NZ Oil & Gas (NZO)

[Beagle]

Part-paid shares that have been issued as part of the
company's Employee Share Ownership Plan will not participate in the return of
capital."

Okay let me put my bias out there right from the start and say that the only people that have done really well out of NZO over the last thirty plus years are the employees and directors. Over the long run relative to the NZX50 this company has been a truly appalling investment.
Now moving on, its clear you guys have missed this major point. This arrangement is ostensibly to benefit owners or the partly paid shares as any possible intrinsic value the market is presently not recognizing carries forward and materially benefits those with partly paid shares. Yes it is better than a dividend, they wouldn't have sufficient imputation credits to fully impute such a large dividend but again this is ostensibly an arrangement that benefits management and directors with partly paid shares as any unrecognized intrinsic value is doubled on a per share basis going forward given the 2:1 share consolidation. Its designed to bolster the SP going forward and as future potential partly paid shares when they may be fully paid will have more of a relative dilution effect management end up with double the bang for their buck with their already lucrative employee share scheme...management are the real winners...again !
Stripping $100m out of the company in cash is a dumb idea. Removes critical mass...really I see this as a losing situation for shareholders.
Disc: I don't think much has really changed from the Tony Radford days.
Again we see NZO management / directors acting in their own best interests...that's something "new" isn't it.
That's my 3 cents, sorry guys can't be bothered debating this pup...just posted because I have some technical knowledge of how these sort of proposed capital returns work.
IRD binding ruling approval is almost certain in my opinion. GLTAH

[digger]

Have read comments from the last day several times.Who voted for selling KUPE anyways and were you informed beforehand that the 100 million return was to take this shape. Does not suprize me. Of all comments Roger has hit the nail square on the head with the huge advantage to unlisted partly paid shares.The exercise price to be fair should be lifted about 39% to reflect the true underlying value of NZO other non cash assets. That to me is the biggest proof of managements serving management.
Cancelling half my shares to me is neither here or there as my % holding in the company stays the same.

[Beagle]

27. Share-based payments The Group operates an Employee Share Ownership Plan (ESOP) which is open to nominated employees. Under the plan there are currently 9.5 million partly paid shares for which employees have paid $0.01 per share. After 2 years, and under certain conditions, the employee has the option to fully pay for the shares. This option lasts for 3 years. The cost of the ESOP to the Group is calculated using the Black Scholes option pricing model and in the year ended June 2016 $0.09 million was expensed through the Consolidated Statement of Comprehensive Income. A total of 2.3 million shares were awarded, 0.2 million shares vested during the year at an average cost of $0.45 per share, expired shares totalling 0.5 million were sold and 0.1 million shares were forfeited.

Kupe has outstanding growth opportunities.

Couldn't resist posting a couple of excerpts from the 2016 annual report.

[JohnPagani]

Hello Sharetraders.

Thanks for your comments. Eveeryone's entitled to a view - but you might consider that the NZO share price increased by 49% from Feb 16 to feb 17, and that was one of the strongest performance son the NZX among the companies that started with a mar cap over $150 million.

We will arrange for CEO Andrew Jefferies to join you in here for a Q+A after the Notice of Meeting is published later this month.

Couple of quick point to answer comments so far: Employee Share Options Scheme shares do not participate in the capital return - even the partly paid up shares do not participate. Since ESOP shares are issued at a premium of 20% to the current share price, most are not in the money; when they are sold, the employee gets back only the amount they have paid up. The capital return should not change the share price, as the proportion of shares issued to capital of the company remains constant. Therefore, while holders of ESOP shares are treated differently as a class, they should not be either advantaged or disadvantaged overall.

Some of you have expressed a view about the share price as a proportion of the company's NAV. The price paid for the cancelled shares has been set as a proportion of the market cap to the current number of shares on issue. It doesn't reflect NAV, except indirectly to the extent that the market cap reflects NAV.

The capital return is good capital management. The share price increased strongly when the return was announced, from under 50c to around 63c the day the Kupe transaction was announced. The stock continues to trade a discount to NAV - so the capital return allows you to capture 100% of NAV, without that discount over that part of the NAV returned, therefore creating a more efficient balance sheet.


I encourage you to continue to seek more information on this capital return. It's important to vote, and remember a 75% majority is required to approve the return.

If you have queries about how the capital return will work, you are welcome to call me on 021 570 872, preferably while I'm at home having my dinner ;-)


All the best


John Pagani
New Zealand Oil & Gas

[fish]

Thank you John,
I suspect everyone is gobsmacked
The truth is so important
The attempt to brand the company as acting against the interests of ordinary shareholders was probably ignorance rather than malice.
Its so easy in hindsight to blame-its the nature of people
A lot of shareholders lost a lot of money investing tax-paid funds into the company at $1.50
You have a good plan to return capital that will not be taxed and I certainly will be voting for it

[t.rexjr]

Hello Sharetraders.

Thanks for your comments. Eveeryone's entitled to a view - but you might consider that the NZO share price increased by 49% from Feb 16 to feb 17, and that was one of the strongest performance son the NZX among the companies that started with a mar cap over $150 million.

We will arrange for CEO Andrew Jefferies to join you in here for a Q+A after the Notice of Meeting is published later this month.

Couple of quick point to answer comments so far: Employee Share Options Scheme shares do not participate in the capital return - even the partly paid up shares do not participate. Since ESOP shares are issued at a premium of 20% to the current share price, most are not in the money; when they are sold, the employee gets back only the amount they have paid up. The capital return should not change the share price, as the proportion of shares issued to capital of the company remains constant. Therefore, while holders of ESOP shares are treated differently as a class, they should not be either advantaged or disadvantaged overall.

Some of you have expressed a view about the share price as a proportion of the company's NAV. The price paid for the cancelled shares has been set as a proportion of the market cap to the current number of shares on issue. It doesn't reflect NAV, except indirectly to the extent that the market cap reflects NAV.

The capital return is good capital management. The share price increased strongly when the return was announced, from under 50c to around 63c the day the Kupe transaction was announced. The stock continues to trade a discount to NAV - so the capital return allows you to capture 100% of NAV, without that discount over that part of the NAV returned, therefore creating a more efficient balance sheet.


I encourage you to continue to seek more information on this capital return. It's important to vote, and remember a 75% majority is required to approve the return.

If you have queries about how the capital return will work, you are welcome to call me on 021 570 872, preferably while I'm at home having my dinner ;-)


All the best


John Pagani
New Zealand Oil & Gas

At what point are the ESOP shares issued? I'm assuming they are issued upon part payment of the share? Which would mean the 20% premium on current share price is in fact 'current share price at time of issue'.

Which is neither here nor there if half of the ESOP shares are also cancelled after the capital return. If they are not however, then that would be a different story given that the market share value instead of NAV value is being used.

[Kay]

Hello Sharetraders.

Thanks for your comments. Eveeryone's entitled to a view - but you might consider that the NZO share price increased by 49% from Feb 16 to feb 17, and that was one of the strongest performance son the NZX among the companies that started with a mar cap over $150 million.

We will arrange for CEO Andrew Jefferies to join you in here for a Q+A after the Notice of Meeting is published later this month.

Couple of quick point to answer comments so far: Employee Share Options Scheme shares do not participate in the capital return - even the partly paid up shares do not participate. Since ESOP shares are issued at a premium of 20% to the current share price, most are not in the money; when they are sold, the employee gets back only the amount they have paid up. The capital return should not change the share price, as the proportion of shares issued to capital of the company remains constant. Therefore, while holders of ESOP shares are treated differently as a class, they should not be either advantaged or disadvantaged overall.

Some of you have expressed a view about the share price as a proportion of the company's NAV. The price paid for the cancelled shares has been set as a proportion of the market cap to the current number of shares on issue. It doesn't reflect NAV, except indirectly to the extent that the market cap reflects NAV.

The capital return is good capital management. The share price increased strongly when the return was announced, from under 50c to around 63c the day the Kupe transaction was announced. The stock continues to trade a discount to NAV - so the capital return allows you to capture 100% of NAV, without that discount over that part of the NAV returned, therefore creating a more efficient balance sheet.


I encourage you to continue to seek more information on this capital return. It's important to vote, and remember a 75% majority is required to approve the return.

If you have queries about how the capital return will work, you are welcome to call me on 021 570 872, preferably while I'm at home having my dinner ;-)


All the best


John Pagani
New Zealand Oil & Gas

Caveat 1: I'm New (to posting on this forum at least!)

Caveat 2: I invest for fun (ish) and don't take bad results to heart (too much)

Caveat 3: I rarely know what I'm talking about on a good day

But I invested in nzo as I felt they were undervalued. Possibly are still. Possibly not.

Following the kupe sale announcement in november the share price has fluctuated between 61-65c. I could have sold 50% of my holding for up to 65c but chose not to.

Today it is suggested that I will be selling 50% of my investment for 62.7c/share.

Had I have known this earlier I would have cashed out and put my money to better use.

As per caveat 2 I play for fun. But the sense of fun is absent when I am told I am selling 50% of my shares for a price determined by others that I disagree with (I wouldn't still be here if I thought 62.7 was a good sell price)

But at least there is a vote.

[fish]

Kay you have a great attitude that I wish I could emulate.
A capital return by giving you 62.7 cents tax-free for every 2 shares you own is tax-efficient-ie no tax compared to a dividend.
Each share entitles you to a small share in the company..You will still own exactly the same share of the company after the capital return.
I bought a lot of shares at 61.5 cents today because I like the way they are doing it.
I do not like paying more tax than I should.
I like buying shares when I think they are under-valued.
NZO shares are high risk but unlike most other companies we invest in they hold a lot of money that is earning zilch so less risk involved if they return capital to us

[tim23]

I don't know what the fuss is about still get about 30c per held share and when they cancel the shares you will hold half number of shares but price should stay the same. Market cap will then be about 100 million and they will hold about 168 million cash plus misc holdings, seems like value to me?

[janner]

Okay let me put my bias out there right from the start and say that the only people that have done really well out of NZO over the last thirty plus years are the employees and directors. Over the long run relative to the NZX50 this company has been a truly appalling investment.
Now moving on, its clear you guys have missed this major point. This arrangement is ostensibly to benefit owners or the partly paid shares as any possible intrinsic value the market is presently not recognizing carries forward and materially benefits those with partly paid shares. Yes it is better than a dividend, they wouldn't have sufficient imputation credits to fully impute such a large dividend but again this is ostensibly an arrangement that benefits management and directors with partly paid shares as any unrecognized intrinsic value is doubled on a per share basis going forward given the 2:1 share consolidation. Its designed to bolster the SP going forward and as future potential partly paid shares when they may be fully paid will have more of a relative dilution effect management end up with double the bang for their buck with their already lucrative employee share scheme...management are the real winners...again !
Stripping $100m out of the company in cash is a dumb idea. Removes critical mass...really I see this as a losing situation for shareholders.
Disc: I don't think much has really changed from the Tony Radford days.
Again we see NZO management / directors acting in their own best interests...that's something "new" isn't it.
That's my 3 cents, sorry guys can't be bothered debating this pup...just posted because I have some technical knowledge of how these sort of proposed capital returns work.
IRD binding ruling approval is almost certain in my opinion. GLTAH

A good honest appraisal. IMO...

Disc. Never been never will a holder .. Until something changes .. A fly paper for newbies