NZ Oil & Gas (NZO)

[arjay]

Don’t get it. 10 yrs on, NZO CEO is still doing the ‘we have 100 mil in the bank and are looking for exciting opportunities” routine, and RNZ are still treating it as news.

[fish]

Don’t get it. 10 yrs on, NZO CEO is still doing the ‘we have 100 mil in the bank and are looking for exciting opportunities” routine, and RNZ are still treating it as news.

That is true.
They report what the company discloses without investigating deeper
They have one very important drill going ahead next year and possibly another one the following year which are likely to be successful and company transforming

[mistaTea]

Overall, not a bad result given the company remains in a holding pattern - awaiting the exciting Ironbark drill, and accumulating cash in the meantime.

Underlying 'Owner Earnings' attributable to NZOG are sitting at around $4M (same as last year, which is to be expected). I am not going to demonstrate a detailed formula of how I arrive at that figure, but it is a concept I have learnt from Buffett which allows you to look through the smoke and mirrors of GAAP to get a feel for how much a business is worth to the long-term owner, from an earnings perspective.

The impairment cost is totally legitimate and necessary. But it is a non-cash transaction. For those who may be less familiar with accounting shenanigans...Assets we previously thought had a reasonable chance of success were recorded on the Balance Sheet as an asset. Those assets are now no longer in play so you have to get them off the Balance Sheet. To do that, you have to apply it as a 'cost' to your Income Statement. But it is non- cash - $7.2M of cash did not physically fly out the door.

You will note that Exploration and evaluation expenditure is up at $8M this year. That is up on last year as we had to fully expense Kohatukai ($4.6M). That was cash flying out the door, unfortunately. By the end of the last year it was deemed gas levels were not commercially viable, and all the cash spent needed to be (quite rightly) expensed all in one hit. But it is a one-off cost to Operating Earnings, and will not be repeated next year. In that light, if everything stayed roughly the same by June 2020, Owner Earnings would likely double to damn near $8M.

Depreciation/Amortisation attributable to NZOG is around $6M. That is probably about 3 times the CAPEX it currently requires to actually 'stay in business' (given most of the assets it holds is cash, and has small minority interests in the assets it holds that do produce).

So by the time you make a few adjustments here and there, the reality about NZOG's underlying performance is not too bad. Certainly not great, and we would prefer to have the cash deployed to increase earnings...however it would be foolish for the long term owner to be worried about the GAAP loss to NZOG of -$7.5M.

Underlying earnings are modestly positive, and we are in a great financial position to explore Ironbark (the main reason most of us are still affiliated with this company).

Oh, and the statements about all of the cash assigned to exploring Ironbark and in escrow...that is just noise that can be disregarded for our purposes. The cash is still there today (it hasn't vanished!), we still own that cash...and any genuine SoA offer wouldn't try to pretend otherwise.

Ok that's it from me for now! Hopefully helpful to some!

[fish]

Thanks for that clear interpretation of the truth behind the report.
With the AGM coming up I wonder if it is possible to try and get a shareholder and true believer in the future of NZO as a NZ company on the Board.
I talked to Digger about this a decade or so ago and he strongly agreed and was prepared to stand

[mistaTea]

I talked to Digger about this a decade or so ago and he strongly agreed and was prepared to stand

He would get my vote.

The current leadership are true believers in NZOG. They are extremely bullish on the medium-long term prospects.

It’s just that our Board is full of OGOG employees now, so their interests are not fully aligned with ours now. And it is perhaps inevitable that the ‘independent’ directors are now compromised (even though I am sure they are decent enough people who would very much love to remain truly independent).

[fish]

He would get my vote.

The current leadership are true believers in NZOG. They are extremely bullish on the medium-long term prospects.

It’s just that our Board is full of OGOG employees now, so their interests are not fully aligned with ours now. And it is perhaps inevitable that the ‘independent’ directors are now compromised (even though I am sure they are decent enough people who would very much love to remain truly independent).

Have just read the annual report.
Opens with the Chairman/CEO report-my reading is that it is written by OGOG and since they want to raise money on the capital markets-which will be a reach for a small company in the current environment-they kindly will buy our shares from us.
Personally I dont go along with this.
If a drill at Ironbark or clipper is successful raising money would be easy peasy.
Going back a decade NZOG raised money by issuing options-I know because I bought a few million.
I have been in touch with some of the top twenty shareholders and am unaware that any have been approached about this option

We have the money to drill Clipper and Ironbark.One of them is likely to be successful.Raising money will then be easy

[fish]

I would say not a dog show as OGOG has 70% and they call all the shots.I would last about 5 minutes as I do not have the rubber stamp qualities OGOG is looking for.In all businees matters I would follow the rules but when it came to a takeover I would act as an independent director.In fact I would recommend the takeover when the offer price is quadrupled.
So there you have it --- Better back a snowball in hell.
What is up with this looooong awaited booklet which is suppose to explain very clearly why we should have our shares stolen by OGOG. WAS A FEW COMMENT IN THE ANNUAL REPORT IT??????

The Northbridge Partners valuation is due later this month. I can,t wait to see it and will be reading it carefully to see if it is fair and reasonable.
I plan to read every sentence and dissect and analyse asap.

[digger]

The Northbridge Partners valuation is due later this month. I can,t wait to see it and will be reading it carefully to see if it is fair and reasonable.
I plan to read every sentence and dissect and analyse asap.

What do you mean --later this month. I thought the special meeting as later this month.Wouldn't put it past OGOG to have the meeting on or just before the valuation comes out.They will certainly be looking for every loop hold to shorten the interval between the two.

[RTM]

What do you mean --later this month. I thought the special meeting as later this month.Wouldn't put it past OGOG to have the meeting on or just before the valuation comes out.They will certainly be looking for every loop hold to shorten the interval between the two.

Can't see any definite dates but I do see this....

"Shareholders will be given the opportunity to vote on the scheme at a special shareholders’ meeting. No date has yet been set for that meeting, but New Zealand Oil & Gas anticipates it will be held in October 2019. "

From "31/7/2019, 8:30 am MKTUPDTE "

Yes...I would like to see the valuation as well. Its been very quiet.

[blockhead]

I think some have already seen the hand written version of the report, appears to be upward pressure on the sp at the moment.

That's surprising for NZO isn't it ??