NZ Oil & Gas (NZO)

[fabs]

As per 25/7/11 = 1.1--1.3 NZO share.
I took 1.1 in sample
downgraded from 50.5 to 40-42 mil by 16 - 20%
Prior to downgrade NZO share =1.375 less 20% now 1.1 as above. loss of 275000 barrels.
I.I MIL. BARRELS OF TAPIS OIL 25/7/11 us $120 @ ex.rate 25.7.11 of 0.865 c US = NZ $152
Loss of 275000 barrel calculated by same formula as above = 38 mil NZ $ over 9 years 4.2 mil NZ$ per year.

SO TOTAL BEFORE DOWNGRADE OVER NEXT 9-10 YEARS OF NZ$ 190MIL.NZ$
NOW REDUCED TO NZ$152

[tim23]

There are some big buyers - always amuses me when a stock goes South that for every seller (pessimest in this case) there is buyer who sees a good deal - which it is time will tell I guess.

[Balance]

There are some big buyers - always amuses me when a stock goes South that for every seller (pessimest in this case) there is buyer who sees a good deal - which it is time will tell I guess.

Exactly. Just as there were big buyers when NZOG was $1.60 and there were big sellers too?

And there were huge buyers at $1.01 - big volume.

[tim23]

So are they taking the bath?

[Xerof]

I've been out and on the sidelines since the mid $1.60's with this one but am starting to get interested again

I'd like to see a changing of the guard first then I'd probably see it as a value trade again

Stale money getting out is usually a good sign of a capitulation event

[sideline]

Lets take the bottom estimate 1.1mil. Barrels left to NZO.
At 120 us $ converted to nz at 0.865$= $152mi. instead of nz $190 mi. a downgrade of nz $ 38mi.
Say over 9 years a loss of GROSS revenue of 4.2 mil.per annual.
Question: is downgrading of at one point 18% and end of day trading yesterday of 13% realistic ,what is going on here?

Yes Fabs, seems totally overdone to me.
What seems to be missed in the picture is that this is only gross revenue - there are costs
associated with generating this revenue and that cost (per barrel of produced oil) was always
expected to increase proportionally as the production rate of Tui was projected to decline.
The Umuroa has basically a fixed cost per month to lease, staff and run and as production
of barrels per month declines it becomes eventually uneconomical to carry on, despite the fact that
more oil is there and could be produced if cost didn't matter.
The impact on NET PROFIT is therefore a lot less than above figures since the reduction of production
happens at the far less profitable tail end of the extraction. Then halve that impact again for NPAT
because approximately 50% would have disappeared in taxes anyway.

[Corporate]

I say you'd have to have some balls to buy some NZO right now....falling knife! NZO's EV is approximately $205m....does Kupe and Tui justify it?

What return can share holders expect, and what serious opportunities do NZO have to build production?

[jwang]

As per 25/7/11 = 1.1--1.3 NZO share.
I took 1.1 in sample
downgraded from 50.5 to 40-42 mil by 16 - 20%
Prior to downgrade NZO share =1.375 less 20% now 1.1 as above. loss of 275000 barrels.
I.I MIL. BARRELS OF TAPIS OIL 25/7/11 us $120 @ ex.rate 25.7.11 of 0.865 c US = NZ $152
Loss of 275000 barrel calculated by same formula as above = 38 mil NZ $ over 9 years 4.2 mil NZ$ per year.

SO TOTAL BEFORE DOWNGRADE OVER NEXT 9-10 YEARS OF NZ$ 190MIL.NZ$
NOW REDUCED TO NZ$152

Thanks Fabs, but I still can't agree with you. Following is my calculation.

Initial Tui Reserve 50.5m, productions: 2008: 14.23m, 2009: 9.12m, 2010: 4.83m, 2011: 2.8m, total production to date: 14.23+9.12+4.83+2.8=30.98m, remaining reserve: 50.5-30.98=19.52m, NZO share: 19.52 x 12.5%=2.44m.

Revised Tui Reserve, say: 40m, production to date: 30.98m, remaining reserve:40-30.98=9.02, NZO share: 9.02 x 12.5%=1.13m

Therefore NZO share is down from 2.44m barrels to 1.13m barrels. Take your tapis oil US120@ex rate 0.865, gross revenue will be down by $182m( (2.44-1.13)m x120/0.865) over next 9-10 years, or approx $18m revenue loss p.a.

[Master98]

I agree with you jwang, same as my calculation.

[the machine]

Thanks Fabs, but I still can't agree with you. Following is my calculation.

Initial Tui Reserve 50.5m, productions: 2008: 14.23m, 2009: 9.12m, 2010: 4.83m, 2011: 2.8m, total production to date: 14.23+9.12+4.83+2.8=30.98m, remaining reserve: 50.5-30.98=19.52m, NZO share: 19.52 x 12.5%=2.44m.

Revised Tui Reserve, say: 40m, production to date: 30.98m, remaining reserve:40-30.98=9.02, NZO share: 9.02 x 12.5%=1.13m

Therefore NZO share is down from 2.44m barrels to 1.13m barrels. Take your tapis oil US120@ex rate 0.865, gross revenue will be down by $182m( (2.44-1.13)m x120/0.865) over next 9-10 years, or approx $18m revenue loss p.a.

revenue is down for last 3-5 years - not until after 2014/2015.
also any early ceasing of production by 3-5 years is also less tax, royalties and production costs, so net reduction to nzo is a lot less than nz$182m.

by having the independant review of awe calculations draws a line in the sand, thus if any partners do not want to participate in next round of development/erxploration, then they can opt out, leaving remaining participants with higher share for any increased production - heck of a calculation to make determining who gets what, but doable.

M