NZ Oil & Gas (NZO)

[blackcap]

Hi,

Not sure if someone can easily shed some light on my below query...But two glasses into my pinot noir and I feel compelled to ask. Again I am a novice investor who largely gambles on "growth" stocks with little success!. NZO are one of the few companies I have tried to understand.

But in nzo I see a company with money and assets which exceed the value of it's share price (I understand Nav to be a basic tool but I am basic in my understanding). This was the case prior to the kupe sale and why I invested in them on the first place. And I considered it a simple and easy decision to invest. Essentially I feel like I am buying money (possibly foolishly!).

I am a believer in the wisdom of crowds so I assume I am missing something. I purchased a few more at 61.5 yesterday to more than cover the capital return.

I would be grateful for any thoughts as to why nzo are valued at 62c when the nav suggests that they are worth more. And nzo's assets are real money and natural resources. Not a brandname or anything overly speculative.

Is it simply that they are assumed to make a loss for a number of years...oil prices won't recover?

The market are valuing NZO at a "discount" because NZO go through about $8 million annually in corporate costs.If you discount them over say 10 years etc then that works out to say 12 cents per share. So instead of NZO being worth 76 cents (its NAV) take off the future loss of corporate costs.. then you have 64 cents..... where it is roughly the last week or so. Hope that helps...

[digger]

The market are valuing NZO at a "discount" because NZO go through about $8 million annually in corporate costs.If you discount them over say 10 years etc then that works out to say 12 cents per share. So instead of NZO being worth 76 cents (its NAV) take off the future loss of corporate costs.. then you have 64 cents..... where it is roughly the last week or so. Hope that helps...

No Blackcap it does not help at all. You have set out only the negative of the next 10 years. Maybe just maybe something positive will happen in the next 10 years and that should be factored in not just the corporate costs as if nothing ever will take place.The future has to be seen in balance though BALANCE will rightly now step forward and point out that the past 10 years have had more negatives than positives.

[blackcap]

No Blackcap it does not help at all. You have set out only the negative of the next 10 years. Maybe just maybe something positive will happen in the next 10 years and that should be factored in not just the corporate costs as if nothing ever will take place.The future has to be seen in balance though BALANCE will rightly now step forward and point out that the past 10 years have had more negatives than positives.

Maybe it will maybe it won't. All I am saying is what the market is saying. They "the market" are valuing NZO as cash - the future corporate costs. That is a fair valuation. You cannot say you think something positive may happen and add a premium to a stock price on wishful thinking. With NZO's past you may even have a negative premium. What is the point in holding cash when interest rates are almost zero? There is really only one way to value NZO and that is how the market is valuing it. Or do you think that the "IP of NZO corporate" has some value or premium?
That said, I do have a small holding as I think Zeta may extract some value, cut corporate costs where required and there is the question of this huge potential gas thingee....

[digger]

The market are valuing NZO at a "discount" because NZO go through about $8 million annually in corporate costs.If you discount them over say 10 years etc then that works out to say 12 cents per share. So instead of NZO being worth 76 cents (its NAV) take off the future loss of corporate costs.. then you have 64 cents..... where it is roughly the last week or so. Hope that helps...

No Blackcap it does not help at all. You have set out only the negative of the next 10 years. Maybe just maybe something positive will happen in the next 10 years and that should be factored in not just the corporate costs as if nothing ever will take place.The future has to be seen in balance though BALANCE will rightly now step forward and point out that the past 10 years have had more negatives than positives.

[digger]

Bad guess Kay.
I havnt spoken to digger for sometime-time flies-.
but its always informative to do so-I suspect he is holding onto more shares than everyone here combined and similarly Knows more than everyone here.
Money in the Bank if you have no intention of using it is better returned to shareholders
NZO potentially has a huge gas field-currently holding 50%.
They need to find another partner capable of drilling a deep well.In my opinion they have a good chance of finding a game changing world scale field-no one knows until it is drilled which will probably happen before this decade is over.
They might decide to sell their interest and wind up the company although i suspect they are honest and atm are looking for that big partner.
Plans can change and investing in nzo is much higher risk than the bank,
That risk will decrease after the capital return and remaning shares may be worth more
However there is no way that you will get much chance of a return with a bank-no more than capital invested plus interest minus inflation and minus tax

Fish I am thinking of going to this next meeting to be called to OK the capital return. Want to get the latest on what the directors are thinking. It will probably be in Wellington but is worth the trip. Are you interested in making similar plans. With more people asking questions we get a better spread of ideas.
I would like the meeting called and have no eats as quite frankly too many people come for the eats and not enough time is spent on ideas.

[fish]

Fish I am thinking of going to this next meeting to be called to OK the capital return. Want to get the latest on what the directors are thinking. It will probably be in Wellington but is worth the trip. Are you interested in making similar plans. With more people asking questions we get a better spread of ideas.
I would like the meeting called and have no eats as quite frankly too many people come for the eats and not enough time is spent on ideas.

Sure would like to get to the meeting but doubt if will be able to make it.
Might have to give you my proxy again.
I do strongly favor the capital return

[blackcap]

No Blackcap it does not help at all. You have set out only the negative of the next 10 years. Maybe just maybe something positive will happen in the next 10 years and that should be factored in not just the corporate costs as if nothing ever will take place.The future has to be seen in balance though BALANCE will rightly now step forward and point out that the past 10 years have had more negatives than positives.

I have said nothing negative. Just being neutral. At the moment NZO is cash. They have corporate costs. these need to be factored in and discounted. If NZO are going to do something (thus justifying these corporate costs) then this action can be both positive or negative. Either or it is neutral and thus the corp costs still need to be accounted for in today's share price. But who am I to argue.. it looks like the market has already done this for me.

[winner69]

I have said nothing negative. Just being neutral. At the moment NZO is cash. They have corporate costs. these need to be factored in and discounted. If NZO are going to do something (thus justifying these corporate costs) then this action can be both positive or negative. Either or it is neutral and thus the corp costs still need to be accounted for in today's share price. But who am I to argue.. it looks like the market has already done this for me.

Correct blackcap

The market is saying NZO not going to do anything with that cash - at least, on your sums, the market not factoring in they will go into some loss making venture. That's positive

[Lion]

Yes, "this huge potential gas thingee...." as you put it, blackcap, and then there's this "huge" amount of money sitting in the Co's bank.

Does anyone else wonder if NZO and partner should drill and confirm just what's there?
Before farming out any further? A deep sea drill is expensive, sure, but rigs are cheap now and I think the money is there (half the cost, anyway)
Sure, it's a big risk, but then the rewards are just enormous. "A game-changer for NZ", I think the Co said recently.
I'm not a gambler by nature, but then as a Co, we don't have a great deal to lose and a vast amount to win.

I think it's exciting - haven't had much excitement from NZO for such a long time.

I will be going to the meeting if it's in Wgtn.

[Kay]

If I have understood correctly, the current share price represents a market that is unable to make judgement on whether nzo can put $100m to good use?...Not sure I can help there either!

I guess I am happy to hold and wait to see what happens next.

Thank you for any replies