NZ Oil & Gas (NZO)

[dsurf]

how about "wealth is created in down markets and realised in up markets"

[Lion]

Yes, or Warren Buffet's one ""Be fearful when others are greedy and greedy when others are fearful" (or something close to that).

But I don't think a handful of words is enough to guide decisions like this anyway.

[Corporate]

I've been pretty busy at work recently and finally had a chance to see what has been going on with NZO lately.

The thing that stands out the most for me is why this company has stopped paying dividends. For the June quarter the company had operating cash flow of $25m. Lets say it was a very good quarter and the annualised operating cash flow is actually $80m. Very conservatively that represents 33% of the current market capitalisation ($80m/$247m).

They could start off with 4 cents per share. On 392m shares that represents $15.7m per annum and a yield of 6.3% net of tax.

I'd seriously consider becoming a shareholder again if the Board and management could show how they were going to provide a return on my investment.

Alas, I can see all the cash being blown on wild cat exploration wells in areas outside our expertise.

[bung5]

I've been pretty busy at work recently and finally had a chance to see what has been going on with NZO lately.

The thing that stands out the most for me is why this company has stopped paying dividends. For the June quarter the company had operating cash flow of $25m. Lets say it was a very good quarter and the annualised operating cash flow is actually $80m. Very conservatively that represents 33% of the current market capitalisation ($80m/$247m).

They could start off with 4 cents per share. On 392m shares that represents $15.7m per annum and a yield of 6.3% net of tax.

I'd seriously consider becoming a shareholder again if the Board and management could show how they were going to provide a return on my investment.

Alas, I can see all the cash being blown on wild cat exploration wells in areas outside our expertise.

I couldn't agree more. The directors need to admit they made a mistake and put back in place the dividend. They can hardly argue that they are doing better with the money than giving it back to shareholders.

Maybe they are waiting to see how much PRC investment they get back before they do.. who knows. Really would like to get more accountability from this board.

[dsurf]

I've been pretty busy at work recently and finally had a chance to see what has been going on with NZO lately.

The thing that stands out the most for me is why this company has stopped paying dividends. For the June quarter the company had operating cash flow of $25m. Lets say it was a very good quarter and the annualised operating cash flow is actually $80m. Very conservatively that represents 33% of the current market capitalisation ($80m/$247m).

They could start off with 4 cents per share. On 392m shares that represents $15.7m per annum and a yield of 6.3% net of tax.

I'd seriously consider becoming a shareholder again if the Board and management could show how they were going to provide a return on my investment.

Alas, I can see all the cash being blown on wild cat exploration wells in areas outside our expertise.

I think they need to do this to show the market that NZO has a long term income stream which with all the PRC distraction it seems to have forgotton. This impression was re-inforce by the ill-considered decision to further rattle the market by dropping the dividend. I would like to see a 1c quarterly dividend & a strong statement saying.

The 1c dividend represents 33%?? of the cash generated from Kupe - This excellent asset will be producing for 10+ years. The other 66% will be re-invested in OIL or GAS activities. The 50? mill expected from Tui will also be re-invested.


If something is not done quickly I think NZO reperesents a takeover opportunity that could easily be funded by debrt and paid off by Kupe alone. The board has mis-read the market by dropping the dividend at a time when re-assurance was needed. They need to correct there mistake and provide signals NZO has a direction and that shareholders will benefit. It is also imperative they restore the confidence of the idsenfranchised institutional shareholders who were told for many years of the likely increasing return profile and have seen there investment slide. The poor performance of the management and decision to drop the dividend has resulted in a market downgrade and extra risk premium which is clearly expressed by the huge gap between NPV/NAV & the share price. Shareholders are pissd from mixed signals.

[Balance]

I think they need to do this to show the market that NZO has a long term income stream which with all the PRC distraction it seems to have forgotton. This impression was re-inforce by the ill-considered decision to further rattle the market by dropping the dividend. I would like to see a 1c quarterly dividend & a strong statement saying.

The 1c dividend represents 33%?? of the cash generated from Kupe - This excellent asset will be producing for 10+ years. The other 66% will be re-invested in OIL or GAS activities. The 50? mill expected from Tui will also be re-invested.


If something is not done quickly I think NZO reperesents a takeover opportunity that could easily be funded by debrt and paid off by Kupe alone. The board has mis-read the market by dropping the dividend at a time when re-assurance was needed. They need to correct there mistake and provide signals NZO has a direction and that shareholders will benefit. It is also imperative they restore the confidence of the idsenfranchised institutional shareholders who were told for many years of the likely increasing return profile and have seen there investment slide. The poor performance of the management and decision to drop the dividend has resulted in a market downgrade and extra risk premium which is clearly expressed by the huge gap between NPV/NAV & the share price. Shareholders are pissd from mixed signals.

NZOG is a company which has trained its shareholders so well that shareholders pretty much accept whatever is dished out to them.

Think about this - DS took over from Gordon Ward after the decision had been made to go ahead with PRC. He must have become increasingly alarmed at the delays, cost-overruns, mishaps and mismanagement of PRC so he blew the whistle. What did the board do? Ignored his concerns and continued with their merry path and kept shoving NZOG's shareholders funds into PRC - until the mine blew up.

If the board will not pay attention to its CEO, what makes you think that the board or management will pay an iota of attention to mushrooms (oops, shareholders)?

[Beagle]

^^ Plus 1. Gross arrogance. Board have lost sight of who owns the company. Major shareholders need to step up to the plate and demand fundamental changes. Won't invest again while TR is in office.

[Beagle]

NZOG is a company which has trained its shareholders so well that shareholders pretty much accept whatever is dished out to them.

Think about this - DS took over from Gordon Ward after the decision had been made to go ahead with PRC. He must have become increasingly alarmed at the delays, cost-overruns, mishaps and mismanagement of PRC so he blew the whistle. What did the board do? Ignored his concerns and continued with their merry path and kept shoving NZOG's shareholders funds into PRC - until the mine blew up.

If the board will not pay attention to its CEO, what makes you think that the board or management will pay an iota of attention to mushrooms (oops, shareholders)?

Well said. All management appear to want to do is feather-bed their own existence. Directors appear to have run out of logic and idea's. Logic suggests running for the door before they destroy any remaining value.

[bung5]

http://www.nzog.com/n110.html

this new release from 3 years does not even seem recognizable now. 285 million cash in the bank.

[Sayce]

As a long time share holder in NZO I can only agree that the market is correct in its current appraisal of the company. The list of negatives is long. For example in the last two years there has been a succession of dry wells, the share buy back was never likely to be a substitute for value adding activity, the company is associated with a tragic coal mining venture, there has been a reserve’s downgrade for Tui and on top of all this, the Board has declared that there will be no dividend in the immediate future. No wonder the share price is low.

There are some immediate things that the company can do to alleviate this market rating. The most obvious of these is an announcement that the payment of dividends will be restored.

Sayce