-costs.html

[tim23]

60c close highest in a while volume still pathetic though

[blackcap]

60c close highest in a while volume still pathetic though

Volumes are always going to be pathetic going forward if you consider that O&G have most of the shares tied up. So the free float is not that many... (especially with the buyback of the smaller parcels as well) But there are moves afoot and things looking interesting with the oil price moving higher.

[mistaTea]

Volumes are always going to be pathetic going forward if you consider that O&G have most of the shares tied up. So the free float is not that many... (especially with the buyback of the smaller parcels as well) But there are moves afoot and things looking interesting with the oil price moving higher.

Yes, so true.

In practice, I think it pays to image that you own part of a private company. The current share price, given the small pool of 'tradeable' shares and low trading volumes, is essentially irrelevant to the owner-oriented shareholder.

If you owned a minority stake in a privately owned Pizza Shop for example, you wouldn't give a damn what the minute-by-minute quotation of your business "value" is. You'd be more concerned about how many pizzas you could sell, the cost of your ingredients, opportunities for expansion and/or other partnerships etc...

That's how I look at NZOG today, for what it's worth.

[RTM]

Yes, so true.

In practice, I think it pays to image that you own part of a private company. The current share price, given the small pool of 'tradeable' shares and low trading volumes, is essentially irrelevant to the owner-oriented shareholder.

If you owned a minority stake in a privately owned Pizza Shop for example, you wouldn't give a damn what the minute-by-minute quotation of your business "value" is. You'd be more concerned about how many pizzas you could sell, the cost of your ingredients, opportunities for expansion and/or other partnerships etc...

That's how I look at NZOG today, for what it's worth.

Thanks. Good perspective. I’d also be wondering if there would be dividends for the shareholders.

[blackcap]

Thanks. Good perspective. I’d also be wondering if there would be dividends for the shareholders.

I would be doubtful of dividends. No need for O&G to pay themselves a dividend after pumping $millions into the company with the work they want to do with it. So if you are relying on one I would look elsewhere. But the AGM is around the corner and I am sure someone may ask that question. Heck, I may even have a few questions myself.

[mistaTea]

I would be doubtful of dividends. No need for O&G to pay themselves a dividend after pumping $millions into the company with the work they want to do with it. So if you are relying on one I would look elsewhere. But the AGM is around the corner and I am sure someone may ask that question. Heck, I may even have a few questions myself.

Absolutely right. In fact, I would be alarmed if NZOG was paying dividends at the moment.

They have $98M of cash that needs to be deployed first. This is absolutely a potential growth phase for the company, and OGOG would not want to risk a potentially very large upside in the years to come for the sake of squeezing out a few million here and there each year to get some instant gratification (which is then subject to tax anyway).

[Grimy]

I'm also happy enough to not receive a dividend from them - as long as the trade off is there - a rising share price. Otherwise, what's the point?

[mistaTea]

I'm also happy enough to not receive a dividend from them - as long as the trade off is there - a rising share price. Otherwise, what's the point?

No doubt about it. We all buy assets today with the view that they should be worth more in the future (otherwise, why would we buy it?).

As it stands, all producing assets and prospects are effectively being given away for free since Market Capitalisation is less than the cash held in the bank. By no means does that mean that NZOG is a sure thing, however it does mean that management would need to make some pretty horrendous missteps with their available resources before shareholders (buying at the current price) face a likely prospect of realising a serious loss.

How patient each individual shareholder is in the meantime is a different matter altogether.

[arjay]

Will be interesting to see what the High Court thinks of this:

https://www.stuff.co.nz/business/107412125/rich-lister-sues-energy-minister-and-coalition-over-oil-and-gas-moves

Those of us who remember NZO’s legal tussles with Greymouth over Ngaroto should not be surprised. Greymouth’s logo ain’t got a shark in it for nothing.

[Marilyn Munroe]

I think the Coalition Government particularly the Labour part were surprised by the blow-back they revived from their offshore oil exploration ban and its knock on effects on business confidence. I further guess their focus group results are showing rising public anger at fuel costs and blame being placed on the Government.

It runs the danger of people linking the rise in petrol prices with the Government banning oil exploration.

I reckon the Labour part of the Coalition Government will be hopping the permit extension discussed in the link below is agreed to by the bureaucrats in MBIE to give them the opportunity to deny any link between the exploration policy and petrol prices.

The result of the bureaucrats deliberation will give a pointer to NZO's possible application to extend the drill or drop date for Barque.

There is a possibility of a drilling campaign down south if the following come together;

o The OMV extension is agreed.

o The Barque extension is agreed.

o The price of oil keeps rising.

As one old timer on Sharechat observed "oil is out there, somewhere, maybe".

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12139675

Boop boop de do
Marilyn

[Marilyn Munroe]

The extension of the drill of drop deadline for OMV in the Great South Basin discussed in the post above has been agreed to.

https://www.radionz.co.nz/news/business/368878/omv-gets-extension-to-drill-well-off-otago-coast

Boop boop de do
Marilyn

[mistaTea]

https://www.nbr.co.nz/story/government-rejects-claims-compensation-over-oil-and-gas-ban

It may well be that the Coalition is not LEGALLY required to make any kind of compensation payments. Regardless, there is one hell of a MORAL issue at play here.

They seem arrogant enough not to care though.

Meanwhile our gas reserves are rapidly depleting (I have read some reports that state 6 years or so left...) and a discovery at Barque would be a lifeline to this government in terms of making their energy transition goals achievable. Why they are not bending over backwards to assist NZOG with assurances (and whatever else is needed) to lock in farm-in partners is baffling to say the least.

[flyingmariner]

https://www.nbr.co.nz/story/government-rejects-claims-compensation-over-oil-and-gas-ban

It may well be that the Coalition is not LEGALLY required to make any kind of compensation payments. Regardless, there is one hell of a MORAL issue at play here.

They seem arrogant enough not to care though.

Meanwhile our gas reserves are rapidly depleting (I have read some reports that state 6 years or so left...) and a discovery at Barque would be a lifeline to this government in terms of making their energy transition goals achievable. Why they are not bending over backwards to assist NZOG with assurances (and whatever else is needed) to lock in farm-in partners is baffling to say the least.

I am somewhat baffled as well, maybe it's because the price of oil is stable or something and they can't see it going higher. Beats me, NZ cannot afford to pontificate about the buzz word re-newables, they just don't meet demand. Perhaps when the supply falls and the price of natural gas goes a lot higher then maybe there might be much wringing of hands. "Oh why didn't we listen to the oil and gas explorers." Of course they will blame them for the price going up. Can't believe I would see the day when NZ imports coal from overseas but that's what is happening. There has been talk of importing in the future LNG if supplies run low. Talk about living in La La land.

[mistaTea]

Yesterday was the final day for BP to confirm their farm-in participation for Ironbark with Cue, was it not?

Ironbarks estimated 15 trillion cf of gas is massive when you consider how excited NZOG is about Barque's estimated 5 trillion cf of gas.

Ironbark could be an absolute monster.

[mistaTea]

Yesterday was the final day for BP to confirm their farm-in participation for Ironbark with Cue, was it not?

Ironbarks estimated 15 trillion cf of gas is massive when you consider how excited NZOG is about Barque's estimated 5 trillion cf of gas.

Ironbark could be an absolute monster.

http://www.cuenrg.com.au/irm/PDF/2451_0/WA359PExtensionofBPEquityOption

Extended to April 25 2019.

[blockhead]

Something down this hole ?

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4871342

[mistaTea]

Something down this hole ?

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4871342


Looks like it.

And check this out: http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/325869/289276.pdf

I was wondering if NZOG or OGOG would pick up the remaining stake in this one. It makes Clipper look tiny.

NZOG will effectively have a 26.5% stake in WA-359-P, making them the second largest participant.

Given the uncertainty around Clipper now since the Government ban on new exploration, maximising exposure to another potentially large prospect is a great way to pivot. Pity the majority of the $98M held in cash is now going to go overseas instead, but hey ho - that's the way the cookie crumbles.

[digger]

Looks like it.

And check this out: http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/325869/289276.pdf

I was wondering if NZOG or OGOG would pick up the remaining stake in this one. It makes Clipper look tiny.

NZOG will effectively have a 26.5% stake in WA-359-P, making them the second largest participant.

Given the uncertainty around Clipper now since the Government ban on new exploration, maximising exposure to another potentially large prospect is a great way to pivot. Pity the majority of the $98M held in cash is now going to go overseas instead, but hey ho - that's the way the cookie crumbles.

Agree mistaTea about our cash going overseas but that is a direct outcome of Labour having to snuggle up to the greens. Banning extra exploration permits in effect also bans deep water drilling even if they have the so called right to go ahead as overseas companies are just put off and they have the equipments to do the drilling,so any ocean drilling in NZ is effectively banned.
Great to see where NZO plans to invest the money. Ironbanks at 15 trillion cf of gas [estimate] certainly makes the good old days of nzo drilling come back to life. In the partial t/o of nzo I did not sell any and in fact have bought some extra. To me it was just a matter of time b4 NZO had to play its hand on what and where to invest the 100 million. In fact I am not supprised where it is going . I have a fair holding in CUE so have been watching developments there and it already did cross my mind that todays announcement could be a expected outcome
Great work Nzo and for what it is worth it has my backing.[But then according to my family I am a drill baby drill nut]

[mistaTea]

Agree mistaTea about our cash going overseas but that is a direct outcome of Labour having to snuggle up to the greens. Banning extra exploration permits in effect also bans deep water drilling even if they have the so called right to go ahead as overseas companies are just put off and they have the equipments to do the drilling,so any ocean drilling in NZ is effectively banned.
Great to see where NZO plans to invest the money. Ironbanks at 15 trillion cf of gas [estimate] certainly makes the good old days of nzo drilling come back to life. In the partial t/o of nzo I did not sell any and in fact have bought some extra. To me it was just a matter of time b4 NZO had to play its hand on what and where to invest the 100 million. In fact I am not supprised where it is going . I have a fair holding in CUE so have been watching developments there and it already did cross my mind that todays announcement could be a expected outcome
Great work Nzo and for what it is worth it has my backing.[But then according to my family I am a drill baby drill nut]

Great to hear from you after a while digger! I was wondering where you were.

Like you, I did not sell into the OGOG offer and purchased additional shares along the way.

The two conditions for Cue should be easily met.

And with regards to Labour - the less I say the better I think. Highly unimpressed!

[digger]

Great to hear from you after a while digger! I was wondering where you were.

Like you, I did not sell into the OGOG offer and purchased additional shares along the way.

The two conditions for Cue should be easily met.

And with regards to Labour - the less I say the better I think. Highly unimpressed!

Hi Mista Tea. Was just waiting for plans to surface regarding NZO money plans.Gone nowhere.
When I said I was not surprised that nzo ended up in Ironbanks it was not how I thought it would develop . I thought NZO would take over CUE and run the show from that vantage point. So I bought some more CUE. Guess it really dosen't matter as long as it is money in my account at the end of the day. In the mean time do not send charity donations as I can look after myself.
Drilling would be about mid 2020 IMHO

[mistaTea]

Hi Mista Tea. Was just waiting for plans to surface regarding NZO money plans.Gone nowhere.
When I said I was not surprised that nzo ended up in Ironbanks it was not how I thought it would develop . I thought NZO would take over CUE and run the show from that vantage point. So I bought some more CUE. Guess it really dosen't matter as long as it is money in my account at the end of the day. In the mean time do not send charity donations as I can look after myself.
Drilling would be about mid 2020 IMHO

I have been a NZO shareholder for only 5 years now - have now made it into the Top 20 shareholders and have enjoyed the process. In an earlier post I mentioned that (IMHO) the way to view your NZO shares is that of a private company now. In other words, largely ignore the hourly vacillation of the share market and just learn about the business you own. We are effectively just (very) junior partners to OGOG, and so far it has been a hell of a ride.

With Barque...though the April decision has made a difficult ‘frontier’ opportunity even more difficult to sell...I am not at the point of dispair yet. Barque was a big reason for Mr Ofer taking the majority stake in NZO...and I doubt OGOG will give up 5Tcf of gas (potential) without a fight. They may even take a % themselves to encourage a BP-type partner to join and drill baby drill.
This is of course pure speculation on my part. At the end of the day, I have absolutely no idea what I am talking about and Mr Pagani is probably reading my post and giggling, if not outright guffawing.

[mistaTea]

https://www.thespinoff.co.nz/politics/29-10-2018/if-the-oil-and-gas-ban-is-really-a-good-idea-why-are-they-rushing-it-through/

“That you attempt to rush it through gives the impression you are not proud of what you are doing.”

I love that line :t_up:

[fabs]

What is stopping the Co.to make an offer for the rest of the shares at around 70 cents?
Also to sell any worthwhile find to a subsidiary for a reasonable price?
Any suggestions?

[mistaTea]

What is stopping the Co.to make an offer for the rest of the shares at around 70 cents?


Do you mean, what is stopping OGOG from acquiring the remaining 30% of NZOG shares?

They stated a while back that they want NZOG to remain a publicly listed company. This provides them more flexibility in the future to reach out to new investors and raise additional capital. A full takeover now would require a delisting which would be a pain in the ass for them.

In the latest annual report the chairman alluded to a potential capital raise at some point in the future if conditions were right etc.

[fabs]

Do you mean, what is stopping OGOG from acquiring the remaining 30% of NZOG shares?

They stated a while back that they want NZOG to remain a publicly listed company. This provides them more flexibility in the future to reach out to new investors and raise additional capital. A full takeover now would require a delisting which would be a pain in the ass for them.

In the latest annual report the chairman alluded to a potential capital raise at some point in the future if conditions were right etc.

CONDITIONS BEING RIGHT??? YEAH RIGHT
THEY WOULD HAVE NO PROBLEMS GETTING ADDITIONAL FUNDS, NO NEED TO BE LISTED FOR THAT.
If the strike is big enough.

[fish]

CONDITIONS BEING RIGHT??? YEAH RIGHT
THEY WOULD HAVE NO PROBLEMS GETTING ADDITIONAL FUNDS, NO NEED TO BE LISTED FOR THAT.
If the strike is big enough.

I would have thought flexibility is a good thing and the need to raise new capital would depend on so many factors.

[mistaTea]

I would have thought flexibility is a good thing and the need to raise new capital would depend on so many factors.

Yeah, correct.

Also if things go well for the company (i.e. some decent discoveries are made) then one would expect the increased company value to be reflected in the share price over time.

This then also gives OGOG options to sell some of their shares on market at a premium to what they paid (thereby getting back some or all of the money they originally invested while still keeping a stake in a productive business).

And no doubt there will be other possibilities that maintaining a public listing allows that my simplistic view of the world has not considered.

[Marilyn Munroe]

Judging by the managing directors address at the AGM NZO are in spend mode and will be calling on shareholders for support.

https://www.nzx.com/announcements/326216

Boop boop de do
Marilyn

[mistaTea]

Judging by the managing directors address at the AGM NZO are in spend mode and will be calling on shareholders for support.

https://www.nzx.com/announcements/326216

Boop boop de do
Marilyn

Absolutely - and not a surprise given the Chairman mentioned this a little while back. Though the $102M in the kitty is considerable, more dosh will be needed to give the company a serious chance to grow considerably.

I imagine there will come a time where existing shareholders are given an opportunity to buy more shares in the company and new shareholders will be invited to join.

So long as any additional shares are sold at a fair price and the money that is raised is used wisely, existing shareholders who choose not to (or are unable to) participate in a capital raise should be no worse off (and more likely better off over time as the cash raised is converted to productive assets).

[blackcap]

I imagine there will come a time where existing shareholders are given an opportunity to buy more shares in the company and new shareholders will be invited to join.

.

That is also what the Managing Director indicated to me during post meeting drinks. I was quite impressed with the O&G representatives as they all showed up and have been doing other events with NZO staff during the week. Staff spoke positively of the new direction that NZO are taking.
They spoke well at the meeting (those up for election) and they did not seem arrogant or belittle us NZers. Nice to have such competence and deep pockets. Andrew Jeffries also mentioned that now when NZO are talking to other parties they have a lot more clout or sway.
If you want to listen to the meeting it should be on the NZO website pretty soon.

[fabs]

More or less same refrain for the last 10 years.
Maybe a bit more impressive and eloquent, Sooo Lets wait and see.

[mistaTea]

Large hydropower dams 'not sustainable' in the developing world http://www.bbc.co.uk/news/science-environment-46098118

Interesting write up about some of the cons of hydro. The majority our renewable electricity generation in NZ is hydro.

Not only are they damned expensive to build, but they also have some very negative impacts on the environment.
Meridian Energy heavily promote their 100% renewable generation - but in reality they are not as clean and green as they make out (though the majority of the public would assume that they must be because it’s “not like they are burning coal or oil!”)

[blackcap]

More or less same refrain for the last 10 years.
Maybe a bit more impressive and eloquent, Sooo Lets wait and see.

Same refrain maybe, totally different people, deeper pockets too, I am more optimistic.

[mistaTea]

https://www.tvnz.co.nz/one-news/new-zealand/canadian-energy-company-sells-its-nz-oil-fields-44-million

Looks like Tag Oil aren't waiting around to see what happens next. Their comments about how their Canadian and American shareholders now just assume NZ is closed for business (so far as oil & gas exploration goes) really highlights that Andrew Jeffries is not exaggerating when he says the stiff winds at Barque have now turned into a gale.

Ultimately I think the government will be flexible in extending the drill or drop permit. Buying NZOG some time might help... though with all the time in the world, nobody is going to (MAYBE) pony up to drill that bad boy unless the government offers some earnest and pretty heart-felt assurances.

In other words, they will need to jump around and offer a whole lot more to make this drill happen - not just the manky letter they sent to NZOG a few months back.

[mistaTea]

https://www.nzog.com/news/new-blog-post-14/

Sure would have been nice to find some gas...

[fabs]

[QUOTE=mistaTea;

Sure would have been nice to find some gas...[/QUOTE]

You get plenty of that at every annual AGM
From a well versed, large & well remunerated SPIN team, learn to be content with that.

& Have another Tui!
CHEERS

[mistaTea]

Some good news.

http://www.cuenrg.com.au/irm/PDF/2473_0/GasDiscoveryatPausBiru1

[mistaTea]

Not sure if any of you subscribe to the AFR.... but I found this:

https://www.afr.com/business/energy/oil/beach-energy-deal-brings-israeli-billionaire-into-australian-gas-20181005-h169kc

I didn't realise Mr Ofer had bought 40% of Otway from Beach. Very large investment... dwarfs the amount he kicked into the can to acquire his interest in NZO/Cue.

Though our 'leaders' have no doubt pissed him off recently, he seems to be pretty bullish in terms of gas opportunities down this end of the planet.

[mistaTea]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12194335

[fish]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12194335

So dry summer,shortage of gas and increased demand=massive increase in the amount of coal being burnt by Genesis.
Without adequate future supplies gas we will most likely be burning more coal.
A hint that we need to foster exploration not ban it.

[mistaTea]

So dry summer,shortage of gas and increased demand=massive increase in the amount of coal being burnt by Genesis.
Without adequate future supplies gas we will most likely be burning more coal.
A hint that we need to foster exploration not ban it.

Nah, we will be sweet. Remember, they have a great transition plan for us...they just need to come up with it first, and then they demonstrate how we have absolutely nothing to worry about.

Should NZOG need to drop the Barque Prospect, who cares? It's not like 5Tcf of natural gas would come in handy or anything...

[mistaTea]

https://www.nzx.com/announcements/329916

Pleased to see in the activities report that Ironbark is continuing to progress.

Interesting blurb about Clipper... "During the quarter the Minister of Energy & Resources advised she is considering exercising her statutory power to amend the work programme in the permit.The Clipper permit is affected because a decision to drill in the permit, or surrender it, must be made by 11 April 2019. The minister’s power can be exercised only with the agreement of the operator. The joint venture has consented to potential extension. At quarter end the minister had not advised a decision."





I maintain that the only way this permit MIGHT still have a chance of attracting partners with the resources and know-how will be if the government bends over backwards to make assurances (and possibly other incentives) to mitigate Sovereign Risk fears.

I never thought I would ever think of my own country as ever having 'sovereign risk' as something to worry about by the way.

An extension (to at least align with Toroa) will definitely be needed...but simply buying NZOG 1 more year in and of itself won't be enough to get this drilled.

Let's see what Megan Woods does next (but don't hold your breath).

[Marilyn Munroe]

https://www.nzx.com/announcements/329916


I maintain that the only way this permit MIGHT still have a chance of attracting partners with the resources and know-how will be if the government bends over backwards to make assurances (and possibly other incentives) to mitigate Sovereign Risk fears.

I never thought I would ever think of my own country as ever having 'sovereign risk' as something to worry about by the way.

An extension (to at least align with Toroa) will definitely be needed...but simply buying NZOG 1 more year in and of itself won't be enough to get this drilled.

Let's see what Megan Woods does next (but don't hold your breath).

Oil majors are happy to explore in third world countries run by despots because their greed and venality are expected and can be allowed for. For a country with a reputation for sound government to suddenly, without consultation or official advice, ban oil drilling, thats scary.

My guess Megan Woods will extend the permit. The Coalition Government is under the pump. All any critic of their policy has to do is point at the Huntly Power Station smoke stacks and say the words "Indonesian coal". Existing permits were excluded under the ban a discovery would be the Coalition Governments get out of jail free card.

I have just had a brain wave. Get Sir Peter Jackson to make a film on the drilling platform. The government can subsidize the drilling with the luvvies film making subsidy.

Boop boop de do
Marilyn

PS. If Sir Peter's movie has a part for a shapely blonde, pick me.

[mistaTea]

Existing permits were excluded under the ban a discovery would be the Coalition Governments get out of jail free card.



Yes, that is true. A major gas discovery would buy them enough time to figure out what their transition plan is before the **** hits the fan.

Though, I was thinking - even if National got back into power next year (and that is a big IF, given they are Nigel-no-mates right now) ... and even if we assume they would immediately reverse Labour's decision...

From an international standing point of view, I think the damage is done. The Sovereign Risk is there for the foreseeable future now. Any fears by the big BP-type companies would still be there - as they will be wondering if Labour would get back in power again the next term, and whether they would bring back an exploration ban, and what that might mean to any $$$ they had invested etc...

If only John Pagani could offer some comforting words.

[digger]

Yes, that is true. A major gas discovery would buy them enough time to figure out what their transition plan is before the **** hits the fan.

Though, I was thinking - even if National got back into power next year (and that is a big IF, given they are Nigel-no-mates right now) ... and even if we assume they would immediately reverse Labour's decision...

From an international standing point of view, I think the damage is done. The Sovereign Risk is there for the foreseeable future now. Any fears by the big BP-type companies would still be there - as they will be wondering if Labour would get back in power again the next term, and whether they would bring back an exploration ban, and what that might mean to any $$$ they had invested etc...

If only John Pagani could offer some comforting words.

mistaTea, You have got it spot on. the damage is done as far as the big oil companies are concerned. It would certainly be hard to reverse.
My thinking is that NZ is stuffed and we badly need a dose of reality---by that I mean we costly import gas as we can not drill for our own.
I am happy for NZO to do what they are doing and stay with CUE and the ironbank up coming drill---next year hopefully.

[mistaTea]

I am happy for NZO to do what they are doing and stay with CUE and the ironbank up coming drill---next year hopefully.

Agreed, a discovery at Ironbark would be transformational to the market caps of both Cue and NZO. If 15Tcf of commercially viable gas is there, that would be an absolute game changer.

Would be a damn shame to miss out on the 11Tcf estimate at Clipper, but that may be the final outcome. Having both in play would have been much more comforting - as if any one prospect turned out to be a non-starter, it would be statistically much less likely that both massive prospects would turn out to be a dud.

With all the eggs in the Ironbark prospect...if is works out we are all filthy rich - excellent. If not...

[mistaTea]

http://www.scoop.co.nz/stories/PA1902/S00033/woods-reveals-weak-grasp-of-nz-energy-needs.htm

More propaganda to further strengthen my already-firm beliefs on this topic :t_up:

[mistaTea]

https://www.nzx.com/announcements/330508

Let's drill baby, drill.

[mistaTea]

Decent underlying performance.

https://www.nzx.com/announcements/314746

If you deduct, say, $20M for Ironbark test drilling...that still leaves approx. $80M cash available (roughly the current market cap of the business).

[peat]

weird to bang on about growth with so much cash on hand

This company moves pretty slowly
Note they are "continuing to screen .."

[mistaTea]

This company moves pretty slowly
Note they are "continuing to screen .."


Stealing from Warren Buffet...it sure would be nice to see them fire their 'elephant gun' soon. Though, most importantly, we want them to agree to the right deal.

When you have $100M burning a hole in your pocket, the temptation to do something (anything!) with the money must be incredible.

I take my hat off to the team for waiting for the right opportunity. Obviously we don't want them to 'thumb suck' too long...but nor do we want them to overpay for an asset. No matter how attractive a prospect may be, nothing is worth an infinite price.

[fabs]

weird to bang on about growth with so much cash on hand

This company moves pretty slowly
Note they are "continuing to screen .."


YEAAHH,
You are so right, pretty much gone on like this for 10 years or more, with not much other to do than watching their B/balance grow.
Price of Oil meanwhile increased by about 20% over amuch shorter period.

[mistaTea]

You are so right, pretty much gone on like this for 10 years or more, with not much other to do than watching their B/balance grow.


I'm not sure it is entirely fair to suggest the company has just been 'thumb sucking' over the last decade. The sale of Kupe was pretty bold and decisive. Repurchasing 4% of Kupe at a lower rate than the Sale Price was shrewd business.

Attracting and securing OGOG as an aligned and long-term partner was a very good move.

Ironbark is progressing, and NZOG have negotiated an approx 25% interest in a potential game-changer.

Clipper is a different story of course, but the additional head winds being faced by NZOG are not of its own making.

I have only been a shareholder for 5 years or so now, so I do appreciate that I have not experienced the previous (sometimes costly) decisions like a long-termer such as 'Digger' would have. But, over the short time I have held an interest, my view has been that Management are owner-oriented and have made investment decisions in the best interests of the long-term shareholder.

[fabs]

I'm not sure it is entirely fair to suggest the company has just been 'thumb sucking' over the last decade. The sale of Kupe was pretty bold and decisive. Repurchasing 4% of Kupe at a lower rate than the Sale Price was shrewd business.

Attracting and securing OGOG as an aligned and long-term partner was a very good move.

Ironbark is progressing, and NZOG have negotiated an approx 25% interest in a potential game-changer.

Clipper is a different story of course, but the additional head winds being faced by NZOG are not of its own making.

I have only been a shareholder for 5 years or so now, so I do appreciate that I have not experienced the previous (sometimes costly) decisions like a long-termer such as 'Digger' would have. But, over the short time I have held an interest, my view has been that Management are owner-oriented and have made investment decisions in the best interests of the long-term shareholder.

Agree with OWNER-ORIENTED and yes some reasonable moves.
But far to soon to be convinced yet, of having S/H interest at Heart.
The Founder of the Co. has been castigated for a long period by S/M Analists and soundry, for draging his feet even with bringing the Co.
with success never yet matched.
Been a s/h since the 90s averaged 46 cents bought then and sold of course to were being well ahead, with present holding basically
owing me nothing.
Cheers

[mistaTea]

I assume Megan Woods will announce a decision on extending Clipper soon? About a month until the drill or drop decision is required under the existing permit.

I think the most likely outcome will be approval for Toroa and Clipper to be combined, and Clipper drill/drop date pushed out to 2020 to align with Toroa.

More time certainly won't hurt, but will it help?

[mistaTea]

http://www.scoop.co.nz/stories/BU1903/S00770/omv-seeks-permit-for-great-south-basin-work.htm

If another extension is given for Clipper...and the permit is combined with Toroa...having a rig in the area around drill time could help NZOG make a stronger case to a farm in partner?

I dare not get my hopes up...

[notie]

http://www.scoop.co.nz/stories/BU1903/S00770/omv-seeks-permit-for-great-south-basin-work.htm

If another extension is given for Clipper...and the permit is combined with Toroa...having a rig in the area around drill time could help NZOG make a stronger case to a farm in partner?

I dare not get my hopes up...

I don't think you should get your hopes up. NZOG hasn't found a partner and the obvious local companies aren't interested in farming in. With the NZ govt exploration ban, no new foreign company is going to bother coming here, so these permits will run up to the drill and drop, and then be surrendered.

[mistaTea]

With the NZ govt exploration ban, no new foreign company is going to bother coming here, so these permits will run up to the drill and drop, and then be surrendered.

Yes, from an outside observer perspective it certainly does look grim.

However, I think an extension will be granted. The government needs some big gas discoveries if they have any chance of a 'just' and 'smooth' transition (to whatever it is we are transitioning to - they are yet to figure that out :D)

It may well be that an extension only delays the inevitable surrender due to lack of farm-in partners. But it does provide some chance for OGOG, NZOG and Beach to leverage their relationships and secure additional investors.

Though it isn't looking particularly hopeful right now, I don't think we can conclude that it is hopeless...

[blackcap]

However, I think an extension will be granted. The government needs some big gas discoveries if they have any chance of a 'just' and 'smooth' transition (to whatever it is we are transitioning to - they are yet to figure that out :D)

.

I am not sure Megan and Jacinta are smart enough to realise that. Because 12 years to go before the world ends you know...

[mistaTea]

I am not sure Megan and Jacinta are smart enough to realise that. Because 12 years to go before the world ends you know...

Oh yes, I keep forgetting about that.

If anyone truly believed the worst case scenario doom and gloom then they (govt and AKL Council...) wouldn't be spending billions on Auckand's CRL...I mean, it'll all be under water soon right!

[mistaTea]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/333151/298183.pdf

Predictably, an extension has been granted. 3 years more, which is longer than I expected.

Certainly won't hurt company prospects. In the near to medium term, I am more interested in what the company is going to do with the $100M cash (beyond Ironbark obligations).

[fabs]

What the company is going to do with the $100M cash ?????

Countless S/Hs have been wondering about that for more than 10 years.
Has been however a good Cash Cow for a number of Under performing and Over enumerated Individuals.

[Sideshow Bob]

ODT Article today:

https://www.odt.co.nz/business/gas-and-oil-exploration-move-otago-coast

[blackcap]

What the company is going to do with the $100M cash ?????

Countless S/Hs have been wondering about that for more than 10 years.
Has been however a good Cash Cow for a number of Under performing and Over enumerated Individuals.

Till now maybe. I do not think the Israeli's paid $.74 for 3/4 of the company for them to go and waste it. At these prices, I think its a no brainer if you are patient and willing to accept some drilling risk in your portfolio.

[Mickey]

ODT Article today:

https://www.odt.co.nz/business/gas-and-oil-exploration-move-otago-coast

I worked on an American oil rig for 3-years in the 70's that drilled in the GSB, (several wells south of Invercargill & 1 off Dunedin) off Nelson and off Taranaki. The biggest conundrum the oil company faced if it discovered an oil field in the GSB was how to get the crude oil from a deep water well ashore. The water in the GSB is mostly very deep and the weather conditions are some of the most atrocious you'll find anywhere in the world and so using floating storage tanks and mooring tankers is likely to be very challenging if not impossible. Building, running and maintaining an underwater pipeline 100-150km to the nearest port is also unlikely because of the water depths and the harsh conditions as well as the environmental hurdles that any company would face. It would have to be one hell of an oil field for the economics to stack up.

[JohnPagani]

Hi Mickey

Technology has changed a bit since the 1970s, and so has the potential market for product. In those days, gas was not much sought after in the GSB. The issue of how to commercialise a discovery is part of the business case for drilling a well in the first place. That's why the joint venture commissioned an independent economic impact study. You can read it here: https://www.nzog.com/dmsdocument/download/333 [pdf]. That report was commissioned to demonstrate that, if we are successful with a discovery, there will be a market for the product - and indeed there would be. Oil or condensate could be commercially produced directly to an FPSO and exported. Gas could be commercially piped ashore, around 60km. You can see a diagram of how it would work in that report.

On the weather conditions, the two New Zealand Oil & Gas prospects, Toroa and Barque, have met ocean conditions that are better than Taranaki. The prevailing wind is offshore and they are sheltered behind the island. Oil and gas is commercially produced in less hospitable places.

So, in summary, the questions you mention are fair, but the issues are well understood around the world, and the engineering and economics required are thoroughly investigated before we make drill commitments.

Kind regards

John Pagani
General Manager Corporate Services, New Zealand Oil & Gas

[mistaTea]

Hi Mickey

So, in summary, the questions you mention are fair, but the issues are well understood around the world, and the engineering and economics required are thoroughly investigated before we make drill commitments.

Kind regards

John Pagani
General Manager Corporate Services, New Zealand Oil & Gas

Indeed John the well documented potential of both Barque/Toroa and Ironbark are very interesting indeed. A major discovery in any of them could turn a number of shareholders into instant millionaires. And technology is now such that, should discoveries be made in any of these areas, getting the resource to shore is absolutely doable. The long term investor may well be rewarded handsomely, time will tell.

I suppose many investors will be more worried about the near-medium prospects though. Appreciate you won't be able to say much right now, however the share price has taken an absolute hiding (down from mid 70's to 48 cents per share). The only thing that will turn that around over the next year or so is the effective deployment if the $100M cash pile (that seems to grow most quarters).

[fabs]

[Good share to buy into then if you are an investor in your 20s - 30s.

[Lion]

How about Ironbark for an exciting “near-medium prospect”, misterTea?
Drilling in a year and a half. Best guess is it has 15tcf of gas, not far from an LNG plant.

What might that be worth?
Two ways I’ve thought of – direct value of natural gas on US market, or convert to barrels of oil equivalent (boe)

(1) The US price their natural gas in millions of btu, currently priced at US$2.68 but it’s been up to $4 in recent times.
At 1020 btu to a cubic foot, Ironbark might have 15.3 billion million btu which is worth about US$42b.

(2) 6,000 cu ft. of gas is approximately equivalent energy to one barrel of oil.
So 15tcf/6000 = 2.5b boe. Price of WTI crude is currently US$63. That’s worth about US$150b.

I have little idea what the operators of the LNG “train” might pay their suppliers. I do know that BP, who are 42.5% partners in Ironbark are also part owners of the LNG plant. I also know that supply for the plant will be tight in future years. And here’s an interesting video saying “the fuel of the future is not a renewable”. (hint, it’s not coal) https://www.bloomberg.com/news/videos/2016-07-29/the-fuel-of-the-future-is-not-a-renewable

Let’s be conservative and use the lower guestimate of $42b. The US gas market is depressed at the moment – it’s a by-product of their huge oil production from the Permian basin shale fields. The world LNG market is robust.

NZO have 15% of the field directly, plus half CUE’s 21.5% which is 25.75%. So NZO’s share is around US$10b. (NZ$15b).

This is gross, gross, for sure, although I’ve been conservative in my pricing. I haven’t deducted any costs of production, but they shouldn’t be huge in comparison, or royalties (not sure, but I think there aren’t any in WA, but there will be other taxes, for sure).

Then it needs an accountant to convert this to annual income over the unknown life of the field with future discounted values and stuff I don’t really understand. Anyone like to have a go? (Adrian at Mana??)

Well, I did have a go actually, using a quarter of that NZ$15b given in dividends for a twenty year field life and came up with NZ$1.18 div per share per year for twenty years. BUT – BIG DISCLAIMER, I’m no expert and I’m not trying to ramp the share price – just using my best amateur arithmetic and hoping to get a discussion going.

However you do the sums, this is pretty exciting stuff.

There just has to be the gas there!

[Joshuatree]

Sure whats the norm 1 in 10 strikes something viable?

[blackcap]

Sure whats the norm 1 in 10 strikes something viable?

Possibly. So you have to do a bit of a probability exercise when working out the value of the project. I am buying at these prices. At the moment buying cash at less than its nominal value. You do not see that often.

[mistaTea]

How about Ironbark for an exciting “near-medium prospect”, misterTea?

*****

There just has to be the gas there!

In terms of the game-changing potential Ironbark could have on NZOG - you are preaching to the converted. Though I make no comments on your sums/logic/assumptions, clearly a large gas find would have an enormous impact on Cue and NZOG's future prospects.

And even though these prospects generally have a 20% success rate, Ironbark is clearly of high interest given BP are running the show and have purchased such a massive stake.

However, drilling for a test well is only expected to start at the end of next year. Assuming a large deposit of commercially viable gas is found, it will still be years from now before the gas is extracted and sold. So (assuming no unexpected delays) I see Ironbark as an exciting prospect that is a big part of the medium-long game.

In the meantime (short - medium term) I would hope that the $100M cash could be put to good use to generate higher company earnings now. I certainly wouldn't want Andrew and the team to rush into 'any old thing' just for the sake of being seen to do something with the cash.
However, it would be ideal if an attractive prospect that was already producing oil and/or gas could be secured sooner rather than later, given they have been holding the cash for quite some time now.

In theory, having a large motivated and influential owner like OGOG should help with this (it certainly won't hurt!).

[Mickey]

Hi Mickey

Technology has changed a bit since the 1970s, and so has the potential market for product. In those days, gas was not much sought after in the GSB. The issue of how to commercialise a discovery is part of the business case for drilling a well in the first place. That's why the joint venture commissioned an independent economic impact study. You can read it here: https://www.nzog.com/dmsdocument/download/333 [pdf]. That report was commissioned to demonstrate that, if we are successful with a discovery, there will be a market for the product - and indeed there would be. Oil or condensate could be commercially produced directly to an FPSO and exported. Gas could be commercially piped ashore, around 60km. You can see a diagram of how it would work in that report.

On the weather conditions, the two New Zealand Oil & Gas prospects, Toroa and Barque, have met ocean conditions that are better than Taranaki. The prevailing wind is offshore and they are sheltered behind the island. Oil and gas is commercially produced in less hospitable places.

So, in summary, the questions you mention are fair, but the issues are well understood around the world, and the engineering and economics required are thoroughly investigated before we make drill commitments.

Kind regards

John Pagani
General Manager Corporate Services, New Zealand Oil & Gas

Appreciate your response John and the link to the impact assessment, which I found an interesting read. You probably noted that my comments were more related to the Great South Basin south of Invercargill as opposed to the Great South Canterbury Basin and having worked on drill sites off both Dunedin and Taranaki, I can attest that the weather conditions are much calmer and likely similar to what will be expected off Oamaru.

It's also good to hear that technology has changed significantly from the 70's making drilling and production much more viable than the days I was referring to, which was during the very early stages of deep water drilling situated over 240km offshore and drilling in extremely adverse weather conditions. I can recall that on one well, we had over 60-days of waiting on weather as the rig was heaving higher than the maximum 46-feet the motion compensator could handle. The good news was that after only 6 or 7 wells, we did strike condensate and did have the flare arms burning off the gas for about a week while the Baker specialists conducted their burn off tests. Unfortunately, it was low grade condensate and the geologist told me that we had tapped into it approximately 20,000 years too soon to make it a viable product. Still, it gives me hope that NZ does have huge untapped potential that is ripe for further exploration. I'll be watching your drilling programme with interest and wish you every success.

[mistaTea]

I am buying at these prices. At the moment buying cash at less than its nominal value. You do not see that often.

Indeed, Benjamin Graham would be salivating at the opportunity to buy NZOG right now.

It would be like buying a house for $800,000 with a small rent-producing granny flat out the back. The rent produces just enough income to cover basic overheads (rates, lawn mowing etc).

Once you take possession of the house, however, you take a look in the basement only to find $1M sitting there in a briefcase waiting for you! You effectively bought $1M for $800K.

Unfortunately, even though the share price is ridiculously low right now - the company is illiquid. Trying to purchase meaningful amounts of stock (in a cost-effective way) is difficult at the moment.

[blackcap]

.

Unfortunately, even though the share price is ridiculously low right now - the company is illiquid. Trying to purchase meaningful amounts of stock (in a cost-effective way) is difficult at the moment.

You are right, Graham would be salivating and so am I. These opportunities do not come along often. I purchased MGX at 20 cents a couple of years ago when they had 35 cents per share cash in the bank and no debt. They are now 117, (due to a bit of luck) but that was a no brainer as well.

Meaningful is such a subjective term. But I am pretty sure I could buy 100k of NZO at under 50 cents within a week. Meaningful enough for my purposes as part of my portfolio. I have already got some at 48 recently and cannot see where the risk is.

[mistaTea]

I purchased MGX at 20 cents a couple of years ago when they had 35 cents per share cash in the bank and no debt. They are now 117, (due to a bit of luck) but that was a no brainer as well.


That’s awesome to hear mate. Peter Lynch would call that damn near a “6 bagger”. You keep that up and you will be giving him a run for his money methinks.

[peat]

You are right, Graham would be salivating and so am I. These opportunities do not come along often.
Except this company seems to present them over and over.

We placed a buy rec on NZO a few years ago after it converted its primary asset into cash and was trading below nta.
It sort of worked out, but depended more on your personal timing than the clear strategy itself and came to fruition with the takeover.
because there is now a controlling shareholder who can tear you up its less likely to succeed imo.

[mistaTea]

I see Chevron outbid us for Anadarko...

😂🤪

[flyingmariner]

Indeed, Benjamin Graham would be salivating at the opportunity to buy NZOG right now.

It would be like buying a house for $800,000 with a small rent-producing granny flat out the back. The rent produces just enough income to cover basic overheads (rates, lawn mowing etc).

Once you take possession of the house, however, you take a look in the basement only to find $1M sitting there in a briefcase waiting for you! You effectively bought $1M for $800K.

Unfortunately, even though the share price is ridiculously low right now - the company is illiquid. Trying to purchase meaningful amounts of stock (in a cost-effective way) is difficult at the moment.

Tried that recently, waste of time (although to be fair it wasn't at the ask) Picked up a few even though the buy order was in for a month. ASB Securities kept charging the brokerage on the dribs and drabs. Not gonna do that again.

[blackcap]

Tried that recently, waste of time (although to be fair it wasn't at the ask) Picked up a few even though the buy order was in for a month. ASB Securities kept charging the brokerage on the dribs and drabs. Not gonna do that again.

Switch brokers. At Direct you only get charged the $29.90 on the initial purchase. After that any dribs and drabs are free of brokerage.

Or don't sit on the bid and when there is an offer half a cent off the bid that is meaningful just take the lot out.

[BigBob]

At Direct you only get charged the $29.90 on the initial purchase. After that any dribs and drabs are free of brokerage.

- so does ASB in my experience....


Or don't sit on the bid and when there is an offer half a cent off the bid that is meaningful just take the lot out.

- totally agree - keep an eye on the depth and take it all when enough is on offer within a cent or two...

[flyingmariner]

Good points blackcap...............I should've just moved it to the ask. Actually I just checked and will take that back. ASB didn't charge the full brokerage which is normally $30 but instead two lots of $15 for less than 3000 shares. The order was for 4 times that. That's expensive and I wish there was an AON (all or nothing option) Just as an aside about 5 months ago I bought an Aussie ETF and sold it a few weeks later. When I saw the contract it showed a loss, how could that possibly be? After looking more closely it was about the only day when the exchange rate went against the NZD. I'll be paying attention next time.

[blackcap]

Good points blackcap...............I should've just moved it to the ask. Actually I just checked and will take that back. ASB didn't charge the full brokerage which is normally $30 but instead two lots of $15 for less than 3000 shares. The order was for 4 times that. That's expensive and I wish there was an AON (all or nothing option) Just as an aside about 5 months ago I bought an Aussie ETF and sold it a few weeks later. When I saw the contract it showed a loss, how could that possibly be? After looking more closely it was about the only day when the exchange rate went against the NZD. I'll be paying attention next time.

If you want some... there are 17,000 offered at 48 and 21,000 at 48.5. But looks like plenty going through at 48. I grabbed some at 48 last week.

[mistaTea]

https://www.nbr.co.nz/story/pm-confident-oil-and-gas-industry-looking-new-investments

According to Jacinda its all gravy, and the oil & gas industry have nothing to worry about. They are being engaged with by the coalition every step of the way to ensure their own 'just transition', and all of their feedback is being taken very very seriously indeed.

I, for one, am reassured because her face looks so earnest as she hammers home each point.

[blackcap]

https://www.nbr.co.nz/story/pm-confident-oil-and-gas-industry-looking-new-investments

According to Jacinda its all gravy, and the oil & gas industry have nothing to worry about. They are being engaged with my the coalition every step of the way to ensure their own 'just transition', and all of their feedback is being taken very very seriously indeed.

I, for one, am reassured because her face looks so earnest as she hammers home each point.

Haha nice write up. She really does have that "earnest" look down pat doesn't she.

[mistaTea]

Haha nice write up. She really does have that "earnest" look down pat doesn't she.

Oh yes, it seems our PM believes the content of what she is saying won't matter too much so long as she looks like she really really REALLY means it.

She keeps banging on about Hydrogen. Now, I am no expert by any means but I am pretty sure natural gas is a key input into the Hydrogen creation process. We can help her out there.

Alternatively, you need electricity to do it...which, of course, is better (cleaner anyway) generated from gas than the coal we import during periods of low hydro.

I just can't believe she can just say this stuff and get away with it.

[blackcap]

I just can't believe she can just say this stuff and get away with it.

Well she can because she is being moral and kind. And that is actually more important than truth these days.

[fabs]

Well she can because she is being moral and kind. And that is actually more important than truth these days.

Yes Agree,
that,s why she,s forgiven the War Criminal Blair, which she worked for and welcomed as her Hero & Comrade when he visited NZ IN 2011

[mistaTea]

Well, NZ First may have let the oil and gas exploration ban go through...but I guess we can at least be grateful they blocked the CGT. Not to block this one would have definitely been the final nail in the coffin for that party.

If our shares are ever worth anything in the future we can at least keep all of our gain 😂🤪

[mistaTea]

https://www.nbr.co.nz/story/oio-decision-sends-shivers-through-investment-community

Another company and industry negatively affected by a Minister putting ideologies ahead of logical reasoning. This will send shivers through the investment community indeed.

But don't worry, our "trustworthy' Ministers have given NZOG assurances that our existing permits are all good. So whoever we are trying to convince to invest has nothing to worry about, it's not like our current Ministers would ever abruptly change direction based on scant evidence or anything...

[mistaTea]

https://www.stuff.co.nz/business/farming/112865084/oil-and-gas-ban-could-force-rethink-of-fonterras-plans-to-cut-coal

[Lion]

Many of you will know that NZOG has a 50% holding (near enough) in CUE which has a 21.5% share in the Ironbark prospect in Northern WA.
That's currently the biggest gas prospect in the world, with 15 trillion cubic feet of gas (if it's there) near an LNG plant.
NZOG also have a 15% direct interest in Ironbark. They expect to drill in about 15 months, around September 2020. BP is the operator.


My reason for posting is that the CUE sp has been rising recently, just in case anyone hasn't noticed. I notice because I have CUE shares too.


Last Thursday, 13th, CUE started at A7.0c, finishing at 7.4c
Next day, Friday, it finished at 8.0c
Next trading day, today, Monday, it finished at 9.0c
A 28.6% increase in three days' trading.


It would seem someone wants in to CUE, but as the shares are fairly tightly held, that's pushing the sp up.


Matthew Boyall, CUE's CEO has said a successful drill next year will be “company-changing” and I am sure it would be, but also for NZO, who effectively have a 25.75% share in Ironbark.
There is considerable overlap in board and management of the two companies, and their futures are intertwined and largely dependant on Ironbark, in the medium term, at least, IMO.


I'm excited by the prospects for both companies, especially as LNG and natural gas can be a bridge to a lower carbon world economy, replacing coal on the way to renewables.

[RTM]

Thankyou Mr Lion for the informative post.
It is a long time to cross my fingers, but as I am a holder of NZO....and have been from the start, it actually seems pretty short.



Many of you will know that NZOG has a 50% holding (near enough) in CUE which has a 21.5% share in the Ironbark prospect in Northern WA.
That's currently the biggest gas prospect in the world, with 15 trillion cubic feet of gas (if it's there) near an LNG plant.
NZOG also have a 15% direct interest in Ironbark. They expect to drill in about 15 months, around September 2020. BP is the operator.


My reason for posting is that the CUE sp has been rising recently, just in case anyone hasn't noticed. I notice because I have CUE shares too.


Last Thursday, 13th, CUE started at A7.0c, finishing at 7.4c
Next day, Friday, it finished at 8.0c
Next trading day, today, Monday, it finished at 9.0c
A 28.6% increase in three days' trading.


It would seem someone wants in to CUE, but as the shares are fairly tightly held, that's pushing the sp up.


Matthew Boyall, CUE's CEO has said a successful drill next year will be “company-changing” and I am sure it would be, but also for NZO, who effectively have a 25.75% share in Ironbark.
There is considerable overlap in board and management of the two companies, and their futures are intertwined and largely dependant on Ironbark, in the medium term, at least, IMO.


I'm excited by the prospects for both companies, especially as LNG and natural gas can be a bridge to a lower carbon world economy, replacing coal on the way to renewables.

[fabs]

[QUOTE=Lion;763206]Many of you will know that NZOG has a 50% holding (near enough) in CUE which has a 21.5% share in the Ironbark prospect in Northern WA.
Next day, Friday, it finished at 8.0c
Next trading day, today, Monday, it finished at 9.0c
A 28.6% increase in three days' trading.ETC;

Yes Interesting and promising development Lyon.
One would be forgiven to assume the NZO S/P to rise in tandem with Cue,s by at lest 8 -10 cents.

Lets just hope that how-ever high the Cue s/p ends up, NZO management will not only then wake up to buy out the rest of Cue ????
A handsome wind fall for the entities that hold those supposed tightly held hordes of cue Shares???

[Sideshow Bob]

Interesting stuff. Beach shareprice hasn't really moved, but then has a $4b market capitalisation. Cue on the other hand is only $63m market cap, so has the potential to be huge for them. Know it's not a CUE thread, but from a NZO perspective, CUE made $4.6m profit in 1HY, after tax.

[mistaTea]

[QUOTE=Lion;763206]
One would be forgiven to assume the NZO S/P to rise in tandem with Cue,s by at lest 8 -10 cents.


Yeah, the pricing of NZ shares has been a mystery to me for some time.

Lookit, the current market cap of NZOG is aprox $82M.
The market cap of CUE is approx $63M. NZOG's share would then be $31.5M or thereabouts.

So that means that, right now, the market effectively values NZOG (in and of itself) at $50M.

For a company with double that in cash in the bank, and a potentially enormous gas prospect in Aussie it is truly astounding.

Either I truly am terrible at investing (and should stick to index funds) or a bunch of people buying now are going to make a huge amount of money on this stock over the next few years.

[blackcap]

[QUOTE=fabs;763251]

Yeah, the pricing of NZ shares has been a mystery to me for some time.

Lookit, the current market cap of NZOG is aprox $82M.
The market cap of CUE is approx $63M. NZOG's share would then be $31.5M or thereabouts.

So that means that, right now, the market effectively values NZOG (in and of itself) at $50M.

For a company with double that in cash in the bank, and a potentially enormous gas prospect in Aussie it is truly astounding.

Either I truly am terrible at investing (and should stick to index funds) or a bunch of people buying now are going to make a huge amount of money on this stock over the next few years.

I am not 100% sure but I think NZO's accounts are consolidated, so that "cash in the bank" is also all of CUE's cash included. So you need to take out CUE's cash holding to adjust for the cash that NZO has. In the 2018 annual report Cue had $18m of cash. Need to keep that in mind.

[mistaTea]

[QUOTE=mistaTea;763302]

I am not 100% sure but I think NZO's accounts are consolidated....

They absolutely are consolidated. In the last Annual Report the Balance Sheet shows that you need to make an adjustment of $6.67M to equity (since 100% of the CUE liabilities are also included) to remove the CUE component. Chump change in the grand scheme of things.

Because the NZOG share price is so low right now it is almost irrelevant though. If the share price was still at the OGOG purchase price of 74c, and you were trying to assess whether or not to buy more, then you would probably need to be much more precise in your calculations.

[blackcap]

[QUOTE=blackcap;763303]

They absolutely are consolidated. In the last Annual Report the Balance Sheet shows that you need to make an adjustment of $6.67M to equity (since 100% of the CUE liabilities are also included) to remove the CUE component. Chump change in the grand scheme of things.

Because the NZOG share price is so low right now it is almost irrelevant though. If the share price was still at the OGOG purchase price of 74c, and you were trying to assess whether or not to buy more, then you would probably need to be much more precise in your calculations.

Cheers I thought they were consolidated. Totally agree with you that NZO is the cheaper entry vehicle right now. Just keep it a bit quiet please, I am trying to pick up a few myself right at this current point in time :) I wonder why the NZO price has not increased commensurately with the CUE share price, is that because the market that follows CUE knows about Ironbark and the NZO market is not that aware of Ironbark and the prospects? Or just people weary and fed up with NZO? Not to worry, I am backing up the truck for a few more.

[mistaTea]

Cheers I thought they were consolidated. Totally agree with you that NZO is the cheaper entry vehicle right now. Just keep it a bit quiet please, I am trying to pick up a few myself right at this current point in time :) I wonder why the NZO price has not increased commensurately with the CUE share price, is that because the market that follows CUE knows about Ironbark and the NZO market is not that aware of Ironbark and the prospects? Or just people weary and fed up with NZO? Not to worry, I am backing up the truck for a few more.

All the best blackcap. I hope it all works out for you mate.

Regarding the market psychology for NZOG...I haven't got a clue and don't waste any of my (extremely) limited brainpower trying to figure it out. All I ever care about is whether a company is objectively worth more than its market value. To Hell with everyone else.

[mistaTea]

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12241688

No doubt you cannot blame the government's oil & gas ban 100% for this as these companies will be constantly looking to ensure they are deploying capital effectively.

However, I don't believe that the oil & gas ban had nothing to do with the decision either (as these companies seem to be at pains to reassure). Put another way, the ban certainly didn't IMPROVE the chances of keeping these guys in NZ.

I wonder if, in a way, this might help the remaining players. The government knows they need some large gas discoveries to keep the lights on while they transition to who-knows-what. Perhaps they may get to the point where they are forced to offer Big Oil some sweeteners to continue exploring in NZ.

Of course, I don't really know what I am talking about and that last comment is purely speculative (and probably wishful thinking).

[Marilyn Munroe]

MistaTea discusses Govt's exploration ban


I predict when we have a dry year with electricity shortages and an election looming the current government will have a sudden change from virtue signalling ideology to realpolitik.

Boop boop de do
Marilyn

[mistaTea]

I predict when we have a dry year with electricity shortages and an election looming the current government will have a sudden change from virtue signalling ideology to realpolitik.

Boop boop de do
Marilyn

Indeed. Though, even if the government reversed (or dramatically diluted) their decision in the face of an energy disaster, it may well still be too late to attract Big Oil back.

It would take a lot of convincing anyway, after making such a hasty and ill-conceived policy with virtually no consultation. The oil explorers will be thinking, fool me once shame on you...fool me twice, shame on me.

Patrick Smellie wrote a piece that may be of interest in the herald.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12241832

[Vaygor1]

So O.G. want the lot now.

Announcement today: https://www.nzx.com/announcements/337411

My initial view is to call bulls**t on this offer.

Basically says "We will pay 25% above market sentiment".

What about paying what it is actually worth given Ironbark and other prospects?

[Vaygor1]

Basically sites that the government has destroyed NZ in the Oil and Gas field (I agree).

No mention about the fact that IRONBARK IS NOT IN NEW ZEALAND.

[mistaTea]

So O.G. want the lot now.

Announcement today: https://www.nzx.com/announcements/337411

My initial view is to call bulls**t on this offer.

Basically says "We will pay 25% above market sentiment".

What about paying what it is actually worth given Ironbark and other prospects?

A very, very opportunistic and cheeky offer to be sure. Shareholders would probably get 80- 90 cents per share if the company was just liquidated.

How does voting work for scheme of arrangements? Only the 30% being acquired are able to vote on it?

[Vaygor1]

A very, very opportunistic and cheeky offer to be sure. Shareholders would probably get 80- 90 cents per share if the company was just liquidated. Shame on OGOG.

How does voting work for scheme of arrangements? Only the 30% being acquired are able to vote on it?

For the scheme to be approved, NZO shareholders must approve the scheme by resolution of:

75% of the votes cast in each interest class, and a simple majority of all votes on issue (whether voted or not).

Whole process is laid out here (I am in no way affiliated with the following crowd in any way):
https://minterellison.co.nz/our-view/how-a-scheme-of-arrangement-works

Cant really blame OGOG... shame on the Board, especially the independent directors.

[mistaTea]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/307284/265938.pdf

Remember, in 2017 Northington Partners gave NZOG a valuation range of 78 - 93 cents per share. That was just based on existing tangible assets, did not take into account Barque or Ironbark.

Northington will be engaged to provide a value estimate again as part of this process. I don't see how the value could have changed much from 2017...nothing has happened to the existing assets, and oil prices are up.

[flyingmariner]

I think I'll take the money and run. There may be a better offer but doubtful. The NZ Govt. has made it quite obvious that all exploration is bad and they have the coalition numbers to back up any legislation. i.e. the greens.

In some ways I can't wait to see the gas stoves go out and then people will realize just how critical energy and oil companies are to an economy.

Everything is wonderful right now but some of us remember the oil shocks of the 70's and 80's and it will happen again. At that time the NZ consumer will blame all the current geniuses for banning exploration.

Personally I'm impatient to get my funds out of NZO before some more dopey legislation comes down the pike.

[Sideshow Bob]

Didn't take long to get a letter (email) out to holders:

DearShareholder

As you may have heard in the news, New Zealand Oil & Gas and its majorshareholder OGOG have agreed a scheme implementation agreement, and if theproposed scheme of arrangement is successful, it will result in OGOG buying the30 per cent of shares in New Zealand Oil & Gas it doesn’t already own. TheNew Zealand Oil & Gas Independent Directors unanimously recommend shareholdersvote in favour of the scheme, subject to the independent adviser’s reportconcluding the scheme price is within or about its valuation range.

Details have been released to the NZX and are on our website at http://nzog.com (http://nzog.com/).

All shareholders will be sent a full information package. This is currentlyplanned to arrive in time for a shareholder meeting in September, whereshareholders will vote on the scheme.

In the meantime, if you would like to discuss you are welcome to email me at john.pagani@nzog.com, or call on 04 4718333.


Warm regards

[digger]

For the scheme to be approved, NZO shareholders must approve the scheme by resolution of:

75% of the votes cast in each interest class, and a simple majority of all votes on issue (whether voted or not).

Whole process is laid out here (I am in no way affiliated with the following crowd in any way):
https://minterellison.co.nz/our-view/how-a-scheme-of-arrangement-works

Cant really blame OGOG... shame on the Board, especially the independent directors.

Sorry for the ignorance and bad spelling.
What I need to know is does this scheme prevent the 90% takeover clause. At 90% shareholder remaining can get an independent [that is a truely independent] assesment paid for by the takeover target company. My shares are not for sell at anything like this low offer. I will wait for Ironbank,even as I know OGOG wants all now before Ironbank.

Calling FISH. An old computer friend needs your imput now as I well remember you several times said you had successfull experience in this takeover above 90%.

[freddagg]

My shares will not be sold voluntarily at anything like this offer price.
The independent directors do not look very independent to me.

[mistaTea]

My shares are not for sell at anything like this low offer. I will wait for Ironbank,even as I know OGOG wants all now before Ironbank.


Hey digger, my shares are off the table too. I want to explore ironbark too - OGOG would have to offer a reasonable sum more to me before I would consider voting to sell my equity.

After discussing the matter with John Pagani, I sent him an email. On the off chance my ramblings are of interest to anyone, I reproduce them below.

*********
Thanks again for taking the time to phone me earlier John, I really do appreciate it. As discussed, I am more than happy to chat with Alistair - and you are welcome to forward this email and my details on to him. In fact, I encourage you to do so.

I wanted to put some thoughts on paper, to make sure my position is clear. No doubt, we could argue the toss on a number of points, but ultimately this boils down to whether or not OGOG are truly being fair to departing equity partners with the current offer. I think not.


Though I understand the NZ specific challenges that the Labour government has created, and appreciate why OGOG want to take 100% ownership of NZOG - the offer of 62 cents does seem very low to me. Though I do not have access to live accounting data for NZOG, this value is lower than NTA and does not take into account the enormous Ironbark prospect.
In fact, Ironbark is not even mentioned in the NZX announcement. A large gas strike in Australia is far from certain, however the prospect is interesting enough for BP to take such a large equity stake in it. If it is good enough for BP, it is good enough for me (and certainly not worthless).


I do appreciate the comments you made about corporate overheads being a drag on current performance etc, however the reality is that existing production has been enough to cover the required cashflows so far. In fact, cash balances have tended to rise despite spend on production, exploration and administration.


In terms of no dividends being paid, and none being on the horizon for the foreseeable future - this is of zero interest to me. NZOG should retain all capital for investment, as this is where we have the potential for maximum ROIC. Paying me a divided under the current climate, which would be subject to tax, would be absolute lunacy. I view the $0.00 dividend right now as a good thing, certainly not a mark against NZOG as an investment.

Regarding the need for a shareholder vote every time an acquisition above a certain $ threshold is attempted - that was always going to be the case. Any challenges caused by this is not a reason in and of itself for me to sell my equity to OGOG at a discount.

I have enjoyed being a minority business partner with OGOG. Their long-term focus resonates with me, and my sole interest has always been around the underlying performance and prospects of our business (the share price on any given day, week or month is of no relevance to me). NZOG could go into a trading halt for the next 10 years and it would be of no significance to me. I only care about the underlying business.

Though it saddens me, I do accept that my business partnership with OGOG may well be coming to an end soon. However, I do hope that they review their offer price to ensure that any criticisms around ‘opportunism’ are baseless.

My plan was to continue as a co-owner of NZOG for the foreseeable future - if OGOG are going to buy me out, it would be nice to think that a price based on the intrinsic value of the business could be made (as opposed to an offer price that is sold as being in my best interests solely because it is some percentage above the current market cap, which is meaningless to the long-term investor).

Personally, I would have thought that OGOG would have offered at least the same price they paid for the first 70% of the company to acquire the remaining 30%. OGOG effectively paid 74 cents per share in 2017. That would be a paltry increase of roughly NZ$6M on their current offer. Peanuts for OGOG to acquire an exciting asset like NZOG, but would go a long way in terms of their brand perception, particularly to those of us who have stuck by them, and would be leaving relunctantly.

In reality, a premium on their previous acquisition price should be made, given how far Ironbark has progressed since then. OGOG stand to make a significant sum of money long-term on NZOG, and should treat minority shareholders how they would expect to be treated themselves.

I have effective control (direct and indirect) of approximately 1.75% of the target shares, and I do not support this low ball offer.

[Joshuatree]

Thanks for sharing your excellent informed letter mtea, im with you guys albeit with a small holding now..

[BigBob]

Thanks for sharing your excellent informed letter mtea, im with you guys albeit with a small holding now..

Same from me Mr. Tea... Although I also don't have too many left...

[rooster]

I agree whole heartedly mistaTea. They will not get any of my shares. Shame on the directors recommending this as they seem to not have the regular shareholder's interests at heart.

[Sideshow Bob]

Not getting any of my 555! Take that OG! :p

[RTM]

Same from me Mr. Tea... Although I also don't have too many left...

Thanks from me to. Excellent. With respect to the regulatory environment....I do wonder if a change in our government...whenever that might be, might see a change in NZ’s position.

I wonder if we should all make Mr T. our proxy. I think he is certainly representing us well.

Personally, I was hoping for a premium price to the original offer, not a discounted one.

[Ripping]

I still have several tens of thousands shares in my portfolio, and I won't be releasing those to OGOG without a fight (or at the minimum a 'nay' vote). This is attempted daylight robbery. Shame on the directors.

[fish]

Sorry for the ignorance and bad spelling.
What I need to know is does this scheme prevent the 90% takeover clause. At 90% shareholder remaining can get an independent [that is a truely independent] assesment paid for by the takeover target company. My shares are not for sell at anything like this low offer. I will wait for Ironbank,even as I know OGOG wants all now before Ironbank.

Calling FISH. An old computer friend needs your imput now as I well remember you several times said you had successfull experience in this takeover above 90%.

Dear Digger,

Yes we successfully beat SEA Holdings by arbitration awarding us a fair and reasonable price for TTP shares plus costs-they appealed against the arbitration award but were defeated in the high court.

It will be fun to do this again although I dont hold so many NZO as I used to-suspect you probably have millions.
I have not kept my file on this and will have to do some research again.
My feeling is they would be lucky to get many shares at this price-you probably still hold millions and I would think very few would sell at less than 72 cents

[blackcap]

I will be voting NO/AGAINST and if they do get to 90% will be invoking Sections 110 and 111 of the Companies Act. I am surprised no one has mentioned those yet.

They are to do with minority protection especially in such a case. Then even if the company do get to 90% where they compulsorily acquire the shares they will probably have to pay you more.

Shame on the "independent" directors, you should both resign immediately and have a good hard look at your thought processes and ethics. On the blacklist for me now.

Lets hope that there are enough holders that will hold out and the 90% is not met as it is.

[JohnPagani]

Hi Share Traders


I'm obviously not going to go beyond the information released to market about the substance of the offer - but I am going to defend the honour of our independent directors.


I am disappointed by some of the comments made in here today and the derogatory ones reflect poorly on the people making them. Naturally you are welcome to your views about the transaction but it's possible to make up your own mind about value without impugning your directors.


A couple of points:


I urge you to consider the independent appraiser's valuation. The independent directors have been crystal clear that they wouldn't recommend a price below the independent valuation. The appraiser is now preparing that valuation, but the independent directors have taken commercial advice, which would include an estimate of where any independent valuation was going to land.


Everyone will be sent a copy of the independent report as well as the detailed thinking of the independent directors about their recommendation.


They have a duty as directors to the best interest of the company. They'll spell out for you why they recommend the offer. in the meantime I refer you to the statement they have made:

In agreeing to recommend the transaction, the independent directors of New Zealand Oil & Gas have taken into account:
- The compelling premium offered to New Zealand Oil & Gas shareholders;
- The changed operating environment for oil and gas investment in New Zealand following the government's decision in April 2018 to not award new offshore exploration acreage;
- The difficulty raising equity capital as a publicly listed oil and gas company on the NZX, especially given the above factors; and
- The significant price decline in New Zealand Oil & Gas shares following the government's announcement in April 2018.


Hope that helps.

I have made my contact details available and if you contact me I will certainly pass on your concerns.

I am more than happy to discuss if you have queries - and a few people have taken me up on that today. john.pagani@nzog.com

Cheers.

[blackcap]

Hi Share Traders


I'm obviously not going to go beyond the information released to market about the substance of the offer - but I am going to defend the honour of our independent directors.


I am disappointed by some of the comments made in here today and the derogatory ones reflect poorly on the people making them. Naturally you are welcome to your views about the transaction but it's possible to make up your own mind about value without impugning your directors.


A couple of points:


I urge you to consider the independent appraiser's valuation. The independent directors have been crystal clear that they wouldn't recommend a price below the independent valuation. The appraiser is now preparing that valuation, but the independent directors have taken commercial advice, which would include an estimate of where any independent valuation was going to land.


Everyone will be sent a copy of the independent report as well as the detailed thinking of the independent directors about their recommendation.


They have a duty as directors to the best interest of the company. They'll spell out for you why they recommend the offer. in the meantime I refer you to the statement they have made:

In agreeing to recommend the transaction, the independent directors of New Zealand Oil & Gas have taken into account:
- The compelling premium offered to New Zealand Oil & Gas shareholders;
- The changed operating environment for oil and gas investment in New Zealand following the government's decision in April 2018 to not award new offshore exploration acreage;
- The difficulty raising equity capital as a publicly listed oil and gas company on the NZX, especially given the above factors; and
- The significant price decline in New Zealand Oil & Gas shares following the government's announcement in April 2018.


Hope that helps.

I have made my contact details available and if you contact me I will certainly pass on your concerns.

I am more than happy to discuss if you have queries - and a few people have taken me up on that today. john.pagani@nzog.com

Cheers.

John,

You may defend the independent directors however liquidation value of NZO is far greater than 62 cents. So in my book accepting a 62 cent offer is indefensible.

[mistaTea]

Hi Share Traders

I'm obviously not going to go beyond the information released to market about the substance of the offer - but I am going to defend the honour of our independent directors.


I am disappointed by some of the comments made in here today and the derogatory ones reflect poorly on the people making them. Naturally you are welcome to your views about the transaction but it's possible to make up your own mind about value without impugning your directors.

Cheers.

To my fellow NZOG business partners,

I do want to echo John a bit here. Though I am as disappointed as everyone else about what I perceive to be a low ball offer for our business, I would encourage everyone to avoid any ad hominem commentary.

Though this is a sensitive time for many of us, at this junction I have no reason to believe that our Independent Directors are anything other than a perfectly decent man and woman.

Whether or not they are able to effectively establish the true underlying value of the business is a separate issue, and should come out when the workings of an independent valuation are shared.

The commercial advice given thus far to the directors appears questionable, but once again we will need to allow this process to run its course.

In the end, the directors will need to stand back and look at the offer from an owners perspective. A 62c/share offer implies that the entire organisation is worth only $102M.

But hang on a minute - the company has no debt. In that case, equity is a reasonable proxy for the value of existing assets. In the last report this sat at $136M (82 cents per share).

Then there is the question around how much is the Ironbark potential upside worth? Can't speculate too much here as drilling is risky...but given we are at the advanced stages of exploration, it must be worth something.

Given the above, would a rational business owner sell the whole business for $102M? I say no.

[Leftfield]

Interesting reading on this thread.....and although I'm not a holder I can't help thinking someone should be approaching NZ Shareholders Association (https://www.nzshareholders.co.nz) re this 'takeover,' if you haven't already.

[Carpenterjoe]

I thought it was fund managers "greening their books" and this was the cause of the low share price.

But now, I smell something rotten, I suppose the big players have their way with us little folk.

Disgusting offer, how about releasing all that cash then paying the premium.

[fish]

I thought it was fund managers "greening their books" and this was the cause of the low share price.

But now, I smell something rotten, I suppose the big players have their way with us little folk.

Disgusting offer, how about releasing all that cash then paying the premium.

If you a shareholder they only get their way if you vote for the takeover.
If you vote against you retain your rights-which includes getting a fair and reasonable price.
Be assured there are enough shareholders who will vote against ,that will take this to arbitration if need be.

[digger]

Hi Share Traders




In agreeing to recommend the transaction, the independent directors of New Zealand Oil & Gas have taken into account:
- The compelling premium offered to New Zealand Oil & Gas shareholders;
- The changed operating environment for oil and gas investment in New Zealand following the government's decision in April 2018 to not award new offshore exploration acreage;
- The difficulty raising equity capital as a publicly listed oil and gas company on the NZX, especially given the above factors; and
- The significant price decline in New Zealand Oil & Gas shares following the government's announcement in April 2018.



Cheers.


I feel the need to put your perspective differently.
It,s a well known fact that independent appraisers always appraise in the range acceptable to the company that pays them. See Fish,s post number 15967 regarding true value from arbitration.
The premium offered is based on a depressed share price,not a premium on the value of the company. Cash along is worth 80+ cents. Then there is the other assets like Ironbank,and surely those independent directors must consider a considerable value on on the board and management abilities or are they admitting we have been paying them for nil skills

--The changed operating environment is now being used by OGOG to justify why they alone should benefit from it with this very low ball offer.
-- Why does NZO need to raise capital? In fact as my broker has pointed out NZO sitting on 120 + million and doing nothing with it has been partly responsible for manipulating the share price lower. You will remember a year or more ago I suggested that NZO look at HZN and Tap both that have done very well.Why did nZO want to do nothing. It seems that that policy has been very useful to lowering the SP and to OGOG advantage.
Finally I am not in the slightest surprised that OGOG is now making this low offer. By their action or more precisely inaction it has been long in the planning stage

[CD_CHCH]

We only have a very small holding but certainly don't plan on letting them go for the amount offered. At the very minimum we would expect cash in the bank value plus a premium for total control of the company and assets. I'm guessing if OGOG had offered a figure slightly above what they originally offered to buy into the company initially they would have possibly had a number of willing sellers, but as the offer on the table is less than cash in the bank it is insulting.

[blackcap]

willing sellers, but as the offer on the table is less than cash in the bank it is insulting.

That last sentence sums up how I feel that John Pagani and the NZO independents are trying to justify the unjustifiable.

I do not care about all of the other factors, in fact they are irrelevant.

[mistaTea]

Some additional food for thought...

A frustration for NZOG has been its inability to deploy the significant cash balance into producing assets with upside (selling at a fair price). And as a publicly listed company, there are additional hurdles that a private company don't have - i.e. needing to gain shareholder approval once a purchase exceeds a certain value etc.

However, given how far we have come...and with Ironbark being drilled in approx 12 months now that we have gained all of the contractual and regulatory approvals...

At this stage it doesn't even really matter that we are 'sitting on cash'. We may as well just wait it out and see what comes out of Ironbark. If other acquisitions are truly not realistic right now, another 12 months of cash in the bank is not the worst thing in the world while we wait to spud.

If we strike anything like the anticipated 15Tcf, the share price for NZOG would rocket. Then OGOG would have no issues whatsoever doing an additional capital raising, if they even needed to.

And if we don't discover commercially viable gas, we will still have the majority of the cash in the bank and life will go on.

We have come so far, it would seem crazy to walk away now. Given our relatively limited downside right now, it would take quite a compelling offer indeed from OGOG for me to forgo the potentially massive upside in Ironbark.

[Lion]

We have come so far, it would seem crazy to walk away now. Given our relatively limited downside right now, it would take quite a compelling offer indeed from OGOG for me to forgo the potentially massive upside in Ironbark.

Thanks for some great analysis recently, mistaTea.
With regard to your quote above - absolutely agree, but what if we have no choice? I rather fear we won't, and that CUE may get gobbled up too.
They were my part of my retirement plan!

[Sideshow Bob]

If Ironbark is a key future consideration, there is always the possibility of deploying any funds into Beach or Cue - although NZO has a bigger exposure than these, directly and also indirectly with CUE.

Of course the better the offer for NZO shares, then the more to deploy elsewhere......

[mistaTea]

With regard to your quote above - absolutely agree, but what if we have no choice? I rather fear we won't...

If OGOG get the deal over the line, and the sale is forced upon us, well - 'them's the breaks'. I suspect they will find some reasonably strong pushback though, given the low price offered. Kiwi's have a strong sense of fairness, and even an imbecile would smell a rat here.

With regards to Cue. Some thoughts:

1. In order to buy into Cue as an alternative to NZOG, you would have to be satisfied that the price you were paying made sense. I see the market cap is now AUD 67M. If you are a Buffett disciple like me, you would need to be satisfied that $67M represented a discount on underlying intrinsic value for Cue. I offer no analysis or recommendations on that front.

The great thing about NZOG is that, for some time, the share price was depressed well below what a true long-term investor would rationally sell their shares for. At one point the market cap was approx NZ$78M. At such a discount to equity (given the company has no debt), an individual buying in was essentially getting a crack at Ironbark (and Barque/Toroa, if it ever happens) for free. Mohnish Pabrai refers to this (relatively rare) situation as "Heads, I win...Tails, I don't lose much".

I am not sure you can make the same argument for Cue, so simply buying in now just because they have exposure to Ironbark could amount to pure speculation. That is outside my wheelhouse.

2. It is entirely possible that, if OGOG are successful in snapping up the rest of NZOG they would go after the rest of Cue. Why share any of Ironbark with anyone else if you can avoid it? The money required to acquire both NZOG and Cue would't even be a rounding error on Eyal Ofer's balance sheet. I hasten to add that I am not predicting that they would go after the rest of Cue, just that it is not a completely ridiculous idea.

Hope this is useful.

[fish]

Hi Share Traders


I'm obviously not going to go beyond the information released to market about the substance of the offer - but I am going to defend the honour of our independent directors.


I am disappointed by some of the comments made in here today and the derogatory ones reflect poorly on the people making them. Naturally you are welcome to your views about the transaction but it's possible to make up your own mind about value without impugning your directors.


A couple of points:


I urge you to consider the independent appraiser's valuation. The independent directors have been crystal clear that they wouldn't recommend a price below the independent valuation. The appraiser is now preparing that valuation, but the independent directors have taken commercial advice, which would include an estimate of where any independent valuation was going to land.


Everyone will be sent a copy of the independent report as well as the detailed thinking of the independent directors about their recommendation.


They have a duty as directors to the best interest of the company. They'll spell out for you why they recommend the offer. in the meantime I refer you to the statement they have made:

In agreeing to recommend the transaction, the independent directors of New Zealand Oil & Gas have taken into account:
- The compelling premium offered to New Zealand Oil & Gas shareholders;
- The changed operating environment for oil and gas investment in New Zealand following the government's decision in April 2018 to not award new offshore exploration acreage;
- The difficulty raising equity capital as a publicly listed oil and gas company on the NZX, especially given the above factors; and
- The significant price decline in New Zealand Oil & Gas shares following the government's announcement in April 2018.


Hope that helps.

I have made my contact details available and if you contact me I will certainly pass on your concerns.

I am more than happy to discuss if you have queries - and a few people have taken me up on that today. john.pagani@nzog.com

Cheers.

Actually I feel this posting is misleading shareholders rather than being helpful.
I admit to having a bias and a conflict of interest.
The Independent Directors might also have similar conflicts as might John.
I feel John and the independent directors are good people and believe they are acting honestly within their own cognition.
The reality that cannot be avoided if we are being truly honest is that any valuation that is fair and reasonable cannot be below the liquidation value.
However the Independent Directors have commissioned a valuation range and indicate they would recommend the offer of 62 cents if it is in this range.This range could be wide eg 60 cents to 100 cents.In which case the directors would recommend the offer even though it is not a fair price to accept.

[mistaTea]

Actually
The reality that cannot be avoided if we are being truly honest is that any valuation that is fair and reasonable cannot be below the liquidation value.


Yeah. Even though I am sure everyone involved in this offer so far are perfectly decent people, it does astound me how clumsy this takeover offer has been.

They know damn well there is huge upside with Ironbark. Also, Barque and Toroa are not write-offs at all. Were that the case, they would have surrendered the permits already - not gained extensions.

If they were less focussed on 'getting a steal', and made an offer that they would be genuinely happy to receive were the situation reversed, things would be much different.

And the money involved is not huge, given the large upside. For example, they could have made the choice to offer $1 a share. That would be an easy story to sell to us...it would be liquidation value + a premium for Ironbark etc...it would be an increase of 100% on the recent share price etc etc...

And in total it would have cost them approx $50M. We are talking a measly $20M above what they have actually offered. And, given Ironbark and Barque could be worth many many billions of dollars...it is astonishing to me that they would quibble over a few million dollars.

That is what we all find so distasteful. Though I am sure OGOG do not mean to come across this way...it FEELS like another big corporate just being greedy.

[Vaygor1]

.... In which case the directors would recommend the offer even though it is not a fair price to accept.

If it is "not a fair price to accept", then by natural extension it is immoral to recommend it.

[Vaygor1]

On further reflection, how could the board possibly recommend anything other than to reject the offer?

In total honesty, I am happy to lose every cent in the event all of NZO's current exploration activities turn out to be complete fizzers because I strongly believe that will not be the case.

As such, even if today's price was $10 a share I believe I would hold. The Ironbark prospect is too compelling (and exciting) for me to consider selling, as is Barque in the medium-to-long term.

I'd also be throwing away the enormous amount of time and effort spent analysing this over the years.

I am staggered at the Board's recommendation to accept.

[digger]

On further reflection, how could the board possibly recommend anything other than to reject the offer?

In total honesty, I am happy to lose every cent in the event all of NZO's current exploration activities turn out to be complete fizzers because I strongly believe that will not be the case.

As such, even if today's price was $10 a share I believe I would hold. The Ironbark prospect is too compelling (and exciting) for me to consider selling, as is Barque in the medium-to-long term.

I'd also be throwing away the enormous amount of time and effort spent analysing this over the years.

I am staggered at the Board's recommendation to accept.

What we do not know is why they would even think of accepting. But then we do not know a lot of things. As happens all too often after a takeover we find the directors of the takeover company are in various way rewarded for the position taken.
Yesterday I paid my $145 and joined the shareholders association. I can not stop a lot of people selling into this steal,but as OGOG knows many will. I need the latest knowledge about the takeover code and how it is applies in the courts. After 90% OGOG can acquiry all my shares and the only redress I have is as FISH has pointed out to demand a true valuation on the company. Not the valuation that OGOG has paid a valuator to come up with.
Anyone with me??

[Joshuatree]

Looks like a bunch of us are against this. And yes how about John Pagani being up front about all the bonuses/financial rewards etc he/they will get as Westland dairy company got.Talk about impartiality or whats best for investors, this is a very weak position and its fair and right for shareholders to get transparency on that and valuations.

[t.rexjr]

Jeepers creepers...

[freddagg]

What we do not know is why they would even think of accepting. But then we do not know a lot of things. As happens all too often after a takeover we find the directors of the takeover company are in various way rewarded for the position taken.
Yesterday I paid my $145 and joined the shareholders association. I can not stop a lot of people selling into this steal,but as OGOG knows many will. I need the latest knowledge about the takeover code and how it is applies in the courts. After 90% OGOG can acquiry all my shares and the only redress I have is as FISH has pointed out to demand a true valuation on the company. Not the valuation that OGOG has paid a valuator to come up with.
Anyone with me??

I will be.

[fish]

What we do not know is why they would even think of accepting. But then we do not know a lot of things. As happens all too often after a takeover we find the directors of the takeover company are in various way rewarded for the position taken.
Yesterday I paid my $145 and joined the shareholders association. I can not stop a lot of people selling into this steal,but as OGOG knows many will. I need the latest knowledge about the takeover code and how it is applies in the courts. After 90% OGOG can acquiry all my shares and the only redress I have is as FISH has pointed out to demand a true valuation on the company. Not the valuation that OGOG has paid a valuator to come up with.
Anyone with me??

Digger now that you are a member-I stopped my subscription after the TTP takeover as I didn't get practical help-can you find out what happens if they don't get 90%.
Don't forget to check your private messages

[KentBrockman]

What is, of course, mildly amusing is that there were the exact same discussions on the CUE board when NZO came in and made a TO bid offering peanuts to CUE holders.

[mistaTea]

-can you find out what happens if they don't get 90%.


From what I can tell, the 90% is only relevant if they implement a traditional takeover (which is subject to all sorts of conditions under the Takeover Code - including the 90% rule). Scheme of Arrangement is different, and more favourable to OGOG.

"Under New Zealand law, a takeover of a widely-held company must be conducted in accordance with the New Zealand Takeovers Code. However, since amendments to the Companies Act were enacted in 2014, schemes of arrangement provide an attractive alternative to an offer under the Code. In particular, whereas a "Code offer" requires that an offeror must obtain 90 percent of the voting rights in the company before it may compulsorily acquire the remaining 10 percent, such restrictions do not apply in the scheme context.


A takeover by way of scheme of arrangement is not without restriction. Under the amended Companies Act, the arrangement must receive the approval of 75 percent of the votes of shareholders (in each interest class) entitled to vote and voting on the resolution, as well as a simple majority of the shares held by shareholders entitled to vote. Further, the applicant(s) must either file a statement from the Takeovers Panel indicating that the Panel has no objection to an order being made, or the Court must be satisfied that the shareholders of the company will not be adversely affected by the use of the scheme of arrangement provisions rather than the Code."




I am not really clear on the statement I highlighted in bold... it mentions needing approval of 75% of shareholders in all classes...but then also says just a simple majority of all shareholders entitled to vote?

[Sideshow Bob]

As at the last quarterly update, they had 60.15cps in cash

So they value the rest of the company at 0.85cps...…

50.04% of CUE is worth $33m, or 20.6cps.

Nuff said.

[mistaTea]

As at the last quarterly update, they had 60.15cps in cash

So they value the rest of the company at 0.85cps...…

50.04% of CUE is worth $33m, or 20.6cps.

Nuff said.

Appreciate the sentiment... just need to be a little careful, as the NZOG financial statements consolidate 100% CUE assets and income etc. So in the report you refer to, not all of the $98M cash belongs to NZOG shareholders.

Given the company has zero debt, I think the line on the Balance Sheet that shows "Equity Attributable to shareholders of the Group" is the key figure. That removes the CUE assets and liabilities component that does not belong to NZOG.

The latest reported figure for this (in the most recent interim report) was $136M. So just the GAAP value of the existing assets alone were most recently reported at being worth approximately 82 cents per share.

So, according to OGOG's advisors...we should not only pretend that Barque/Toroa and Ironbark don't exist...but we should also hand them the rest of the business for less that the carrying value of existing assets.

[JohnPagani]

Looks like a bunch of us are against this. And yes how about John Pagani being up front about all the bonuses/financial rewards etc he/they will get as Westland dairy company got.Talk about impartiality or whats best for investors, this is a very weak position and its fair and right for shareholders to get transparency on that and valuations.

Nice try but my interests are the same as any other shareholder since you asked. Not only that, any interest in the transaction must be fully disclosed in the booklet, which will be sent to everyone. As I said earlier in the week, the answers to questions about valuations and all interests associated with the transaction will all be disclosed. No one has anything to hide and the reasons the directors feel their recommendation is correct will all be set out. It's always good to hold boards to account, and debate viewpoints, and the regulatory process expects you will find the information coming your way useful in informing the debate.

You will note it is also a court-supervised process, which provides protection that everyone is treated fairly.

[Wiremu]

It's interesting to read the addresses to the November 2018 Annual Meeting, then some eight months later read the exact opposite in the notice of scheme of arrangement, including the story line John Pagani is sticking to closely in doing his job. In brief, it insults one's intelligence, to add to the offer requiring cash less than the cash held by the company.

Several important points from the Minter Ellison article mentioned earlier include:

"The target company will then hold the shareholder vote on whether to approve the scheme at the scheme meeting.
For the scheme to be approved, target shareholders must approve the scheme by resolution of:
• 75% of the votes cast in each interest class[1]; and
• a simple majority of all votes on issue (whether voted or not).
If the shareholders do not approve the scheme, it will fail. There is no “middle ground” position or ability to continue pursuing the scheme as part of the same process but just with those shareholders that voted in favour.
If target shareholders approve the scheme, the target company will then seek final Court orders approving the scheme.
If the Court approves the scheme, it will become binding on the target company and all of its shareholders (including on those target shareholders who voted against the scheme or did not vote at the scheme meeting) on and from the date specified in the order."

As i read this its all or nothing with a scheme of arrangement. OGOG either end up with all of the shares, or nothing happens. No reaching 90% and the compulsory aquisition, and no debate about valuation.

That being the case OGOG need 75% of the votes of the minority shareholders actually voting on the day. In the top 20 I can identify possibly 20% of votes from shareholders who are likely to vote no, and will certainly be contacting those parties. (Digger, I have you in my sights once again.) I am aware that Andrew Jeffries has contacted at least one of the minority shareholders in the top 20.

If contributors on this site who are against accepting the offer express their feelings by voting then there is a chance the scheme of arrangement will fail.

My question is - do we need to consider forming a united group of some sort? Opinions appreciated.

[fish]

Nice try but my interests are the same as any other shareholder since you asked. Not only that, any interest in the transaction must be fully disclosed in the booklet, which will be sent to everyone. As I said earlier in the week, the answers to questions about valuations and all interests associated with the transaction will all be disclosed. No one has anything to hide and the reasons the directors feel their recommendation is correct will all be set out. It's always good to hold boards to account, and debate viewpoints, and the regulatory process expects you will find the information coming your way useful in informing the debate.

You will note it is also a court-supervised process, which provides protection that everyone is treated fairly.

Thank you for that reply john-we should all await the booklet before making judgements
I must call you out on the first sentence because I like to know the truth. I cannot see how a NZO employee can have the same interest as any shareholder.
You are far more likely to be aligned more with the interests of the majority shareholder and that of NZO employees. In this case minority shareholders are the target as enshrined in company law and as you say are protected by the regulatory process.
The companies act has provision for the rights of minority shareholders and if appropriate we will use these provisions

However it would be preferred if co-operation to get a good outcome for all parties is used rather than conflict and the initial offer is manifestly inadequate

[Joshuatree]

Yes what financial interest, bonus etc will you and others gain from this attempted sale if it does go ahead, in the interests of transparency you claim to be.Thank you.

[Wiremu]

You will note it is also a court-supervised process, which provides protection that everyone is treated fairly.

The court-supervised process has nothing to do with seeing that everyone is treated fairly. It's role is to ensure the process is followed, which has nothing to do with pricing or valuation which are the real concerns.

[CD_CHCH]

Nice try but my interests are the same as any other shareholder since you asked. Not only that, any interest in the transaction must be fully disclosed in the booklet, which will be sent to everyone. As I said earlier in the week, the answers to questions about valuations and all interests associated with the transaction will all be disclosed. No one has anything to hide and the reasons the directors feel their recommendation is correct will all be set out. It's always good to hold boards to account, and debate viewpoints, and the regulatory process expects you will find the information coming your way useful in informing the debate.

You will note it is also a court-supervised process, which provides protection that everyone is treated fairly.

Thank you for your input John, and I accept that we have not seen or reviewed the information related to the valuations and all interests associated with the transaction that will be disclosed.

However, here is a very simplified example that may help NZO and OGOG see the matter from the shareholders point of view:

Let's assume you have a home worth say $1,000,000 and I tell you I want to purchase your home for $750,000 because that's the figure a valuer I chose came up with, and the purchase price also includes all your contents and the cars in the garage, would you not feel a little hard done by?

[digger]

Digger now that you are a member-I stopped my subscription after the TTP takeover as I didn't get practical help-can you find out what happens if they don't get 90%.
Don't forget to check your private messages

The PPP thing was Australian so I can not see how that applies to an NZ company

[fish]

The PPP thing was Australian so I can not see how that applies to an NZ company

The 90% was Sea taking over TTP-transtasman properties.
This looks as if it was changed to 75% in 2014 so we are all getting confused

[mistaTea]

However, here is a very simplified example that may help NZO and OGOG see the matter from the shareholders point of view:

Let's assume you have a home worth say $1,000,000 and I tell you I want to purchase your home for $750,000 because that's the figure a valuer I chose came up with, and the purchase price also includes all your contents and the cars in the garage, would you not feel a little hard done by?

Yes indeed!

And in addition to existing assets worth $1M, planning is underway to build a new Decile 10 school (Ironbark) nearby which, if built, would certainly increase the value of the property significantly.

[JohnPagani]

Yes what financial interest, bonus etc will you and others gain from this attempted sale if it does go ahead, in the interests of transparency you claim to be.Thank you.

All my interests have to be disclosed in the booklet. I hold a small number of ordinary shares. I can only trade with permission in times when there is no inside information (e.g. right after we have declared results), so they are less liquid than yours. I also have some ESOP shares, which are out of the money - if the scheme goes ahead, the money I have paid towards them will be refunded. No other interest or bonus, although I deserve one for being awesome.:) I'll mention your recommendation to the boss.