NZ Oil & Gas (NZO)

[blackcap]

Why would anyone want to sell their shares, when today the news was all about the potential for billions of gas being exploited on NZOG land?
Why would the independent directors recommend that we sell our shares and accept the takeover bid for 78c, surely then we are not going to reap the reward of the gas field,.
This is all very strange.
can someone explain.
I own about $2500 worth, so its not like I am going to retire on this, but it just seems really odd for the independent directors to tell me to accept the offer.

Your question was explained quite well by the Chairman at the AGM. The Chairman himself is selling all his shares for 78 cents. (74 now).
The thing is with this big gas field... there is about a 1 in 5 chance of hitting anything, and it will cost billions to drill etc. NZO can not do this alone and will need partners. Ofer is the right "people" in their opinion to help do this.
The value of the prospect alone is about zero according to the Chairman. It thought he was being a bit disingenuous. However Ofer have said that NZO will remain listed, they only want up to 70%, so effectively you will be able to buy your shares back at a discount (perhaps) and still participate in this exciting new venture that may 20% chance or may not 80% chance succeed.

[fabs]

YES drilling is always a gamble, normally 1-10, this one is considered 1-5.
Drilling was arguably some time ago, supposed to be taking place in 2017.
YES development cost are huge, however no problem after, if big GAS deposit struck to raise the money.
Management where waxing lyrical about prospects not so long ago, down talking it now.
CO. also had quite a lot of CASH with management bereft of IDEAS what to do with.
As this is a major GAS play Greens will have a struggle stopping it with what looks like a potentially spend happy lot in power.
Also WHO was NZOG in FARM-OUT discussions, about this time last year.
Hope it was not this Party that wants to take a dominant position now.
Also that at the moment worthless Permit has to be drilled by April 2018 applied for an extension or Relinquished, according to Mr. Jefferies.

[Marilyn Munroe]

........however no problem after, if big GAS deposit struck to raise the money.

Umm I dunno. Aussie LNG producers seem to be facing the old "long term fixed price contract" words translate to "flexible contract" in our language tactic.

http://www.smh.com.au/business/energ...27-gz9p59.html

Boop boop de do
Marilyn

[Sideshow Bob]

For some unknown reason, the ODT has good coverage of NZO. From today:

https://www.odt.co.nz/business/ofer-...-gains-support

[mistaTea]

Given the potential upside, selling shares below NTA with the hope (speculation) that the price will fall post-takeover so that you can buy back in at a cheaper price seems odd to me.

Ben Graham wouldn't approve, and the approach wouldn't count as investing in my view.

It would be like selling your much-loved home cheap because you speculate the property market will dip after, and can then buy back in at an even cheaper price. I mean, what kind of a nut would do that?

I think that, logically, you would only accept the OG offer if you believe 74 cents is a fair price for the company based on everything that is known about it.

[blackcap]

I think that, logically, you would only accept the OG offer if you believe 74 cents is a fair price for the company based on everything that is known about it.

The conundrum for shareholders is this. If you do not sell into the offer, and OG do not get their 50%, then the SP will fall again back to the 20% discount to NTA that it was previously. If you accept the offer and the OG offer is successful.. then the SP will probably stay at or near 74 cents. What to do.

[mistaTea]

The conundrum for shareholders is this. If you do not sell into the offer, and OG do not get their 50%, then the SP will fall again back to the 20% discount to NTA that it was previously. If you accept the offer and the OG offer is successful.. then the SP will probably stay at or near 74 cents. What to do.

It is only a conundrum if you are a speculator. If you have formed a view based on sound research that your shares have a long-term intrinsic value of a $1.50 (just a random number I am using as an example) then you won't care about fluctuations in the SP. In fact, you would take advantage of any drop in SP as an opportunity to buy more.

If you do not understand the long term intrinsic value, then you should not hold the stock in the first place. Alternatively, if you are a short-term speculator, then you are entitled to the poor results you will almost certainly achieve over time.

[blackcap]

It is only a conundrum if you are a speculator. If you have formed a view based on sound research that your shares have a long-term intrinsic value of a $1.50 (just a random number I am using as an example) then you won't care about fluctuations in the SP. In fact, you would take advantage of any drop in SP as an opportunity to buy more.

If you do not understand the long term intrinsic value, then you should not hold the stock in the first place. Alternatively, if you are a short-term speculator, then you are entitled to the poor results you will almost certainly achieve over time.

It's not quite that simple though. Say I purchased in the high 50's and low 60's because that for me was a too high discount to NTA. I thought the Zeta influence would cut costs and leave a sharper NZO and give me the cash back. That is what I wanted. So I am happy with the 78 cents. I did not want NZO to go spending money on a 1 in 5 shot at glory.
THere are however others that did not want the cash back and did want NZO to go for gold so to speak.
Both of these are long term views and not speculators views. Therefore the conundrum. The long term intrinsic value is dependent on the direction of the firm. Under Zeta leadership my long term intrinsic view was about 75 cents. Under another direction, I have to alter my intrinsic value as it is likely that the cash will be used/utilised to go prospecting/drilling. This potentially strikes but potentially throws it all away too. That scenario for me is not acceptable. (all hypothetically speaking off course, just raising a scenario)

[fish]

The conundrum for shareholders is this. If you do not sell into the offer, and OG do not get their 50%, then the SP will fall again back to the 20% discount to NTA that it was previously. If you accept the offer and the OG offer is successful.. then the SP will probably stay at or near 74 cents. What to do.

Personally I will wait another 4 weeks before deciding.
Cannot lose this way-if nz dollar drops more or Brent price increases maybe a better offer will appear-doubt it but who knows-eg could Zeta spoil the og offer-eg with a partner wanting to drill Barque

[blackcap]

Personally I will wait another 4 weeks before deciding.
Cannot lose this way-if nz dollar drops more or Brent price increases maybe a better offer will appear-doubt it but who knows-eg could Zeta spoil the og offer-eg with a partner wanting to drill Barque

Possible, though the NZ dollar has risen sharply this morning. I do not think Zeta have the stomach or intent to drill Barque, but I see what you mean. I will be holding off too for a few more weeks to see what happens. That is what Duncan Saville intomated at the meeting on Monday as well. (ie that is what Zeta will be doing)