NZ Oil & Gas (NZO)

[Bilo]

"Lets take an objective look at NZO from a fundamental point of view..
I ask the following questions.
1, The pike coal mine will produce for thirty years giving NZO a dividend income over that period unless they sell their shares. 8% yeild on a dollar perhaps ?, or a capital gain.
can't help it macDunk
1/ why not 30% yield?

The potential 30pc increase in coking coal price could at a dollar to the PRC share price (see my note on the PRC thread) and 35c to the NZO share price...

[neopole]

i enjoyed reading the last 2 pages...... very interesting.
i see there are a few posters asking about the future of NZO and the possible direction that they might take.
we have seen NZO go from an exploration company with a share price ranging from 30c to 80c odd in the last 6 years before the recent period of drilling of last year. we have gone from explorer to producer, and 2 more production projects are soon to come on stream.
so........ then what?
my view is, they have to start returning value to the loyal shareholders, once they are looked after, (via dividend, or a constant and steady growth curve) then they can look at what to do with the revenue. one option is, once all 3 current projects are producing, is to then use some of that revenue to take on a exploration project on there own. as we know, technology is advancing at greater rates, and in 3 or 4 years time NZO should be in a position to look at another prospect somewhere........with better detection aperratus, maybe even looking at the great southern basin.
this company is leaving its teenage years behind, and is becoming mature.
the knocking/ramping of the sp today is meaningless in my view, unless you want out, or you need volitility to trade the stock.
long term is in good shape, and i know there is more prospecting on the horizon, but this time it will be paid for by company profits.
on an internation scale this country is under explored, and NZO has only been a spring chicken in this field, but the oportunities for NZO and NZ are very good.
those with time on there side cant go wrong with NZO, the rest should go and play with the other volitile stocks.
disc; i too was looking for a better result of NZO at this stage, but have change my stratagy to this stock and am know buying what ever i can.

[upside_umop]

hey shasta,

about discounting, sure you cant discount what you already have in your pocket (cash), but tui is not yet all cash is it, nzo have not recieved everything in one go.

ie, they have cash flow streams for the next 18 years, so any cashflow in the future has to be discounted to time zero, which is now.

if we didnt discount, time value of money would mean nothing, but we all know that as investors, time is of the essence as its the opportunity cost that brings this discount about.

[shasta]

hey shasta,

about discounting, sure you cant discount what you already have in your pocket (cash), but tui is not yet all cash is it, nzo have not recieved everything in one go.

ie, they have cash flow streams for the next 18 years, so any cashflow in the future has to be discounted to time zero, which is now.

if we didnt discount, time value of money would mean nothing, but we all know that as investors, time is of the essence as its the opportunity cost that brings this discount about.

I cant say ive seen 18 years for the Tui project before, where did you get that from?

[upside_umop]

oh my bad, i got it into my head 18 years from somewhere. its more like 10 isnt it.
never the less, its still got to be discounted to today, at an appropriate rate..

[shasta]

I cant say ive seen 18 years for the Tui project before, where did you get that from?

The Tui JV has the FPSO for a 5 year period with right of renewal for 5 further 1 year extentions.

I thought the Tui project was a 5 year project, & thus any NPV calculation will be distorted & therefore lower using the longer timeframe.

My contention, was & still is NZO is worth more than $1.03 right NOW!

[manxman]

The Tui JV has the FPSO for a 5 year period with right of renewal for 5 further 1 year extentions.

I thought the Tui project was a 5 year project, & thus any NPV calculation will be distorted & therefore lower using the longer timeframe.

My contention, was & still is NZO is worth more than $1.03 right NOW!

Shasta
As the field ages, the water cut will rise, and with Umuroa limited to 120000 bpd total liquids, the oil flow will decrease. I think the original intent was to get the bulk of the oil out in five years, then decide, year by year, whether the oil yield justified the cost of keeping the FPSO on station.
With the rising price of oil, it now looks as though production may continue economically up to the tenth year, albeit at a low rate. I think that this is the primary reason for the first reserves upgrade. They haven't identified any more oil in place, but they can economically recover more of it at $80 than they would at $60.
So look forward to further upgrades as the actual oil in place is assessed, and they have some operational experience in handling the water cut. I imagine one could seriously screw up the oil/water yield by being too greedy. IMO there are still too many unknowns regarding rates of production at various stages in the life of the field to get much value from an NPV analysis, but its all starting to look rather sweet.
Mx

[upside_umop]

i just looked up a few articles and the common consensus stating around the 10 year mark.
nzog presentation from may gives a reasonable estimate of expected flows of oil from tui.
-1.2 mmboe for 08, declining to 0.6, 0.4 and 0.3 for 09, 10 and 11 respectively. after this, around 0.2 mmboe looks to be constant.

these are estimates are very similar to what i have done the cashflow with NPV.


but yeah, agree that its a good share at these levels if you expect oil to remain at current prices.

[shasta]

i just looked up a few articles and the common consensus stating around the 10 year mark.
nzog presentation from may gives a reasonable estimate of expected flows of oil from tui.
-1.2 mmboe for 08, declining to 0.6, 0.4 and 0.3 for 09, 10 and 11 respectively. after this, around 0.2 mmboe looks to be constant.

these are estimates are very similar to what i have done the cashflow with NPV.


but yeah, agree that its a good share at these levels if you expect oil to remain at current prices.

What if the US decides to make a pre-emptive strike against Iran?

Oil could easily surge past $US100 bbl, though i agree a consensus of around $US60bbl for the life of the Tui project appears reasonable.

IMO oil looks a better bet to hit $US100 bbl than drop to $US40bbl, with $US70 being the mid point.

I believe Tui will surpass the mid point overall as the first 2 years look set to reap around 50% of the total OIP.

Which brings me back to the NPV, most of the oil is upfront & looks to be sold at higher than forecast oil prices & with a falling $US to boot.

By Xmas we would have effectively paid back our share of the JV costs!

When i get a chance i'll post a more robus & realistic NPV for NZO.

[the machine]

repayment of any debt for tui should almost be completed by the agm.

M