Profit = Revenues less costs less interest.
So what is Tui worth to NZO NPV? I do not know but you all seem to but don't want to post it ?
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Fair call others oilers i like are AED/NWE/AWE/BPT/COE, but NZO undilluted @ say 260m @ $1 = $260m MC (very simplistic terms)
We get 9 months revenue to balance date (6250 X 365 x 9/12 = 1.7mmbo)
for 1 July - 31 March (take off a month or so to be conservative, say 1.5mmbo & for the ultra conservative reduce to 1.0m).
Using $US70 @ NZ/USD 0.70 (again very simplistic thinking) = $100 per barrel or $100m revenue
Is a $260m MC reasonable for a company generating that sort of revenue?
It won't last at those levels for much more than a year, but with Pike & Kupe to come online 2008/09, as a yield type play we can now start to apply a forward P/E ratio to value NZO.
Now, lets estimate the numbers, say EBITDA of $80m?, & NPAT of $52m?(no tax due to continuity of losses carried forward).
I used NPAT of $52m to illustrate EPS @ 20c, & as of today the market says a P/E of 5 @ $1?
Naw, to cheap for my mind, givien the POO & FX rates allow for more upside & these figures exclude other projects...
Conclusion: $1 today is buying more than $1, real question is how much more are you getting?
NB, Figures are all illustrative only, please DYOR.
I have quickly updated waihokke's (spelt along those lines) spreadsheet by applying current market rates:
-oil from $55 to $75
-exchange rate from 0.67 to 0.70
-NPV starting from now rather than 3 years
-updated the recoverable amount of oil from 25mmboe to 32mmboe
-updated number of shares to 262.5 million
All other factors left constant. The factors above have potential for upside, but also for downside.
Given this, it gives NZO a NPV of $177 million = 67.5 cps
All in all, this is a high case scenario.
A couple of things i noticed in the spreadsheet that i didnt fix were:
1) The oil flows were for 7 years, rather than 18 expected this will adversly affect the NPV of the project.
2) Tax benefits were not included, this will positively affect the NPV.
For the above two, I havent calculated net effect, as it was relatively quick fix of the current spreadsheet, but you get the overall jist of things.
What on earth discount were you using, NPV of $177m = one full year of revenue @ 50k BOPD & this project will go for around 10 years!
Remember the oil is flowing NOW, so the discount applied should be low - mid single digits.
The Tax benefit is around $40m or around 14cps itself.
I would also argue the POO will be higher & the FX rate lower...
Look at my earlier post with extremely conservative figures!
PS Its Waaihoek :D
Looking to shortly increase my oil weighting....but not sure wether to buy more PPP or NZO... or possibly a Aussie oiler.....probably tending towards PPP at this stage....any guidence out there.?
The real value of the NZO SP will only be reflected in the market once NZO starts making a regular return to shareholders. No amount of blue sky drilling horizons will get us there. Neither will Tui pumping, whether it be 1000 barrels per day or 100,000 barrels per day if that revenue goes into drilling risky wells and shareholders don't see any of it. What's needed is a better than ~15c/share dividend per year for the next few years to represent a better investment on $1.50 than putting your money in the bank. For a distribution of 15c next year NZO would reap 10X that amount $1.50 in exercised options, which is good for NZO and good for their shareholders (win-win). Continued dividends over the life of Tui, Kupe etc at 15c or above will underpin the real SP at a minimum of around $1.50. Good for everyone I reckon.
Arjay,
Even the "mature" low growth companies on the NZX, like CMO/STU don't quite pay 10% & to be honest i would like to think NZO could do much better by buying a bigger slice of the action in a JV with AWE on say a 50/50 basis.
We also have to consider growth by acquistion, once we ditch the coalmine.
We are only just a producer, & if we sit back & just become a bank, like PPP & NWE we will get taken over, as the cash in the bank funds itself!
Croseus - Look at AED/NWE - or AWE/PPP - i like these pairings...
haha cheers for the spelling!
discount rate used is 9% which was originally used, and i still feel is appropriate..
the tax benefit being worth 14cps is good, but will probably be offset in the calculation from the short amount of time being used to recover oil in spreadsheet, ie 7 years instead of 18.
i hope poo is higher too, but if we were thinking that and want to bet on it, we should be taking long positions on it :D :D
i was so so close to taking out a forward contract for 2-3 years when nzd hit around 78 cents...but the banks only did 6 months contracts (although would be looking good now) and other forex places just laughed at the young student wanting to buy that sort of usd...
have you got Waaihoek's original spreadsheet shasta?
Hmmm i did have the ones he did on FIXX donkeys ago...
NPV probably isnt the best valuation method for a company NOW producing, as i don't believe any project should be discounting CASH.
Anyone know an industry average gross margin, or a reasonable idea of the costs to date?
I'd love to know the split between Capex/Maintenance, as with the loan repayments the interest is easy to work out.
Thanks Shasta, I will research NWE and AWE today, I remember a poster maybe Shrewd Crude was keen on AWE but had'nt even heard of NWE.
Cheers.
On another note, I see WEN (NZ Listing,) has recievied a permit for the Kotuku Oil Seeps, from little acorns maybe ?
Waaihoek valued PRC at $120m and Hector/Taranui at $40m = $160m at a low base valuation. Hector/Taranui now = 0m and NZO's PRC stake is valued in the market at $55m.
So it's $105m less or 52.5 cents less per share on his valuation.
Using the high case scenario, PRC was valued at $201m and H/T at $66m = $267m.
So that's $212m less or $1.06 less per share.
Brrrrrr... she's a cold morning, isn't she? Good reality check?
Balance your a share knocker freak.You must have got your schooling from religious zealous. You have the intended ability to see only what you want to find. I am left wondering why the NZO SP is not about 10 cents after reading your supposed balance comments. Could you shed any light on why it is still over a dollar dispite your many attempts to get it lower.
Finally is there any difference between Balance,Sniper,etc,etc, and Gerymouth Petroleum?
the high case scenario was bassed on oil at $55 but as we all know its well over $75 presently and opex when it meets next tuesday is unlikely to increase supply. $55 is looking a tad conservative now balance wouldnt you agree ?
Between Balance and Boysey we have 2 ends of the Spectrum....... not being a expert on NZO could someone post a value....which includes
Debt Owed
Cash in the Bank..plus estimate of Tui Cash going forward ( have they Hedged at a lower level then current mkt)
Forward expense ... commitments for future drills etc
NAV if the options go tits up nxt year
NAV if the options are taken up
Pike.. hmmn ... have my doubts... can that be a seperated assett...
and Shares on issue, ( I presume there a millions of Director options and rights lurking )
Cheers Croesus