The best shake up would be if Dam Jenny was replaced.
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It is the start of facing up to the threats of solar, batteries and IT changes which are starting to drop margins on domestic customers and pose a threat. Never buy shares in a company chaired by an x politician from bitter experience.
But I am referring to company value increase as a result of greater 2P reserves than previous assumed.
No matter which way you look at it, a 33% increase in something is a 33% increase.
If you over-estimated gas reserves by 33%, knock that much off. This isn't intended to be a super-precise calculation. Just an estimate
((($0.13 + ($0.16*67%)) / 1.33) x 33% = $0.06 increase in company value per share.
Note that this uses the new gas figure you changed since my earlier post
I also believe the oil price in later years will be higher than you model, it's not some rubbish heavy crude, so some upside potential there IMO
you are kidding me. Those at the forefront are actually doing it , not trying to block it thru denigrating it . Those at the forefront are independent of the energy market
If you want to account for that you should take 33% off my previous field size estimate. Not add 33% to current field size I am modelling. My previous overestimate was due to lack of field data on what the size of the field was back then.
Yes I could have done that, and adjusted my historical valuation of Kupe downwards. But what's the point? That overestimate is now historical. I can always only use the best data I have at the time.Quote:
If you over-estimated gas reserves by 33%, knock that much off.
Apologies for changing the figures on you. I put that unfinished post in as a placeholder. There was a hint there that I was planning to adjust it later.Quote:
This isn't intended to be a super-precise calculation. Just an estimate
((($0.13 + ($0.16*67%)) / 1.33) x 33% = $0.06 increase in company value per share.
Note that this uses the new gas figure you changed since my earlier post
Those figures for gas (16c) and petroleum (13c) are the total value of the 31% equity accounted wholesale price (for gas) and pre-refining price (for oil) of the Genesis share of the Kupe field over the lifetime of the entire field. Sure the changes are worth millions of dollars. But when you spread those new millions over the billion shares on issue, the changes in value for GNE shareholders are still small.
Multiplying either of those two figures by a fraction (like you did), assumes the same pricing profile over the life of the field. With oil, that is certainly not true. With gas it is nominally take or pay, so that might be true. But I wouldn't be surprised if there is some reset price clause after say 5 years (from field start in 2011). In fact I have assumed this in the revised gas model data (Iterations 2 and 3).
Furthermore since there is no call to suddenly boost production, all of this gain from new resources would be in future years and that would be subject to 'time value for money' discounting. Current production of oil profitability is significantly increased by prudent hedging. I don't think the increased field contents would even sell for half of todays prices (and that is before time value of money discounting).
You may be correct xafalcon. I still haven't found any definitive source for that 'sweet crude premium' that Kupe oil supposedly enjoys. My oil price for FY2017 is almost certainly too low in any case. I know this because we are told that Genesis has the policy of some hedging 12 to 24 months out.Quote:
I also believe the oil price in later years will be higher than you model, it's not some rubbish heavy crude, so some upside potential there IMO
But it may be my US$45 (based on $NZ1 = 0.66US) in latter years is too high. The crude price is currently $US35. So I am modelling a price recovery of some 30% from today's prices.
SNOOPY
I am talking about the 'Schoolgen' program horus. This is the one where Genesis have an equity stake in the panels on School rooftops. And yes, Genesis are actually doing it right now.
The fact that Genesis aren't offering to buy the solar energy from your roof horus, relates to your panels not being numerous enough AND/OR not being able to guarantee a boost in supply at peak usage time.
SNOOPY
Summary: My slightly crude and possibly still overestimating of reserves Kupe model shows:
1/ the present value of Genesis oil from Kupe (equity accounted share, post tax) to be 13cps AND
2/ the present value of Genesis gas (equity accounted share, post tax) to be 16cps (from Iteration 3).
These are the 'right now' figures, as best as I can ascertain them, with the information I have (interpolated data from a bar graph in the NZOG annual report for FY2015).
SNOOPY
FYI this is what my formula did in red - the division of your theoretical value contribution per share divided was by 1.33 to remove the "extra" 33%
((($0.13 + ($0.16*67%)) / 1.33) x 33% = $0.06 increase in company value per share.
This value was then multiplied by 33% in blue to calculate the "field increase effect" on company value per share, as 33% was the magnitude of the increase
My calculation was never intended to be super accurate. I just wanted a guide to better understand the effect on company value that the increased 2P reserves provided.
Having thought more about using your pre- v's post- tax figures, I think pre-tax is more appropriate as asset appreciation isn't taxed until it is sold and partially distributed as a dividend
So using your most recent figures, the increased company value becomes
((($0.21 + ($0.22*67%)) / 1.33) x 33% = $0.09 increase in company value per share, or 4.7%
PS. I really do appreciate the well researched and clearly explained analysis that you provide us with Snoopy :)
I notice that GNE have not yet included any change in Gas reserves into their own calculations of company assets. Maybe that is because the falling gas price almost exactly cancels out the increase in gas quantity.