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Thread: NZR

  1. #1771
    Junior Member
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    If it was truly a sunset industry in terminal decline then we would see a sustained decrease in oil consumption in NZ. Apart from a GFC related dip NZ demand is higher than ever (snip from MBIE EDF 2018). I would hazard that NZR will still be refining in 10 years.

    Attachment 10945

    Regarding earnings


    Average FCF since 2010 has been $11 million a year. Significant plant upgrades and shut downs are out of the way so I would hope the next 10 year are more profitable with more material processing more cheaply.
    If I take out the years around Te Mahi Hou (2013 & 2014) and the shutdown (2018) which happen infrequently (10 yr +) then average FCF is $76.5 million

    Large CAPEX has been spent on:
    Jet tank farm upgrade (2019-ongoing)
    Shut down (2018)
    Crude shipping project (ongoing)
    RAP upgrade (2019)
    Te Mahi Hau (2015)

    All of these projects have or aim to move more volume, more efficiently, exactly what a tolling refinery should be doing. More oil through means more money. Expensive running a refinery but they seem to do it well.

    Australian refineries are a bit different as they have multiple refiners, some consolidation of smaller refiners is happening. As we only have one refiner it is in a better position. Also note when the Australian refineries close they turn into import terminals, unlikely that NZR will stop refining but if they did, there would still be significant value in their infrastructure (port, pipeline and tank farms).

    80% of our imported refined oil comes from Singapore and South Korea. It is likely that ultimately these mega refineries will scale sufficiently to drive NZR out of the refining business but it wont happen in the medium term with the sweet deal BP, Z and Mobil.

  2. #1772
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    auckland, , New Zealand.
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    Quote Originally Posted by Waikaka View Post
    If it was truly a sunset industry in terminal decline then we would see a sustained decrease in oil consumption in NZ. Apart from a GFC related dip NZ demand is higher than ever (snip from MBIE EDF 2018). I would hazard that NZR will still be refining in 10 years.

    Attachment 10945

    Regarding earnings


    Average FCF since 2010 has been $11 million a year. Significant plant upgrades and shut downs are out of the way so I would hope the next 10 year are more profitable with more material processing more cheaply.
    If I take out the years around Te Mahi Hou (2013 & 2014) and the shutdown (2018) which happen infrequently (10 yr +) then average FCF is $76.5 million

    Large CAPEX has been spent on:
    Jet tank farm upgrade (2019-ongoing)
    Shut down (2018)
    Crude shipping project (ongoing)
    RAP upgrade (2019)
    Te Mahi Hau (2015)

    All of these projects have or aim to move more volume, more efficiently, exactly what a tolling refinery should be doing. More oil through means more money. Expensive running a refinery but they seem to do it well.

    Australian refineries are a bit different as they have multiple refiners, some consolidation of smaller refiners is happening. As we only have one refiner it is in a better position. Also note when the Australian refineries close they turn into import terminals, unlikely that NZR will stop refining but if they did, there would still be significant value in their infrastructure (port, pipeline and tank farms).

    80% of our imported refined oil comes from Singapore and South Korea. It is likely that ultimately these mega refineries will scale sufficiently to drive NZR out of the refining business but it wont happen in the medium term with the sweet deal BP, Z and Mobil.
    data for past oil consumption in NZ is irrelevant if your considering the future, as Z energy have presented in there modeling there will be a decline in petrol consuming moterists going forward. probably not noticable in 10yrs but who knows events like bush fires in AUStralia just speed up the call for change to green. Also as electric vehicle technology improves which it is getting cvheaper and better each year will speed up conversion to electric as well. telsla just started up big factory in china which promises to lower the cost per vehicle big time and look how that has put a sky rocket under there share price as people now realise tesla is a leader in the field.

    I do agree nzr does have good fcf but they are really just spending it all on stay in business capex to prolong the life of the refinery. moving more volume doesnt necessayry translate into more profit as it depends on the crack at the time as well as other factors. with cracks low at the moment nzr not gonna be making much boomer profits to reduce debt and pay big NZX sized divs.

    if the share price went lower i might get tempted as a punt for a massive div one day as they probably be aroung in 10yrs but who knows with how fast technology and opinion on fossil fuels is changing
    bull

  3. #1773
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    Apr 2013
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    I think this industry is cyclical and can benefit from external factors such as refinery issues in other countries etc. I cant remember the math but there is a sweetspot where it makes NZ based refined petro cheaper than importing on a tanker.

    Considering the expense of shipping I think NZR needs to scale up even more. I assume there is a cost benefit between importing the oil v fuel i.e. % extra cost as shipping is the same cost? Also they get some local oil from Todd?

  4. #1774
    Member
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    Dec 2011
    Location
    Christchurch
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    104

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    When will Labour / Greens join this club?

    https://en.wikipedia.org/wiki/Phase-..._fuel_vehicles

  5. #1775
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    Jul 2015
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    Napier
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    1,022

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    Quote Originally Posted by mcdongle View Post
    When will Labour / Greens join this club?

    https://en.wikipedia.org/wiki/Phase-..._fuel_vehicles
    The sooner the better as I am sure the majority of public will not like that happening in the foreseeable future

  6. #1776
    Junior Member
    Join Date
    Nov 2018
    Posts
    29

    Default

    Quote Originally Posted by Waikaka View Post
    If it was truly a sunset industry in terminal decline then we would see a sustained decrease in oil consumption in NZ. Apart from a GFC related dip NZ demand is higher than ever (snip from MBIE EDF 2018). I would hazard that NZR will still be refining in 10 years.

    Attachment 10945

    Regarding earnings


    Average FCF since 2010 has been $11 million a year. Significant plant upgrades and shut downs are out of the way so I would hope the next 10 year are more profitable with more material processing more cheaply.
    If I take out the years around Te Mahi Hou (2013 & 2014) and the shutdown (2018) which happen infrequently (10 yr +) then average FCF is $76.5 million

    Large CAPEX has been spent on:
    Jet tank farm upgrade (2019-ongoing)
    Shut down (2018)
    Crude shipping project (ongoing)
    RAP upgrade (2019)
    Te Mahi Hau (2015)

    All of these projects have or aim to move more volume, more efficiently, exactly what a tolling refinery should be doing. More oil through means more money. Expensive running a refinery but they seem to do it well.

    Australian refineries are a bit different as they have multiple refiners, some consolidation of smaller refiners is happening. As we only have one refiner it is in a better position. Also note when the Australian refineries close they turn into import terminals, unlikely that NZR will stop refining but if they did, there would still be significant value in their infrastructure (port, pipeline and tank farms).

    80% of our imported refined oil comes from Singapore and South Korea. It is likely that ultimately these mega refineries will scale sufficiently to drive NZR out of the refining business but it wont happen in the medium term with the sweet deal BP, Z and Mobil.

    It's not a sunset industry, it's a growing industry. I work for the company and have done for a long time, drop a line if you wish svchieftain@gmail.com. I'm not in possession of any information that is not available to the market and it looks as though you have done some research, that said you are missing a great deal.

  7. #1777
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    auckland, , New Zealand.
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    caltex in aus just released there trading update yesterday and there refining margin took a big slump in Q4

    https://www.asx.com.au/asxpdf/202001...gt4nb7pmzl.pdf
    bull

  8. #1778
    Legend
    Join Date
    Jan 2002
    Location
    auckland, , New Zealand.
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    just as we thought , cracks are bad.

    doesnt look good for immediate future and shares are hitting new lows but that is how it goes for a refining company. debt wont look good soon i reckon

    https://www.nzx.com/announcements/347355
    bull

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