NZ Oil & Gas (NZO)

[etnom]

With regards to the valuation - something else that appears in the workings that is completely alien to me as an investor... (as in, I have never ever even heard of this in everything I have studied around working out business value...)

After working out what everything is worth....apparently we need to deduct 17 cents per share (roughly $28 million) from all of our assets. "Corporate Overheads" projected until at least 2027.

In other words, they expect us to pay for NZOG staff's salaries + some one-off Ironbark costs (as part of the deal with Cue) up until 2027, even though we would no longer be owners from October 2019.

***

Like, if you owned a rare painting that I wanted to buy - and let's say we could objectively agree that your painting is worth $1 million. But hang on! Not so fast! I am an art dealer, and you need to pay towards my salary for the next 10 years! Your portion of that is 150,000! (Don't worry thought - I did a NPV calculation and discounted my earnings at 10%!)
There is also a one-off shipping and storage cost of $50,000!

Sorry matey, you need to sell me your $1 million painting for $800,000. It's only.... fair after all *Cheshire grin*

What chance do we have of our spineless independent directors to come clean and do the right thing.

[etnom]

Yes. the recent NZOG reports have been scant on detail around Ironbark. Considering how effusive Andrew Jeffries was as recently as June about Ironbark (when announcing the farm-in agreement), I was hoping for a lot more colour around our largest exploration asset.

Not sure what else we are missing from NZOG....but I can tell you what we are missing from OGOG - a decent offer.

Here is a summary of how I would value the business for the purpose of a takeover (for what it is worth to anyone who might be vaguely interested in my thoughts on business value). My reasoning assumes the majority shareholder is acting in good faith, and understands that some premium must be paid to take 100% control.


NZOG cash balance at last Annual Report= approx $78 million (NZ$106M consolodated - NZ$28M Cue Energy share). Approx 47 cents per share.
Kupe = $24 million (low figure from Northington for this part is not unreasonable based on current reserves). Approx 15 cents per share.
Cue Energy: Current Market Cap = NZ$72 million. Price has increased somewhat after Ironbark farm in announcements, so this is probably a decent enough figure for what the market feels Cue is worth, given Ironbark is now fully funded and in play. NZOG share = NZ$36 million (22 cents per share).

So before we have even worked out what the exploration assets are worth we have 47c (cash) + 15c (Kupe) + 22c (Cue) = 84 cents per share. That is what I would consider a reasonable offer just for the existing assets that NZOG control.

Now let's talk about exploration.

Ironbark. It can be shown that a very conservative estimate of potential earnings attributable to NZOG for a 15Tcf find is NZ$1B. It would most likely be closer to double that. In 2017 Cue estimated the chance of success at 25%. We have strong reason to believe this probability of success has significantly increased due to BP, beach and NZOG farming in with large pieces of the equity each (especially BP).

But for our purposes, we can still use the 25% probability. 25% * conservative NZ1B = $250 million. But OGOG would be taking on all of the risk, so we can't expect them to pay all of that. Not even half actually.
A reasonable offer for Ironbark, given how advanced the exploration permit is and the encouraging signs so far, would then be about NZ$100M (61 cents per share).

Clipper. The Barque prospect is estimated to be about 75% of the size of Ironbark. However, there is more uncertainty given the current government policy. Also, the existing infrastructure near Ironbark does not exist near Clipper. So there would be additional costs to extraxct, store and ship the gas onshore.

For this reason we can't just say 75% of Ironbark. 50% would be more reasonable = $50M (30 cents per share).

Ok, so we have 84 cents (existing assets) + 61 cents (Ironbark) + 30 cents (Clipper) = $1.75 per share.

This is what I think a reasonable starting point would be for a majority shareholder to offer minority holders to take full control of this business.

Oh and, to whoever is reading this representing OGOG...now that you have learnt how to view the value of the assets through the eyes of a business owner - it's not too late to increase your offer appropriately

Probably as they knew the old offer had no chance and have access to this site and read messages here .... decided lets go as low as practically possible.

My 50,000+ shares vote no, to the revised offer stands.

[Independent Observer AUNZ]

Your so right Arjay.. Of all the about 100 articles I have on the ever changing climate I picked that one. A real screw up. I probably am an atheist--I certainly have no interest in religion.

So science you want . Try this piece and I have double checked that god fearing stuff does not creap in.

professor-valentina-zharkova-breaks-her-silence-and-confirms-super-grand-solar-minimum/

Can't believe I'm having this debate with what I assumed were intelligent people on this forum... but...

https://www.theguardian.com/environm...ts-still-wrong

https://www.newscientist.com/article...lobal-warming/

And hundreds more...

[mistaTea]

Can't believe I'm having this debate with what I assumed were intelligent people on this forum... but...

https://www.theguardian.com/environm...ts-still-wrong

https://www.newscientist.com/article...lobal-warming/

And hundreds more...

My view remains that the climate is getting warmer due to a combination of natural variations and man made consumption and pollution.

With 7 billion people on the planet, of course we are having all kinds of impacts on the natural environment. And of course we need to clean up our act. Not only with CO2 emissions but also a whole range of other environmental destruction (intensive farming wrecking waterways, excessive logging etc etc).

We need ambitions long-term goals to clean Earth up, though in the meantime we need to keep away from the rhetoric and implement pragmatic and achievable goals. Doom and gloom prophecies that call for complete bans etc are just absurd. The reality is, over the course of the next century we will need to be able to produce more energy than we ever have to support a growing population as well as 3rd World countries who are making the transition to an industrialised nation.

Accepting gas as a key transition fuel away from coal power plants is an example of a pragmatic step.

Investing in carbon capture technology would also seem like a reasonable thing to do while we are transitioning.

It’s entirely possibly to be an Oil & Gas explorer and accept global warming is a thing, and that humans are contributing.

[Ripping]

My view remains that the climate is getting warmer due to a combination of natural variations and man made consumption and pollution.

With 7 billion people on the planet, of course we are having all kinds of impacts on the natural environment. And of course we need to clean up our act. Not only with CO2 emissions but also a whole range of other environmental destruction (intensive farming wrecking waterways, excessive logging etc etc).

We need ambitions long-term goals to clean Earth up, though in the meantime we need to keep away from the rhetoric and implement pragmatic and achievable goals. Doom and gloom prophecies that call for complete bans etc are just absurd. The reality is, over the course of the next century we will need to be able to produce more energy than we ever have to support a growing population as well as 3rd World countries who are making the transition to an industrialised nation.

Accepting gas as a key transition fuel away from coal power plants is an example of a pragmatic step.

Investing in carbon capture technology would also seem like a reasonable thing to do while we are transitioning.

It’s entirely possibly to be an Oil & Gas explorer and accept global warming is a thing, and that humans are contributing.

Agree. And yet I think many arguments on this are irrelevant with respect to Ironbark. Worldwide demand for energy is increasing. Every energy producer is exploiting that demand, whether the source be coal, oil, gas, solar or wind.
If global temperatures are rising, falling or remaining static, that demand for energy will keep increasing, and certainly in the fossil fuel sector, the source of raw material to produce that energy is still decreasing.
Simply supply and demand.

[airedale]

I have just been to Computershare to re-check my vote as I recently bought a few more. My updated total is correct and the newest shares have been recorded as per my original vote against.
However, from Computershare the details of the time and place of the meeting are 10.00 am on Tuesday 14th November. Tuesday of that week is the 12thof November.

[digger]

I have just been to Computershare to re-check my vote as I recently bought a few more. My updated total is correct and the newest shares have been recorded as per my original vote against.
However, from Computershare the details of the time and place of the meeting are 10.00 am on Tuesday 14th November. Tuesday of that week is the 12thof November.

So does that give you confidence in computershare? Can't look up on a calander and sort out the day of the week,so can they be trusted to give your shares the no vote you asked for. As you have spotted this you should point it out to them.

[Independent Observer AUNZ]

My view remains that the climate is getting warmer due to a combination of natural variations and man made consumption and pollution.
Accepting gas as a key transition fuel away from coal power plants is an example of a pragmatic step.

I agree that gas is a good transition fuel (and better than coal).

There is however not sufficient evidence that natural variations could cause, or even sufficiently contribute to materially, the extreme changes we are seeing already in climate data. The more that idea gets trotted out and accepted in various forums, the more I feel some in our society are keeping their head in the sand about what is really happening right before our eyes.

[neopoleII]

I agree that gas is a good transition fuel (and better than coal).

There is however not sufficient evidence that natural variations could cause, or even sufficiently contribute to materially, the extreme changes we are seeing already in climate data. The more that idea gets trotted out and accepted in various forums, the more I feel some in our society are keeping their head in the sand about what is really happening right before our eyes.

and in the meantime the western world wants cheap products from china and india which is about a 1/3 plus population on earth and huge polluters and our western governments want to tax the life out of our citizens and corporations to virtue signal we "the minions" are doing a positive thing.
all an aware person needs to do is look at the stats of co2 production from china, india, indo asia and region and see that what entitled 1st worlders are spouting about is nothing but virtue politics.

to fix this issue, we of the western world who believe in climate change and think that a few million people can fix the climate compared to billions of the rest of the world population should vote to buy and sell nothing to or from the polluters.
like putting tariffs on products made in china, not selling our stuff to china etc.

not going to happen........ but the politicians play this game for their own agenda.

[neopoleII]

sorry for the above post, should be elsewhere, but this climate change ideology and the persecution against energy producers really annoys me