NZ Oil & Gas (NZO)

[impacman]

My understanding/read on it is that the current 2P reserves offer a reasonable (but not stellar) ROI. The upside of this deal is the potential to increase those reserves with more exploration drilling in what is regarded as a fairly reasonable concession.

Cheers,

I-man

[digger]

My understanding/read on it is that the current 2P reserves offer a reasonable (but not stellar) ROI. The upside of this deal is the potential to increase those reserves with more exploration drilling in what is regarded as a fairly reasonable concession.

Cheers,

I-man

Hi Impacman
That is my understanding as well.
It should do all right as it is called Cosmos which is my son's name so it is all go.
Things take time to deliver and what we are seeing is the ground work laid down by DS. He was hot on Tunisa for some years.

[impacman]

Hi Digger, yep will take a little time but I think this will be good for NZOG... and with the a name like Cosmos it bodes even better

Have a good weekend.

Cheers,

I-man

[arjay]

Cosmos is the name of our new Intranet at work. It is proving to be extremely sluggish, not at all like NZO.

[Sideshow Bob]

http://www.stuff.co.nz/business/6219...-be-in-Tunisia

Former New Zealand Oil & Gas chief executive David Salisbury hopes to see a possible $100 million deal in Tunisia come to fruition for the company he left last week.

While the potential deal is still in negotiation, it would mark a significant step overseas for NZOG, after some recent baby steps to expand outside New Zealand.

Leaving after five years as the head of NZOG to spend more time with his family, Salisbury came in as production from the highly successful offshore Taranaki Tui oil field was just starting. That was followed a couple of years later by the Kupe gas field, in which NZOG also had an interest.

NZOG has been a joint venture partner in a handful of wells in New Zealand in the past five years, but all have come up dry. Earlier plans to drill a prospect called Kakapo have been put off till next summer.

Last year NZOG won a prospecting permit in the newly democratic Tunisia in North Africa, and announced plans to spend close to $4m on gathering seismic data at the Diodore permit. In the middle of December, NZOG said it executed an agreement to take a 40 per cent stake in the offshore Tunisian Cosmos concession that contains an oil field which could be brought into production as early as 2014.

At November's annual meeting, Salisbury hinted that a significant international deal was in the wings, with talks "quite advanced".

The recent investment in Tunisia was a "smallish investment up front" but in an oil discovery which, if all went well, would be an oil field development in a year's time, which would be a big step, potentially a $100m deal.

"That would change the face of the company, if NZOG invests that sum of money, and there is an `if'," Salisbury said of the potential deal.

If it went ahead, the investment would be bigger than the remaining value of the highly successful Tui field in New Zealand.

"They are small steps, but steps in the right direction," he said.

In New Zealand, NZOG has been involved in the drilling of five wells, including Hector, Kahu and Tui southwest.

While all came up dry, and that was disappointing, "that's part of the game we are in".

"You go in knowing that usually they are more likely to fail than not. It is very disappointing," Salisbury said.

"It is a numbers game".

New Zealand was also a difficult geology and it was hard to get a look in on successful areas that did have potential.

Ad Feedback That drove the company to look overseas.

"New Zealand tends to be higher risk/higher reward. If you go to other places like Indonesia it is lower risk and lower reward," he said.

Salisbury announced plans to step down in June.

After his final day clearing his office, he said he planned to take a few months off work, including a holiday up north, after 20 years in business. The plans include a bit of boating and snorkelling.

He had received some work offers but had "deliberately turned down some opportunities" for now to keep himself free to decide what to do next, though said he could do some consulting work in the coming year.

"I'm having a sabbatical ... though I've had some conversations," he said.

He is considering roles both in New Zealand and overseas, where there were "amazing opportunities".

Salisbury said he liked being back in New Zealand, but had also enjoyed working in Vienna with OMV before joining NZOG in early 2007, but had not talked to his former employer.

Austrian company OMV also has a big operation in New Zealand. OMV is New Zealand's largest liquid hydrocarbon producer, with stakes in the Maui, Maari and Pohokura fields in Taranaki. The company holds two exploration permits in the Great Southern Basin and another four in the Taranaki Basin.

Salisbury arrived in April 2007 to replace Tony Radford, who became NZOG chairman. Salisbury has now been replaced as chief executive by Andrew Knight, who has been an NZOG director since 2008.

Salisbury arrived just a month before the Pike River Coal initial public offering was launched, after it had been stalled for some time.

As chief executive he has ridden through the troughs at NZOG, which was a 29 per cent shareholder in Pike when the mine disaster happened just more than a year ago.

The mine explosion that killed 29 men marked the low point in Salisbury's time at NZOG.

"We watched in horror as everyone did as that situation unfolded," he said. "It was dreadful."

But some people did misunderstand NZOG's role.

"We were a shareholder [in Pike]. We were not in there operating or managing Pike," he said.

Though help was offered, NZOG was not involved in the operations at Pike after the explosion.

"Most of my information came through the media," Salisbury said.

NZOG also had to go through the decision to put Pike into receivership. As well as being a 29 per cent shareholder, NZOG was a secured creditor, owed tens of millions of dollars by Pike.

But NZOG was horrified as the details had come out about Pike's safety performance during the Commission of Inquiry into the disaster. The figures given to NZOG before the explosion didn't suggest any sort of problems.

"Post-explosion when people started delving into it ... it is a dreadful set of circumstances," Salisbury said, but it would take some time to form a final judgment.

The disaster wiped out the value of NZOG's stake in Pike.

NZOG's share prices slumped from more than $1.30 a share before the disaster to about 71c now, hit more recently by a downgrade on the reserves of the Tui field.

Even before the explosion, Pike's development was plagued with large cost overruns and production delays because of the complex geology of the West Coast mine.

However, Salisbury said NZOG made good progress in getting full value out of their assets during his five years.

"We have set the company up for growth, with people and skills and systems. I'm proud that the results of that are starting to flow. In the last year, we have gone into Indonesia and into Tunisia," Salisbury said.

While the investments were relatively small so far, NZOG had gone looking but had not found "the investment" to expand the company.

New Zealand remained on the international radar for oil explorers with the likes of Brazil's Petrobras looking for oil off the East Coast of the North Island and OMV exploring the Great South Basin. NZOG is not involved in those prospects.

"There was enthusiasm [in the Great South Basin] but it is very high risk, but very high reward," he said. "But it is not a must-have type of investment. It has a place in a portfolio" for a big oil company.

There was still exploration going on, but nobody was close to drilling an offshore well in the Great South Basin which could cost about US$100m (NZ$127m). Even then, the chances of success would be relatively low, "perhaps a one-in-five chance of success, if you are lucky".

"So you have an 80 per cent chance of losing your money," he said.

But there had also been small successes onshore in New Zealand, with Canadian-based Tag Oil notching a string of small wins in Taranaki in 2011. "But in the global scale, it is small beer," Salisbury said.

American oil and gas exploration giant Anadarko has been exploring off Taranaki recently.

Tag Oil has also entered into an agreement with United States firm Apache Corp to explore the East Coast Basin for oil and gas.

Apache will spend up to US$100m to earn as much as half of Tag's present 100 per cent share of the exploration prospects, on completion of a third phase of proposed work. Exploration work would run for four years, with seismic testing starting late last year and a decision where to drill expected in the first half of this year.

- © Fairfax NZ News

[the machine]

so thats why sp gone up 2% today

M

[NOCASH]

Can anyone advice me why is NZO buying its ordinary shares back?

[macduffy]

Can anyone advice me why is NZO buying its ordinary shares back?

I don't know if NZO has made any statement about its intentions but the usual rationale is that the shares have got too cheap - in the company's view - and that there is no present better use for the cash. With less shares on issue the value of the remaining shares increases - bigger slices of the company pie!

[Sideshow Bob]

so thats why sp gone up 2% today

M

At the moment 10 trades for a total of 39,000 shares, so no volumes. Maybe also a slight benefit from 1 or 2 of the brokers choose in their 2012 picks.......

[digger]

At the moment 10 trades for a total of 39,000 shares, so no volumes. Maybe also a slight benefit from 1 or 2 of the brokers choose in their 2012 picks.......

The most positive thing you can read in share price movement is an up on very small volumn.Shows sellers are shy and that for any large number to change hands the price will have to be higher.This Tunisia thing from DS has the market starting to take notice given the short time frame they are talking about for production to start.
Cheers all and the best for the new year.