I would have thought it added a useful amount of diversity to their resource base. we should go back and see what they said when they bought it.
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I would have thought it added a useful amount of diversity to their resource base. we should go back and see what they said when they bought it.
The possibilities for the Kupe field are that they find the gas reserves are larger than previously thought, or they are not larger, but an additional well could tap the remaining reserves faster. It is very unlikely that they would find the reserves are diminished on what was previously counted. The upfront costs of drilling are not cheap, and hence the reason for the review.
Couple the positive aspects of this drilling programme along with the government's stated policy of no fossil fuel electricity generation after 2030, and it would seem prudent for Genesis to consider selling their interest ion Kupe at a time that the value is increasing. I see this as having more upside for Genesis than potential downside. If they keep their interest in Kupe as is, it will be costlier in the short term, but will increase earnings long term. If they sell now they will have a small cash mountain (special dividend perhaps), but the ongoing cost of their fuel for Huntly units 5 and 6 will increase. However these units have only 10 years left if the government has its way.
I hope they do decide to sell now.
A lot of the attractiveness of Genesis depends on your own circumstances. For anyone in their 70s for example who just wants an income stream then they are pretty good.
If you are just going to stick them in the draw from 30 years then maybe not so much. However at 7% plus it does not take that many years to recoup your initial investment back in dividends. They have plenty of time to transition away from thermal, they recently did a deal with tilt for example
Agreed. Sold out of AGL not long after their dividend. The Superannuation funds in Aust anyway have woken up to the climate risk on coal power. From now on in Aust at least, AGL for example is now a dividend trap in my view with medium term capital losses accruing to the shares.
The Super funds in NZ haven't fully woken up yet to the Climate risk of coal yet IMO, so while Huntly's baseload generation is needed, the dividend is safe. It comes down to how fast AGL and Genesis can transition to renewables eg gridscale batteries with AGL and wind with Genesis via TILT.
I also sold out of Genesis with medium term capital losses in mind recently before this announcement. Gonna miss Genesis, it's been good to me, but until the Govt wakes up to the transition fuel argument for Gas and its needed exploration in NZ - and the baseload generation puzzle is resolved with Tiwai and the possible Pumped Hydro option which looks tempting to the Govt, I'm out for now. Maybe if the transition to renewables accelerates markedly I'll reconsider, but renewables are somewhat on hold with all the uncertainty at the moment. Time will tell. Good luck to holders...
The GNE term deposit is performing well Beagle. Very strong weekly uptrend. Still 10% upside to hit last years highs so definitely lagging its peers though.