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  1. #1901
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    Quote Originally Posted by Nor View Post
    Still think it's ridiculous. Refinery can't make a profit because it's cheaper overseas. But is there anyway of getting it here? No, at least not in the required quantities. Were it not for onerous agreements refinery is ideally placed to make such huge profits that it would be regulated. If it was regulated at least there would be a return.
    Before anyone says it I will save them the bother - I don't know what I'm talking about.
    Nor, with all due respect you hit the nail on the head with the last sentence!

    It's not because it's cheaper overseas, it's because it's cheaper to land refined fuel here in NZ.

    The 'onerous agreements' have nothing to do with it with the exception they are getting a 143 million dollar subsidy to stay alive right now, without the agreement they were dead a long time ago.

    Take all agreements away and you're left with the fact that you cannot ship crude to a beach in Northland, then turn it into a variety of high quality refined products and distribute around the country for less than you can pick up the phone and order finished product direct to NZ.

    No different to any other commodity product or whatever. Good luck to importing raw materials and then manufacture into high quality commodity products here with a labor productivity rate of 60% of the OECD average and doing it cheaper.

    Throw in having to operate under a quasi communist regime and then you're really screwed.

  2. #1902
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    Quote Originally Posted by Waikaka View Post
    NZR has been pretty disappointing but over the years I have found that staying the course, long term things should settle down. I just about always get the timing wrong with these things so always have cash to top up as they drop. Lot easier doing this now that low brokerage offering are out there.

    Started buying small amounts of NZR in Oct 2019 (no talk of Covid then!) and have only bought since then. 2nd worse stock in my diversified portfolio of junk behind Transocean.

    Sharesight tells me I am 56% down on NZR and snip of purchases below shows how dedicated I am to gutter stocks
    Attachment 12034

    Off topic but my other stocks have done well and overall not unhappy.

    I didn't start it and again off topic but Ill be honest I pivoted post covid to buying a decent amount of:
    SLB: NYSE
    XOM: NYSE
    CVX: NYSE
    STO:ASX
    WPL:ASX
    KEX: NYSE

    Astonishing SLB can still pay quarterly dividends at a time like this. Remarkable company and good to work with.

    Plenty of fish in the sea so happy to come back and check on NZR in a few years.
    Hope you're not paying for Sharesight, bloody awful. Few minutes in Google Sheets and you can build something far better than their rubbish.

    Gutter stocks are great and will outperform if you have the right ones.

    However to be worth something an investment must produce cashflows not fake earnings due to aggressive accounting. Considering NZR has produced no cashflow over the last 10 years that hasn't been invested back into the plant and quickly destroyed, essentially it's worthless.

    Some value in some of the assets but weighed against the debt and the cost of getting rid of the rusting heap as well as uncertainty of the costs of running a terminal etc it's just pure speculation.

    Compare it's actual cash generation free to be distributed to investors over 10 years VS Steel and Tube. Now there is a pristine gutter stock.

    Now those other stocks you mentioned, you will do exceptionally well with them.

  3. #1903
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    Quote Originally Posted by SailorRob View Post
    Nor, with all due respect you hit the nail on the head with the last sentence!

    It's not because it's cheaper overseas, it's because it's cheaper to land refined fuel here in NZ.

    The 'onerous agreements' have nothing to do with it with the exception they are getting a 143 million dollar subsidy to stay alive right now, without the agreement they were dead a long time ago.

    Take all agreements away and you're left with the fact that you cannot ship crude to a beach in Northland, then turn it into a variety of high quality refined products and distribute around the country for less than you can pick up the phone and order finished product direct to NZ.

    No different to any other commodity product or whatever. Good luck to importing raw materials and then manufacture into high quality commodity products here with a labor productivity rate of 60% of the OECD average and doing it cheaper.

    Throw in having to operate under a quasi communist regime and then you're really screwed.
    Seems obvious to me that there is not enough capacity in NZ to land all we need from overseas because if there was how could converting Marsden to an import terminal work? There would be no demand for it if we already had the capacity.
    As for the subsidy, very generous I don't think. Without regulation and without these agreements the refinery could make much more.

  4. #1904
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    Quote Originally Posted by Nor View Post
    Seems obvious to me that there is not enough capacity in NZ to land all we need from overseas because if there was how could converting Marsden to an import terminal work? There would be no demand for it if we already had the capacity.
    As for the subsidy, very generous I don't think. Without regulation and without these agreements the refinery could make much more.
    Of course there is always demand for a cheaper service irrespective of capacity. With a pipeline to Auckland from a deep water terminal in the North you can compete with any other capacity.

    That aside, correct the capacity does not exist without the Marsden Point terminal. So as Refining NZ do you import oil and refine on the beach then pump the product down the line, or do you import finished product far cheaper and do the same thing?

    With the same regulations that Refiners face in Asia or refinery could make much more (more than nothing)? Yes, but what relevance does this have to anything?

    Without 'these agreements' the refinery could make much more? I think you need to really think this through. Forget the agreement and think of the economics and the ownership. If the oil companies let it get shut down then it's pretty obvious that it's uneconomical.

    You've been through the last 15 years of financials and seen how the floor and cap have affected income NET over this time?

  5. #1905
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    Why do we need to invest in a cheaper import capacity when, as you admit, capacity to 100% import does not exist, and so the refinery is vital? Cheaper for everyone except the shareholders that is who are expected to write off a perfectly good refinery which the country is currently dependent on and build something else.
    You suggest the companies might just shut it down.
    You want me to forget the agreements and concentrate on the economics, but in the next sentence you want me to go back to the cap and floor. A bit circular. Like this discussion is becoming.

  6. #1906
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    Quote Originally Posted by Nor View Post
    Why do we need to invest in a cheaper import capacity when, as you admit, capacity to 100% import does not exist, and so the refinery is vital? Cheaper for everyone except the shareholders that is who are expected to write off a perfectly good refinery which the country is currently dependent on and build something else.
    You suggest the companies might just shut it down.
    You want me to forget the agreements and concentrate on the economics, but in the next sentence you want me to go back to the cap and floor. A bit circular. Like this discussion is becoming.
    No, the companies WILL shut it down, very soon. There is no other option.

    No I meant without the NZR facility the capacity doesn't exist, with it there is plenty of import capacity as we will find out soon. They could go to an import facility to supply Auckland and Northland right now and more capacity isn't too hard to bring on nor too expensive (all of which we will find out over the next 12 Months).

    The shareholders are not expected to write off the Refinery. They HAVE already written it off. The price to book will immediately tell you this. They just haven't written it off enough but that will come.

  7. #1907
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    Quote Originally Posted by Nor View Post
    Why do we need to invest in a cheaper import capacity when, as you admit, capacity to 100% import does not exist, and so the refinery is vital? Cheaper for everyone except the shareholders that is who are expected to write off a perfectly good refinery which the country is currently dependent on and build something else.
    You suggest the companies might just shut it down.
    You want me to forget the agreements and concentrate on the economics, but in the next sentence you want me to go back to the cap and floor. A bit circular. Like this discussion is becoming.
    Nor, what people are not factoring in here is what if the margins suddenly increase back to very profitable levels again? It means we are in the MONEY again. Like if there is huge political uncertainties overseas, or wars etc. and things start turning to custard. Some might say "yeah right" BUT things can change very quickly! Yes we are on a course at the moment that looks like a terminal only BUT and there is still a BIG BUT I believe....time will tell

  8. #1908
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    Yes when I read through the thread I noted how quickly things can change even just in the normal course of business. Wars and revolutions a (deplorable ofcourse) bonus. Recover in Asia could come very soon.

  9. #1909
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    Quote Originally Posted by Sharp737 View Post
    Nor, what people are not factoring in here is what if the margins suddenly increase back to very profitable levels again? It means we are in the MONEY again. Like if there is huge political uncertainties overseas, or wars etc. and things start turning to custard. Some might say "yeah right" BUT things can change very quickly! Yes we are on a course at the moment that looks like a terminal only BUT and there is still a BIG BUT I believe....time will tell
    Things can change very quickly, if margins improve it will make very little difference however.

    The entire point is that returns have not been generated over the entire 13 or so year cycle, when margins are high it all goes back into the plant.

    If margins improve significantly then the cash will be put aside for the conversion or maybe they would be stupid enough to complete the 2022 shutdown which would destroy all the cash and try and continue but obviously that wont work for long.

    Nothing will go to shareholders that's for sure. You'll never get anywhere predicting global macro events, the best chance of making money would be to take me up on the wager you offered regarding the Refinery closing but I never did hear from you.

    Nor there are such once in a lifetime incredible opportunities out there right now, you've read this entire thread, if you put that kind of effort into something else that's actually worthwhile it would be rewarding.

    Refinery shares could go back to $1 or more in a heartbeat. No argument there.

    Money placed on red or black on a roulette wheel could double too. Speculation is not investing.

    If you can read a cash flow statement then you could read 13 of them. And if you do that, we would not be having this discussion.

  10. #1910
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    Quote Originally Posted by SailorRob View Post
    Things can change very quickly, if margins improve it will make very little difference however.

    The entire point is that returns have not been generated over the entire 13 or so year cycle, when margins are high it all goes back into the plant.

    If margins improve significantly then the cash will be put aside for the conversion or maybe they would be stupid enough to complete the 2022 shutdown which would destroy all the cash and try and continue but obviously that wont work for long.

    Nothing will go to shareholders that's for sure. You'll never get anywhere predicting global macro events, the best chance of making money would be to take me up on the wager you offered regarding the Refinery closing but I never did hear from you.

    Nor there are such once in a lifetime incredible opportunities out there right now, you've read this entire thread, if you put that kind of effort into something else that's actually worthwhile it would be rewarding.

    Refinery shares could go back to $1 or more in a heartbeat. No argument there.

    Money placed on red or black on a roulette wheel could double too. Speculation is not investing.

    If you can read a cash flow statement then you could read 13 of them. And if you do that, we would not be having this discussion.
    Well actually we would be having this discussion. In fact those poor results are the reason we're having this discussion.
    Returns have not been generated because the agreements prevent it. Returns are capped and not inflation adjusted. Under a different operating model they could make a profit every year. Cost plus a margin. And/or ownership of the crude and products is another obvious model. Nevermind how much it costs overseas the motorist is not going to put his car on a boat to fill up. We will have to disagree about whether nz has capacity to import all it's requirements in finished form at present. But if it did there would be little point in converting Marsden, may as well just close it down, and nobody would even notice.

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