NZ Oil & Gas (NZO)

**arjay** · 30-07-2011, 04:32 AM

Just finished listening to DS webcast. To be fair, I thought he did a good job tackling some of the recent negative press. I did however love his comment (this is my translation

that "corporate effort is largely aimed at securing upside, and because figures for the potential value of upside are not included in the analysis it would be inappropriate to include the cost of corporate." That statement is so beautifully slippery you could put fins on it and call it an eel.

**Sideshow Bob** · 30-07-2011, 10:39 AM

From Brian Gaynors Column in the NZ Herald today:

Unfortunately many listed New Zealand companies, including those in the NZX50 Index, are lacking management depth and it is not obvious who will replace the current chief executive if he suddenly resigns.

New Zealand Oil & Gas is an excellent example of this.

David Salisbury was appointed chief executive of the oil exploration and production company in April 2007. He had just returned from Vienna where he had been vice-president business development of OMV Exploration & Production.

Salisbury was quoted as saying "I relish the opportunity of working with business partners, shareholders and staff to capitalise on NZOG's current major projects and to position the company for further growth opportunities".

"Tui with its strong initial oil flows, Kupe as a solidly-based long-life asset, and the diversity brought to the portfolio by Pike River Coal together creates a very sound financial platform for an exciting growth path for NZOG".

Unfortunately these growth opportunities have not been realised and on June 30 Salisbury gave six months' notice of his resignation and will finish on December 29. Chairman Tony Radford said the company "will commence shortly to recruit a replacement chief executive".

When Australian Worldwide Exploration, the operator and 42.5 per cent owner of the Tui field, announced this week that Tui's reserves had been downgraded from 50.5 million barrels to 40 to 42 million barrels, NZOG seemed to be rudderless. The company made a short factual comment to the NZX with no quotes and no executive contact details. This was in stark contrast to earlier Tui reserves upgrade announcements which contained contact details for Salisbury and another company executive.

One of NZOG's problems is that Radford is based in Australia and he is not a great communicator. He was appointed to the NZOG board in June 1981 and has been chairman for most of this 30 year period.

NZOG's corporate governance leaves a lot to be desired and shareholders are now paying a big price for the company's inability to secure a long-term chief executive, as well as for its inadequate succession plans and its poor communications, particularly in adverse situations

http://www.nzherald.co.nz/business/n...ectid=10741723

Corporate · 30-07-2011, 11:09 AM

Originally Posted by Sideshow Bob

From Brian Gaynors Column in the NZ Herald today:

Unfortunately many listed New Zealand companies, including those in the NZX50 Index, are lacking management depth and it is not obvious who will replace the current chief executive if he suddenly resigns.

New Zealand Oil & Gas is an excellent example of this.

David Salisbury was appointed chief executive of the oil exploration and production company in April 2007. He had just returned from Vienna where he had been vice-president business development of OMV Exploration & Production.

Salisbury was quoted as saying "I relish the opportunity of working with business partners, shareholders and staff to capitalise on NZOG's current major projects and to position the company for further growth opportunities".

"Tui with its strong initial oil flows, Kupe as a solidly-based long-life asset, and the diversity brought to the portfolio by Pike River Coal together creates a very sound financial platform for an exciting growth path for NZOG".

Unfortunately these growth opportunities have not been realised and on June 30 Salisbury gave six months' notice of his resignation and will finish on December 29. Chairman Tony Radford said the company "will commence shortly to recruit a replacement chief executive".

When Australian Worldwide Exploration, the operator and 42.5 per cent owner of the Tui field, announced this week that Tui's reserves had been downgraded from 50.5 million barrels to 40 to 42 million barrels, NZOG seemed to be rudderless. The company made a short factual comment to the NZX with no quotes and no executive contact details. This was in stark contrast to earlier Tui reserves upgrade announcements which contained contact details for Salisbury and another company executive.

One of NZOG's problems is that Radford is based in Australia and he is not a great communicator. He was appointed to the NZOG board in June 1981 and has been chairman for most of this 30 year period.

NZOG's corporate governance leaves a lot to be desired and shareholders are now paying a big price for the company's inability to secure a long-term chief executive, as well as for its inadequate succession plans and its poor communications, particularly in adverse situations

http://www.nzherald.co.nz/business/n...ectid=10741723

Jeez that is fairly scathing, but spot on!

Corporate · 30-07-2011, 11:28 AM

I just had a look at the cash flow statement for the 12 months ending 30 June. One number stood out....NZ$12.7m in administration cost. I thought it looked on the high side given NZO is a non-operator in all its production assets. I then checked out CUE's admin costs for the same 12 months. It was A$4m.

Why such a disparity between the two companies? Unbelievable.

**Balance** · 30-07-2011, 12:09 PM

Originally Posted by arjay

Just finished listening to DS webcast. To be fair, I thought he did a good job tackling some of the recent negative press. I did however love his comment (this is my translation

that "corporate effort is largely aimed at securing upside, and because figures for the potential value of upside are not included in the analysis it would be inappropriate to include the cost of corporate." That statement is so beautifully slippery you could put fins on it and call it an eel.

Figuratively speaking, you are a wordsmith of exceptional talent!

I have never had any time for NZOG's directors and management. Go back far enough and it was already a company structured to keep the board (especially TR) and management in clover, champagne and first class air travel for the rest of their lives. Sad to see DS fall into the same category - but at least he has the integrity to move on.

Meanwhile, shareholders have pumped close to $250m into this company since 2005 and what have they got to show for it?

**troyvdh** · 30-07-2011, 05:19 PM

Dear balance....as a comparison ...could you please enlightlen us to which company(ies)...really gets your concentrated,repeated and unbridled approval.

cheers troy

**Balance** · 30-07-2011, 05:54 PM

Originally Posted by troyvdh

Dear balance....as a comparison ...could you please enlightlen us to which company(ies)...really gets your concentrated,repeated and unbridled approval.

cheers troy

Try this 5 to 10 baggers - http://www.sharetrader.co.nz/showthr...light=diligent

**percy** · 30-07-2011, 06:03 PM

Originally Posted by Balance

Try this 5 to 10 baggers - http://www.sharetrader.co.nz/showthr...light=diligent

Balances up RNS disaster. Yeah Right. lol.

**Balance** · 31-07-2011, 01:37 AM

Loel - no brainer, Percy.

1 x .5 + 1 x 5 = 5.5 against entry price of 2 = 175% gain.

You savvy?

Now if I was really smart, I would have been shorting NZO all the way down to here. But then, you would all accuse me of down-ramping.

As a few others in this forum have found over the years, management is almost everything in a company. As is famously said once "I like to invest in companies which can be run by monkeys, because one day you will get one running it."