Kupe valuation FY2016: Part 1 Oil & Condensate (Iteration 4 - pre-reval. field value)
Quote:
Originally Posted by
Snoopy
Just to reprise. The re-evaluation of the Kupe petrochemical field looks good for GNE. But it appears my modelling has (largely) already taken this into account. Nevertheless there is one benefit I have not yet modelled. Because the field will last longer, that means the field depletion and depreciation charges incurred to date should be spread out over a longer time frame. If I add two years into that timeframe, here is what happens.
Year |
No. of Oil & LPG |
Oil Barrel |
Kupe Condensate |
Resource Depreciation |
Net |
|
Equiv barrels |
Price USD |
Revenue |
and Amortization |
Proceeds |
2016 |
640000 |
76.6 |
$64,189,474 |
$20,610,081 |
$43,895,113 |
2017 |
620000 |
45 |
$39,558,818 |
$19,286,913 |
$20,271,905 |
2018 |
579000 |
45 |
$34,571,102 |
$18,048,694 |
$16,522,408 |
2019 |
537000 |
45 |
$30,004,886 |
$16,883,967 |
$13,114,919 |
2020 |
558000 |
45 |
$29,176,617 |
$15,805,632 |
$13,370,986 |
2021 |
476000 |
45 |
$23,291,139 |
$14,790,910 |
$8,500,229 |
2022 |
393000 |
45 |
$17,995,312 |
$13,841,334 |
$4,153,978 |
2023 |
434000 |
45 |
$18,596,859 |
|
$18,596,859 |
2024 |
393000 |
45 |
$15,758,884 |
|
$15,758,884 |
2025 |
269000 |
45 |
$10,094,114 |
|
$10,094,114 |
2026 |
227000 |
45 |
$7,971,221 |
|
$7,971,221 |
2027 |
145000 |
45 |
$4,764,859 |
|
$4,764,859 |
2028 |
62000 |
45 |
$1,906,558 |
|
$1,353,062 |
Total |
5.333E06 |
|
$298,195,663 |
$119,273,530 |
$178,922,132 |
PV per share |
|
|
|
|
$0.18 |
PV per share (tax paid) |
|
|
|
|
$0.13 |
Not exciting. But that extra cent added onto the value of each Genesis share is still worth noting.
I have done a backflip on my previous opinion that the value of Kupe prior to the October 1st 2015 valuation was not worth detailing. Iteration 4 is not a better version of Iteration 3 (Iteration 3 still stands as my best guess valuation).
For Iteration 4 I have taken a couple of years of production (827,000 barrels of oil equivalents based on actual oil and LPG) which roughly approximate the increase in 2P resrves just announced. There are several ways I could have done this. I have chosen to take out the old FY2023 and FY2024 (434,000+393,000=827,000). In turn I have moved the production from what was 2025 and beyond up the table. This adjustment preserves the expected production decay, but sees the field life shortened by two years. Consummate with this, I have returned the depletion and depreciation write off so that it all expires after five years again, not seven.
Year |
No. of Oil & LPG |
Oil Barrel |
Kupe Condensate |
Resource Depreciation |
Net |
|
Equiv barrels |
Price USD |
Revenue |
and Amortization |
Proceeds |
2016 |
640000 |
76.6 |
$64,189,474 |
$28,854,113 |
$35,651,150 |
2017 |
620000 |
45 |
$39,558,818 |
$27,001,679 |
$12,556,139 |
2018 |
579000 |
45 |
$34,571,102 |
$25,268,171 |
$9,302,931 |
2019 |
537000 |
45 |
$30,004,886 |
$23,645,954 |
$6,358,932 |
2020 |
558000 |
45 |
$29,176,617 |
$22,127,884 |
$7,048,733 |
2021 |
476000 |
45 |
$23,291,139 |
$0 |
$23,291,139 |
2022 |
393000 |
45 |
$17,995,312 |
$0 |
$17,995,312 |
2023 |
269,000 |
45 |
$11,526,624 |
$0 |
$11,526,624 |
2024 |
227,000 |
45 |
$9,102,460 |
$0 |
$9,102,460 |
2025 |
145,000 |
45 |
$5,441,085 |
$0 |
$5,441,085 |
2026 |
62,000 |
45 |
$2,177,162 |
$0 |
$2,177,162 |
Total |
4.506E06 |
|
$267,350,449 |
$126,897,802 |
$140,452,648 |
PV per share |
|
|
|
|
$0.14 |
PV per share (tax paid) |
|
|
|
|
$0.10 |
We can see the October 1st 2015 revaluation has resulted in the value per share of Genesis increasing by 3cps (condensate component only)
SNOOPY
Kupe valuation FY2016: Part 2 Gas (Iteration 4- pre-revaluation field value )
Quote:
Originally Posted by
Snoopy
As with the oil and condensate, the gas field proportion of depletion and depreciation can likewise be spread out over 7 years, not 5. So here are those changes.
Year |
Kupe Gas |
Value |
Resource Depreciation |
Net |
|
(GJ) |
Received |
and Amortization |
Proceeds |
2016 |
7.00E06 |
$47,320,000 |
$18,889,919 |
$28,480,081 |
2017 |
7.00E06 |
$44,282,056 |
$17,677,187 |
$26,604,869 |
2018 |
6.50E06 |
$38,479,209 |
$23,159,236 |
$15,319,973 |
2019 |
5.1E06 |
$28,253,093 |
$15,480,295 |
$12,772,798 |
2020 |
6.3E06 |
$32,660,243 |
$14,486,460 |
$18,173,783 |
2021 |
6.3E06 |
$30,563,455 |
$13,556,421 |
$17,007,026 |
2022 |
5.1E06 |
$23,153,418 |
$12,686,106 |
$10,467,312 |
2023 |
5.6E06 |
$23,981,181 |
$0 |
$23,791,181 |
2024 |
5.6E06 |
$22,263,788 |
$0 |
$22,263,788 |
2025 |
3.5E06 |
$13,021,533 |
$0 |
$13,021,533 |
2026 |
3.2E06 |
$11,141,075 |
$0 |
$11,141,075 |
2027 |
2.3E06 |
$7,493,556 |
$0 |
$7,493,556 |
2028 |
8.00E05 |
$2,540,580 |
$0 |
$2,540,580 |
Total |
6.43E07 |
$324,963,186 |
$116,306,640 |
$208,656,546 |
PV per share |
|
|
|
$0.22 |
PV per share (tax paid) |
|
|
|
$0.16 |
For Iteration 4 I have taken a couple of years of production (11.2PJ) which roughly approximate the increase in 2P resrves just announced. There are several ways I could have done this. I have chosen to take out the old FY2023 and FY2024 (5.6PJ+5.6PJ=11.2PJ). In turn I have moved the production from what was 2025 and beyond up the table. This adjustment preserves the expected production decay, but sees the field life shortened by two years. Consummate with this, I have returned the depletion and depreciation write off so that it all expires after five years again, not seven.
Year |
Kupe Gas |
Value |
Resource Depreciation |
Net |
|
(GJ) |
Received |
and Amortization |
Proceeds |
2016 |
7.00E06 |
$47,320,000 |
$26,445,887 |
$20,874,113 |
2017 |
7.00E06 |
$44,282,056 |
$24,748,061 |
$19,533,995 |
2018 |
6.50E06 |
$38,479,209 |
$23,159,236 |
$15,319,973 |
2019 |
5.1E06 |
$28,253,093 |
$21,672,413 |
$6.580,680 |
2020 |
6.3E06 |
$32,660,243 |
$20,281,044 |
$12,379,199 |
2021 |
6.3E06 |
$30,563,455 |
$0 |
$30,563,455 |
2022 |
5.1E06 |
$23,153,418 |
$0 |
$23,153,418 |
2023 |
3.5E06 |
$14,869,488 |
$0 |
$14,869,488 |
2024 |
3.2E06 |
$12,722,164 |
$0 |
$12,722,164 |
2025 |
2.3E06 |
$8,557,007 |
$0 |
$8,557,007 |
2026 |
8.00E05 |
$2,785,269 |
$0 |
$2,785,269 |
Total |
5.31E07E07 |
$283,645,402 |
$116,306,640 |
$167,338,762 |
PV per share |
|
|
|
$0.17 |
PV per share (tax paid) |
|
|
|
$0.12 |
We can see the October 1st 2015 revaluation has resulted in the value per share of Genesis increasing by 4cps (gas component only).
The total boost to per share value of Genesis (gas and condensate) as a result of the field revaluation is therefore 7cps, based on this particular valuation model.
SNOOPY
Those Mystery Imputation Credits
Quote:
Originally Posted by
Harvey Specter
I know Roger(??) is concerned about the impuation credit position going forward so lets have a more detailed look.
Per the stats on p81, they have 0.1m of IC's so not enough to impute a dividend so they will have to pay more tax (before 31 March 2016) to be able to pay this dividend.
A positive company Imputation Credit balance means that the company concerned has already paid their legal tax requiremnet to IRD. This means that when those profits are passed on to shareholders, by the way of dividends, that the tax is paid (barring a wash upwithholding tax) so that the company profits are not taxed twoice (at company level and owner level).
Provisional tax is normally paid in three bites, with a wash up settlement due months later on, in the February following the close of each tax year. Any company would no doubt have a very good idea of what their provisional tax bills will be. Am I correct in saying that this 'future tax due' is recorded as a deferred tax liability (p81, AR2015)?
Can the deferred tax liability, if it is too low, be a measure of excessive forward payment of tax that will allow unrealistic expectations of fully imputed dividends going forwards?
Quote:
But lets look at their tax position. Current Tax is an asset of $16.9m (Note 8 AR2015, Snoopy correction from $16.2m) which given their third installment wasn't due to after year end, means they have already prepaid, not just their final P3 payment, but $16m in excess of that, to be able to be used for 2016. And how much tax do they have to pay a year. Current tax expense per the notes is only $16m, so if 2016 is the same, then they have already prepaid their full 2016 tax liability,
If you look under note 8, you will see that the underlying current year tax was $37.6m (not $16.9m). There was a significant tax remediation settlement of $18.5m, based around Tekapo canal remediation costs. It is this, I believe, that has boosted the imputation credit balance to allow up to:
$18.5m/0.28 = $66m
of profits to be paid to shareholders with full imputation credits, when this otherwise would have required -further- huge prepayments by Genesis to the IRD to achieve the same result.
Quote:
even though they need to make an additional payment to be able to impute the 2015 final dividend (that means to be able to impute the final 2015 dividend, they will be paying their 20167 tax liability early!!!). This is not sustainable unless they expect their tax liability to increase significantly going forward or they change their imputation ratio.
Maybe the imputation of dividends is even more precarious than you thought? I think the dividend going forwards (all dividends from here) will probably only be 50% imputed. That would be a major blow to dividend hungry shareholders
SNOOPY