NZ Oil & Gas (NZO)

[geezy]

time to take on some losses and move on for me..

[fabs]

Yes JWANG You are correct,
tackled this from the wrong end.
My main point was however the overreaction of the market, figures as pointed out since too
by other members above, where gross figures-- more like nett. profit of 6 -7mil p.a.
Unless the predicted and estimated flow rates are still within range, not much will change in the next couple of years.
Yes it could mean of course a shorter life for the well.
It is indeed a funny market, when good news like D/S departing is greeted with a downgrading.
Wonder how much as ORIGIN, AWE & OTHERS are among the circling Vultures

[Balance]

Could be more downside yet as final reserve number to be determined in August.

Downgrades are slippery things and it is hard to understand how Tui can go from upgrades (3 in a row) to one single big downgrade - indicative of amateurs at work?

[digger]

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.

I have checked your cals and i agree with them.Also cost stay the same so not too good
The big one though is what were the company going to do with the money.My point is if you were just going to throw it at brance offices to ego build while the home front collapses then the loss of income is no real loss. It is a bit like a smoker facing an income decrease when even if he got the origional sum was just going to burn it up anyways .

[digger]

Could be more downside yet as final reserve number to be determined in August.

Downgrades are slippery things and it is hard to understand how Tui can go from upgrades (3 in a row) to one single big downgrade - indicative of amateurs at work?

That two i agree with and have already made that point. Again what is the point of these models when they can easily be this far out.What is the point of expensive modelers that make reports this far out? All around i see a big need for corporate down sizing.Too many snouts at the trough just not earning anything like there keep.Again the Dairy company several times downsized and have over time rises to be NZ biggest income earner.
It is well past time for the board to look at itself and ask where it is going.

[dsurf]

[QUOTE=Corporate;352353]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?

Kupe does by itself for a normal company where the shareholders get a share of the returns. I feel that NZO made a big mistake by cancelling the ANNUAL dividend 6 months before the years result was known. The truth is that the NPAT loss is an accounting loss so why focus on it 6 months before it was necessary. during the year 80mill? cash has been generated. Yes 50% wasted but that would still have left $40m to cover a dividend. Instead they signalled to the market that management were panicking and this has trashed the shareprice by focusing attention on PRC's failure.

But back to the original question of does Kupe & Tui justify it. What about the net cash? What about the return of money leant to PRC. Thesae are worth 30c a share. What about upside from PRC sale. What about PPP. etc my point is that I think capitulation is here. That does not mean the shareprice will go up however as the CEO has decided to hang around for another six months so that another 20 tio 30% of value can be wiped off. Most likely he will then succeed in getting the company taken over and then the complete demise of this company will be realised from the perspective of current shareholders. I want him to leave immediately and give this company a chance to regain a smidgeon of market credibilty and perhaps a chance not to be taken over with the inevitable transfer of wealth overseas.

[fabs]

Near the end of say 8-10 they upgrade, like with Maui 2011 is long forgotten then.
Like you say BALANCE up and down grading is a slippery thing.
Lets ponder and focus on who my gain in the long run, including the present weekly beneficiary's on the trough.
A few days ago i suggested a S/P OF 30 -40cents will definitely bring this to a head, unless we all underestimate this management.

[sideline]

That two i agree with and have already made that point. Again what is the point of these models when they can easily be this far out.What is the point of expensive modelers that make reports this far out? All around i see a big need for corporate down sizing.Too many snouts at the trough just not earning anything like there keep.Again the Dairy company several times downsized and have over time rises to be NZ biggest income earner.
It is well past time for the board to look at itself and ask where it is going.

I agree that the corporate overhead in Wellington needs some serious downsizing.

However, I find it easy to understand how the 'models can be this far out': in the case of Tui the
'economic cut off point' and hence the 'P2 reserves that can be ECONOMICALLY produced' are
dependent on the the price of oil!!!!! As the price of oil went up in 2008 so did the P2 reserves,
because at the higher oil price you can keep going longer profitably while paying for the fixed
monthly costs of the Umuroa. Notice that both the POO and the P2 estimates peaked at the same
time. My guess is that little of the upgrades at the time had much to do with the reservoir
being found to contain more oil than originally thought and most was based on the changing
economics of production because of the changing POO.

Similarly I guess that the current downgrade of P2 reserves has quite a lot to do with a less
optimistic estimate of what the POO will be through to 2019/20. We all know that there are
wildly diverging views on this.

Since the P2 highly depends on the POO I would like to know what estimates were used and
would also like the company to comment on the validity of my guesses.

[Master98]

Again the Dairy company several times downsized and have over time rises to be NZ biggest income earner.
It is well past time for the board to look at itself and ask where it is going.

Dairy company and Oil company are totally different, they are not comparable.

[J R Ewing]

Dairy company and Oil company are totally different, they are not comparable.

I think that Diggers' point is that NZO spends a lot of money on salaries and directors fees and it is hard to see what value is being added as a result. We could trim a lot of expenditure without necessarily reducing any revenue, after all AWE operates Tui, Origin operates Kupe and there seems to be very little happening on the prospecting side.