NZ Oil & Gas (NZO)

[Fabs37]

Its a BS report and we all know it. They know it, everyone knows it. Its just up to enough of us Shareholders to vote NO at the meeting.

As pointed out in a couple of postings over the last 2 years since they took their holding to where it is atm.

The present move was quite obviously the plan since then.
Give it enough time for the S/P to drift and have friendly party/s at 40 - 45 cents buying up,
to make a good return and Vote in favour of present offer.

Chance of No votes stopping it, sadly very slim IMHO.

[blackcap]

As pointed out in a couple of postings over the last 2 years since they took their holding to where it is atm.

The present move was quite obviously the plan since then.
Give it enough time for the S/P to drift and have friendly party/s at 40 - 45 cents buying up,
to make a good return and Vote in favour of present offer.

Chance of No votes stopping it, sadly very slim IMHO.

Not that many shares traded in the 40-45 range though. In fact none did. So not sure if there are going to be enough YES votes. 75% is quite a large threshold.

[trader_jackson]

https://www.nzherald.co.nz/business/...ectid=12266098

Quite glad I sold out in November 2016 at 64 cents... although quite sad really as this takeover of another NZ firm looks to be basically a done deal with OGOG already having a 70% holding, and 75% required - meaning only 5% of the remaining 25% need to vote in favour for it to proceed (is that right)

[mistaTea]

https://www.nzherald.co.nz/business/...ectid=12266098

Quite glad I sold out in November 2016 at 64 cents... although quite sad really as this takeover of another NZ firm looks to be basically a done deal with OGOG already having a 70% holding, and 75% required - meaning only 5% of the remaining 25% need to vote in favour for it to proceed (is that right)

Wrong. 75% of Minority Shareholders have to vote in favour for this to pass. Given the low price offered, the chances of OGOG getting enough votes from minority holders are slim.

OGOG's 70% holding is irrelevant.

[trader_jackson]

Wrong. 75% of Minority Shareholders have to vote in favour for this to pass. Given the low price offered, the chances of OGOG getting enough votes from minority holders are slim.

OGOG's 70% holding is irrelevant.

Ah ok, and how much % does management hold? They look to be all voting in favour...

[blackcap]

Ah ok, and how much % does management hold? They look to be all voting in favour...

Will management even be allowed to vote? Or is it just the directors and O& G associates that are not allowed to vote?

[mistaTea]

Have had some time to read over the details and digest it all.

The valuation from Northington is the only thing of interest to me. Ultimately, their valuation method is flawed (imho). Trying to break all of the parts up in the way they have, and then attributing little or no value to the exploration assets (with a combined prospective discovery potentially being over 26 trillion cf of gas...) makes no sense to me.

A business owner would not view his company that way. A trader, looking for a quick win - maybe. But not the long term owner. To be fair to the SoA, they clarify that this is not financial advice, and does not consider individual investment objectives.
It is clear to me that OGOG have valued the company in the most pessimistic way in an effort to buy us out cheap. I think they will be unsuccessful, and will regret not being more generous (especially if a big discovery is made). An offer at the top of the range would have only cost them an extra $10M or so - chump change for OGOG given the enormous upside. That would have made it much easier to get YES votes, as they could have told a much better story to the market. As it stands, even Northington have said that the offer is "not compelling".
Not for me to say how they should make their investment decisions, but if Ironbark is successful...they will be gutted that they were so tight on the SoA, and now have to share the bounty with us.

Anyhow,

So let's point out a few of the issues, as I see them (for what it's worth):

1. They claim that NZOG only has $74M in cash after deducting funds owed to Cue as part of the Ironbark investment. That is misleading because NZOG also owns half of Cue's A$26M cash (today that would be approx NZ$14M attributable to NZOG). So when you add that back in, you have $88M in cash alone, with no debt. Roughly $4M was paid to Cue as part of the Ironbark deal...given we own half of Cue, we effectively paid ourselves half of that ($2M). So add that back in since we still own that cash... and now you have $90M of cash alone, attributable to NZOG.

In other words, the value of all production assets between NZOG and Cue, as well as their exploration permits (two of them are potential monsters) are effectively valued at $12M (based on the low range).

2. Their valuation for Cue as a whole is about $10M or so lower than the current market cap. The Australian market clearly disagrees with Northington in terms of what Cue is worth. Even using the lower Cue market cap at 21/08/19, Northington still think the Aussies are all wrong.

3. Zero dollars to very small dollars attributed to Clipper and Ironbark. Even if we forget about Clipper for now (as there is regulatory uncertainty at the moment) and just focus on Ironbark...a discovery of 15T cf of gas would immediately push NZOG's market cap well over $1 Billion dollars. Of course there is risk in exploration - that is part and parcel of owning an oil and gas exploration company. To suggest that we should give away an exploration permit of that magnitude - which has an enormous upside potential - for $3M is nuts. A rational business owner would not do that.
And BP has taken a huge % of the equity in Ironbark and agreed to be Operator. That does not guarantee success, but it is as positive a sign you are ever going to get that there is a better than average chance of a meaningful discovery.

To sum up, I think it is best to do a little thought experiment.

Imagine you are the only owner of NZOG, as a private company. All assets are exactly the same as now.

After taking into account a deal you have done with your subsidiary (Cue) for Ironbark, you still effectively have $90M of cash attributable to your business. No debt, you don't owe anyone a damn thing. You have existing production assets that keep enough money rolling in to pay all your bills and even have some extra cash at the end of each month.
You have just signed a massive deal with BP and Beach energy to participate in the drill of the century. BP and Beach are excited, and you are excited too having extensively studied the various surveys of Ironbark. Within a year you are going to drill...after all your hard work getting the deal in place, you can finally see light at the end of the tunnel...and this could make your business worth billions, depending on the size of a discovery...

If someone knocked on your door in that situation and offered you $102M to purchase your company, what would you do?

It is my view, that a rational business owner would say thanks but no thanks. Possibly something much less polite!

I will still be voting no.

[BigBob]

"All shareholders are strongly encouraged to vote on the scheme. To approve the scheme, 75% of the votes cast in each interest class must be voted in favour. All shareholders other than OGOG will comprise one interest class. OGOG will comprise a second interest class. This means that the scheme will only proceed if 75% or more of the votes cast by the minority shareholders support it. Shareholders may vote in person at the special meeting, by postal vote (including online), by proxy or by corporate representative."

According to my calculations:

Total shares on Issue: 164,430,718
OGOC (as per annual report): 114,876,016 (interest class 2)
All other shareholders: 49,554,702 (interest class 1)

25% of interest class 1: 12,388,676.

So we need at least 12,388,677 to vote against or not vote.

It would be interesting to know approximately where the no vote is at, but judging by comments here, that may be doable...

It would, of course, also be possible to buy a few extra shares prior to the meeting to vote against if it is close....

[Beagle]

Is this the same Northington that was engaged by Geneva Finance to give management the valuation they wanted ?
If so Northington for the record valued Geneva Finance at approx. 38 cents for the purposes of a restructure and the shares never traded above 13 cents per share post restructure. (Geneva finance subsequently have had a 10:1 share consolidation).

[mistaTea]

So we need at least 12,388,677 to vote against or not vote.

.

Yes, and that number assumes 100% of the minority class vote. The reality is well less than 100% will participate, so the number of NO votes required will be less than the 12.4M you have stated. Best to plan for the worst case scenario though.

I am not going to get into it on here as John Pagani follows this forum. Though I maintain a respectful relationship with John, at this junction the less he knows about what I am doing behind the scenes, the better.

But I have every reason to be cautiously optimistic right now.