NZ Oil & Gas (NZO)

[Kay]

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

I enjoy the risk (calculated and affordable risks!). And I feel a decision to sell should be my own. If it's forced upon me then it should be favourable to me. I don't see 62.7c as favourable.

I don't want to sell 50% of my holding for 62.7c. If I did I would have done it already.

I guess I can't overly complain. It's technically fair. But investing is risk and 50% of my risk has been taken away! I might as well pop into anz (or others) and put my money in a term investment!

[blackcap]

I enjoy the risk (calculated and affordable risks!). And I feel a decision to sell should be my own. If it's forced upon me then it should be favourable to me. I don't see 62.7c as favourable.

I don't want to sell 50% of my holding for 62.7c. If I did I would have done it already.

I guess I can't overly complain. It's technically fair. But investing is risk and 50% of my risk has been taken away! I might as well pop into anz (or others) and put my money in a term investment!

The capital return of $100m was signalled quite a while ago. So why did you not sell when this was announced? The 62.7 cents they came up with today is immaterial. The company is going to lose $100m, half the shares are going to be gone. Alternatively they could have said that they would do it by selling a third of the shares at $1. However then your shares post capital repayment are going to be worth a lot less then they are under the current scenario. I would not be too hung up about the figure contrived at for the capital repayment.

Because if the stock is undervalued, it will be just as undervalued after the capital return (or the selling of half your stock as you put it).

[Kay]

The capital return of $100m was signalled quite a while ago. So why did you not sell when this was announced? The 62.7 cents they came up with today is immaterial. The company is going to lose $100m, half the shares are going to be gone. Alternatively they could have said that they would do it by selling a third of the shares at $1. However then your shares post capital repayment are going to be worth a lot less then they are under the current scenario. I would not be too hung up about the figure contrived at for the capital repayment.

Because if the stock is undervalued, it will be just as undervalued after the capital return (or the selling of half your stock as you put it).

I hear your point!

I guess I am naively looking at this from a total money invested perspective rather than looking at the percentage of company etc. And if nzo have no use for $100m then maybe best returned.

And i guess I can simply rectify my money invested by purchasing the value of half my stock for 62.7c or under (or capital return as you put it). And it's business as usual and I can go back to reading this forum rather than writing!

[blackcap]

I hear your point!

I guess I am naively looking at this from a total money invested perspective rather than looking at the percentage of company etc. And if nzo have no use for $100m then maybe best returned.

And i guess I can simply rectify my money invested by purchasing the value of half my stock for 62.7c or under (or capital return as you put it). And it's business as usual and I can go back to reading this forum rather than writing!

No please do keep contributing. I was not trying to be critical, just trying to help. I bought for the same reason (a small enough parcel). Not that I am a shill for NZO, I note they have made plenty of mistakes in the past and the jury is still out. I think that they are worth about 75 cents currently so there is a discount in the market. That discount will naturally be amplified post capital return but if the market does not realise the discount now, they are unlikely to post capital repayment.

[Kay]

No please do keep contributing. I was not trying to be critical, just trying to help. I bought for the same reason (a small enough parcel). Not that I am a shill for NZO, I note they have made plenty of mistakes in the past and the jury is still out. I think that they are worth about 75 cents currently so there is a discount in the market. That discount will naturally be amplified post capital return but if the market does not realise the discount now, they are unlikely to post capital repayment.

no worries at all...constructive criticism always welcome...And probably needed!!!

I have leant a good deal on the sidelines of this forum (with translational help from investopedia!)

[RTM]

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?

I'm with you Tim. They are doing more or less what I expected to return the 100Mil to us all in a tax effective way. And I will be voting for it.
What we are all grappling with I suspect is what will the value of the company be once the transaction has occurred ? That is the big question in my mind and I'm not sure how to figure out the answer...other than to simply wait and see how it plays out.
Disc: very very very long time shareholder.

[digger]

Because if the stock is undervalued, it will be just as undervalued after the capital return (or the selling of half your stock as you put it).[/QUOTE]

Blackcap could you please respond about this line you wrote.As I see it it will be twice as undervalued per share as it was before the 50% cancellation.And it is this point that I think the market is letting it slip under the radar. If as some do think the current value should be 90 cents it is 30 cents undervalued. After the cancellation this 30 cent per share now must become 60 cents to cover the non cash element of the company.
So after the 50% cancellation the remaining shares the share value will go from current 90 to 1-22.Naturally if you say the current undervaluation is only 10 cents then the after valuation will be 82 cents. Again it is this very point that is important as immediately after the 50% cancellation the company will be ripe for a very cheap TO at say 62 cents which will cost our major shareholder very little as most of the money will have just come in from NZO own account.

[blackcap]

Because if the stock is undervalued, it will be just as undervalued after the capital return (or the selling of half your stock as you put it)

Blackcap could you please respond about this line you wrote.As I see it it will be twice as undervalued per share as it was before the 50% cancellation.And it is this point that I think the market is letting it slip under the radar. If as some do think the current value should be 90 cents it is 30 cents undervalued. After the cancellation this 30 cent per share now must become 60 cents to cover the non cash element of the company.
So after the 50% cancellation the remaining shares the share value will go from current 90 to 1-22.Naturally if you say the current undervaluation is only 10 cents then the after valuation will be 82 cents. Again it is this very point that is important as immediately after the 50% cancellation the company will be ripe for a very cheap TO at say 62 cents which will cost our major shareholder very little as most of the money will have just come in from NZO own account.

Yes you are right digger... shhhh, don't tell anybody.

Exactly it will be twice as undervalued after the CR. What I was meaning was that if the market undervalues it pre it will probably also undervalue it post capital repayment. My terminology was incorrect, granted, I should have said.. more undervalued post capital return.
Yes you are right in that if you think NZO is worth $242million (which I think it is worth) on 319 million shares then right now the shares should be trading at 76 cents.

Post capital return NZO is then worth $142million but only on 160 million shares or 88 cents per share happy days.


However the market is currently valueing NZO at $200m and thus after the capital return of $100m, I do not see the market valuing NZO any differently than now, so after the CR the market will probably value NZO at $100m or 62.5 cents per share give or take a cent or two.

[Sideshow Bob]

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.

Hi John,


Appreciate the posting - think more companies could do well to make the occasional post. Hope you enjoyed your dinner last night.

Just in terms of your first comment, one can select any dates and make things look good. Many of the posters on this forum are long-term holders, and depending on when they bought etc would still be below water. Graph below - nowhere near the top performer of the NZX over the years regardless of market cap!

I view NZO as a learning experience......one which I should have exited more of my holding some time ago.


Cheers
SSB

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[t.rexjr]

I'm not sure there is a fuss either. My query was to try and get a feel from those more experienced than I of where the value of the company would be after the transaction. My only experience so far with this sort of thing was with Tenon where they clearly stated

Grant Samuel is preparing a valuation report for Tenon shareholders, which shows a value range of NZ$3.01 - NZ$3.25 per Tenon share assuming completion of the Blue Wolf offer

The reality is that post Bluewolf the remaining shares are likely to be sold for $2.12.

Hence my query. So thank you Blackcap and Digger for your last two posts...

I do have a query regarding the ESOP shares. They are not part in the capital return (which i think is fair enough in terms of the part paid ones) but do they get cancelled as per the ordinary shares? As I see it, if they are not then effectively, while ordinary shareholders % holding in the company remains the same after the cancellation, the ESOP shares would double their % holding. If NAV and Market were that same then neither here nor there. If not then those ESOP shares are effectively increasing their stakehold at a discounted rate are they not?