NZ Oil & Gas (NZO)

[bermuda]

Hi Unicorn,
Would you be able to do an NPV for all of NZO please

I think you should assume revenue of about $120 million per annum right through.

Thanks

[Unicorn]

Balance,

I am quite comfortable with 10% discount. At this stage close to half of the first years projected production has been achieved - there is no risk on that component. The production profile, and what has been achieved to date, shows a heavy front end production weighting so risk correspondingly reduces quite early. I seriously doubt that professional institutions will be discounting cash.

[Unicorn]

Hi Unicorn,
Would you be able to do an NPV for all of NZO please

I think you should assume revenue of about $120 million per annum right through.

Thanks

I would rather not attach my name to a npv calculation for NZO, as I feel it would be too unreliable. In particular I do not know enough about Kupe to come up with what I consider to be reliable figures for that project (and it is the major component of NZO's future). In simple terms Kupe is about 3x the size of Tui, but a couple of years behind. This year NZO should report an excellent result due to Tui income, but next year that should be expected to fall away as Tui production reduces markedly, before picking up again the following year as Kupe comes on stream.

Progress with Kupe to date has been okay, but not nearly as good as Tui. Kupe certainly warrants a higher discount rate than Tui, at this point in time, as costs and income streams are less well defined.

Npv calculations against $120M p.a. are

Years    @10%     @15%
   5     $454M    $402M
  10     $737M    $602M

[trackers]

Of course you hold NZO because you must believe that there's a big future for them. But is NZO really substantially undervalued?

If it is, why are the institutions not buying? Instaed it looks like they are happily selling out the placement stock they took at 90 cents (plus an option) to the punters lining up and buying off them? Nice quick profit for them, huh?

I have seen a valuation done on NZO and it goes along the lines of :

Tui $131m
PRC 60m
Kupe 45m (more funding required yet - like PRC)
Total 236m

There's 256m shares on issue so NZV = 92 cents per share. The cash that NZO is sitting on will be used up.

Haha that's a good one balance...but I missed the punch line?

[bermuda]

I would rather not attach my name to a npv calculation for NZO, as I feel it would be too unreliable. In particular I do not know enough about Kupe to come up with what I consider to be reliable figures for that project (and it is the major component of NZO's future). In simple terms Kupe is about 3x the size of Tui, but a couple of years behind. This year NZO should report an excellent result due to Tui income, but next year that should be expected to fall away as Tui production reduces markedly, before picking up again the following year as Kupe comes on stream.

Progress with Kupe to date has been okay, but not nearly as good as Tui. Kupe certainly warrants a higher discount rate than Tui, at this point in time, as costs and income streams are less well defined.

Npv calculations against $120M p.a. are

Years    @10%     @15%
   5     $454M    $402M
  10     $737M    $602M

Thanks.Those figures look a lot better.

[upside_umop]

Bermuda, remember that is only the discounting of revenue. Not NPAT or cashflow which ultimately determines the underlying value of a stock.

[bermuda]

Bermuda, remember that is only the discounting of revenue. Not NPAT or cashflow which ultimately determines the underlying value of a stock.

Upside,
No worries mate. Just some rough figures eh.

I wish Waaihoek would do an updated valuation.He put alot of work into it but I think the knockers put paid to further updates.Pity really they were very good.

Let's see what AWE say about Tui on Thursday

[Nitaa]

A big chunk of the valuation must go in to the current earnings and projected earnings less expenses of course.

For some there is still too much uncertainty with PRC and Kupe. That where it is discounted. Also with the prospects of the company going to the market for more money has to be a factor in the supressed sp at the mo.

Make no mistake Tui is a better than even chance for further upgrade especially if oil stays consisently avove $70. worth noting that both Rio and BHP expect commodity prices to keep increasing over the next 5 years. Capex and operating expenses will go up but so will the oil, gas and coal if you are to believe what the big boys say

[digger]

This year NZO should report an excellent result due to Tui income, but next year that should be expected to fall away as Tui production reduces markedly, before picking up again the following year as Kupe comes on stream.
End Quote from Unicorn

Unicorn your comments are always something to look forward to. I would say all considerable them valuable. Your comment above is the official line and what the market accepts, it is also the most likely to turn out to be wrong. Tui is more than likely to supply a revenue long enough that no dip will occur before Kupe kicks in. Am lookinh forward to AWE's AGM on thur 22 as it may highlight where Tui production is likely to stand.

[digger]

Ok i should have included the figures.
Say we leave it at 40,000 daily. We will get more if we pump it more slowly,AND IT WILL BE WORTH MORE.
40,000 [365]=14,600,000
That brings us to 31 july 08
The field could easily and eventually likely yield 40 million so another year at 14,600,000 will give only 29 million. The balance will get spread over the next 5 years at a lowe rate. Seems reasonable to me and is my best guess as to what will happen.
I am not planning to sell,so whoever the sellers bermuda refered to it is not me.

I se on enegrybulletin.nett that some private conversation by saudies was broadcast live by mistaKE AND AS THAT INFO GOES AROUND THE MARKETS IT IS EXPECTED THAT TOMMOROW THE OIL WILL BREAK 101 DOLLARS.