NZ Oil & Gas (NZO)

[digger]

You could not have got your assumptions more wrong.

NZO would come across as the biggest idiot of all times as NZO cannot just buy 5%.

Under the takeover code, NZO would need to buy up to at least 50% and launch a formal bid.

There will be plenty of disappointed PRC shareholders very happy to sell out to NZO at $1.15.

Watch NZO share price drop like a lead balloon.

Actually for the first time ever i find balance has posted a balanced and factual set of true statements.Has balance converted to the truth or is this just an unfortunate one off,never to be repeated again slip in his charactor.Every sentence is correct and true.

[Mr Tommy]

Kupe gas field costs skyrocket
By JAMES WEIR - The Dominion Post | Wednesday, 12 September 2007

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ROBERT KITCHIN/Dominion Post
FULL STEAM AHEAD: The oil and gas market is overheated with lots of projects, and suppliers are spoilt for choice, Kupe project director Peter Ashford says.

The giant Kupe gas project in Taranaki will cost 10 per cent more than the original estimate of $980 million, as world prices for equipment and hire of drilling rigs rocket up in an overheated market.


Weather delays could also add to rising costs in the next six months, as the project moves into its big offshore campaign, with a well drilling rig due to arrive next month.

The Kupe gas field is about 30 kilometres off the south Taranaki coast, and the project also involves a big processing plant onshore, near Hawera.

The world oil industry was still catching up with hurricane damage done to equipment in the Gulf of Mexico two years ago, and cost increases since then had been huge, Kupe project director Peter Ashford said yesterday.

"The oil and gas market is very overheated with a lot of projects, and suppliers are spoilt for choice. Suppliers name their price and their schedule."

There were few projects on schedule or budget and Kupe was suffering in a "challenging environment", with prices rising by the day, Mr Ashford said.

In 2005, Kupe was expected to cost $800 million, but a year earlier the cost was put at $400 million.

Australian company Origin Energy is operator of the project and a 50 per cent shareholder in Kupe, with state-owned power company Genesis holding 31 per cent.

Origin also owns 51 per cent of Contact Energy. Origin is presently trying to raise $200 million from New Zealand investors through the issue of preference shares.

Gas from the Kupe field is expected to flow from the middle of 2009. Reserves are estimated at 250 petajoules. Kupe will be big enough to supply about 15 per cent of New Zealand's present total gas demand.

However, Kupe is just a fraction of the size of the massive Maui gas field and its estimated 3562PJ.

While Kupe will not comment on the price for its gas, Pohokura gas was said by industry experts to cost about $6.50 a gigajoule - about 2.5 times more than the original cheap Maui gas. A petajoule is one million gigajoules, indicating 170PJ could be worth about $1 billion.

Kupe locked in the cost of the well drilling rig at the end of 2005, and some other equipment in the middle of last year, when the final decision to go ahead with the project was made, but other costs have risen.

When the partners moved to putting in final orders, prices had risen by as much as 25 per cent. In other cases, some installation equipment had been locked in for half the present day cost, Mr Ashford said.

The project cost could go even higher, if the weather slowed down planned offshore work.

[Hoop]

Short article from todays Market Watch

SAN FRANCISCO (MarketWatch) -- October crude climbed 74 cents to close at $78.23 a barrel Tuesday, marking the highest closing level for the front-month contract traded on the New York Mercantile Exchange. OPEC agreed to raise actual production levels by 500,000 barrels per day and lift the cartel's quota to 27.2 million barrels per day as of Nov. 1, according to news reports. But Charles Perry, chairman of Perry Management said "just about everyone is skeptical of OPEC increasing their production very much" with many members near their peak production.

Seems the world is a little short of oil at the moment.
...and the Northern winter yet to come..

[dsurf]

Balance - there is a word for overly pedantic people who concentrate on words instead of the message - okay PRC borrow off NZO & then buy 5% - hope you make money being right - go on - have a go.

[Toddy]

Re Kupe cost blowout.

Shareholders can live with the current cost increases. However, surely there is a risk to NZO option holders that the project leaders (Origin) come out with an unwelcome budget update just weeks before the NZO option exercise date.

If this is coupled with further teething problems down at PRC then NZO manangement would be faced with an almost impossible task of convincing the market that the NZO SP is worth $1.50 a share or more.

Its all about the timing, and unfortunately the exercise date for the od's is a year too early.

[arjay]

You could be right Toddy, in which case maybe NZO could think about adding a year onto the life of the ODs and adjust to exercise price upward by a few cents to compensate for risk. They did this with the OB's some years back so it can be done.

[sideline]

Aspect Huntley have updated their report on NZO, reiterate accumulate rating.

[digger]

You could be right Toddy, in which case maybe NZO could think about adding a year onto the life of the ODs and adjust to exercise price upward by a few cents to compensate for risk. They did this with the OB's some years back so it can be done.

That is my thinking two Arjay.Since the OD's were issued some of the events have taken place but a lot of them have been delayed.In fact only 1 of the 3 projects will be up and running by then.These delays are beyond the company but giving the options a longer life as with the OB's is the way to go.. Another point of discussion for the AGM.

[winner69]

Balance - there is a word for overly pedantic people who concentrate on words instead of the message - okay PRC borrow off NZO & then buy 5% - hope you make money being right - go on - have a go.

maybe you should start buying up to 5% of PRC yourself dsurf ..... achieve the same result

[shane_m]

any one know the Tui gas lift cost per barrel ?