NZ Oil & Gas (NZO)

[blackcap]

[URL]

I can't wait to visit my local cafe for a hearty breakfast that's for sure! I'm going to push the boat out - Big Breakfast and a large flat white! Go on, spoil me!

Sounds like a good plan, but you know you can make the above quite easily yourself and trust me it tastes just as good

[Lion]

I went to your link above, mistaTea and had a look round the site.

On this page https://www.energynewsbulletin.net/f...drilling-giant dated 28th April I found this little snippet about the Ocean Apex:

"The Ocean Onyx and Ocean Apex are still positioned in the Asia Pacific region and are expected to continue to complete work even while the company is in Chapter 11."

[mistaTea]

I went to your link above, mistaTea and had a look round the site.

On this page https://www.energynewsbulletin.net/f...drilling-giant dated 28th April I found this little snippet about the Ocean Apex:

"The Ocean Onyx and Ocean Apex are still positioned in the Asia Pacific region and are expected to continue to complete work even while the company is in Chapter 11."

Positive sounding news! Once I realised they could still trade under chapter 11 I figured there was a good likelihood existing commitments could continue.

After all, chapter 11 is a way to avoid going completely bust. To achieve that, they need to continue generating revenue to try and trade their way out of their current problems while they restructure their debt etc.

I just wonder if the fact that Diamond are now suing our JV partner will impact Ironbark. Hopefully not, since it is really BP who is running the show. But still far from ideal.

[Lion]

I think it was on Hot Copper that I read an opinion that if Diamond Offshore do sue Beach, that Beach are big enough and smart enough to "shrug it off".
Well, I wouldn't know about that, Diamond are a pretty huge company too.

Your link above didn't look that optimistic about Ironbark though, did it?
I wonder if there was a bit of journalistic speculation there. It didn't sound like BP themselves had mentioned Ironbark, just general budget cuts.
I agree with you - you'd think Ironbark would be one of the last projects they'd consider cutting.

I did a small top up of NZO at 49.5 a couple of weeks ago.

P.S. Your link says "New Zealand Oil And Gas said it believed the well would still spud this year"

[fish]

I think it was on Hot Copper that I read an opinion that if Diamond Offshore do sue Beach, that Beach are big enough and smart enough to "shrug it off".
Well, I wouldn't know about that, Diamond are a pretty huge company too.

Your link above didn't look that optimistic about Ironbark though, did it?
I wonder if there was a bit of journalistic speculation there. It didn't sound like BP themselves had mentioned Ironbark, just general budget cuts.
I agree with you - you'd think Ironbark would be one of the last projects they'd consider cutting.

I did a small top up of NZO at 49.5 a couple of weeks ago.

P.S. Your link says "New Zealand Oil And Gas said it believed the well would still spud this year"

I thought it was a bit of poor journalism as well ..
The money for Ironbark is held in escrow.
If Ocean Apex is unable to drill there will be a breach of contract .
No money lost.
Plenty of Rigs available-probably with cost savings.
In fact whatever happens costs are likely to be less.
Natural Gas is the future of clean energy and we can afford to take time as long as it takes provided running costs minimised.In the Industry there are many wage cuts and cost savings so future development of Ironbark more feasible.

[blackcap]

Time to liquidate surely? Some very good points made. Shareholders can receive cash, yet still participate in Ironbark. Corporate overheads must go.

http://makethemaccountable.com.au/20...uidate-surely/

NZOG has abandoned NZ as an investment destination yet remains sitting on a huge wad of cash. No strategy has been announced five months on from saying they would develop one – what other public company has no strategy? As a financial investor which has abandoned its mandate to invest in NZ, there is zero logic in continuing to spend nearly $10 million on an executive team and office. This letter makes the financial and operational case for liquidation to put 80 cents per share in the pockets of shareholders plus the upside in Ironbark which could be serval multiples more.

[mistaTea]

Time to liquidate surely? Some very good points made. Shareholders can receive cash, yet still participate in Ironbark. Corporate overheads must go.

http://makethemaccountable.com.au/20...uidate-surely/

NZOG has abandoned NZ as an investment destination yet remains sitting on a huge wad of cash. No strategy has been announced five months on from saying they would develop one – what other public company has no strategy? As a financial investor which has abandoned its mandate to invest in NZ, there is zero logic in continuing to spend nearly $10 million on an executive team and office. This letter makes the financial and operational case for liquidation to put 80 cents per share in the pockets of shareholders plus the upside in Ironbark which could be serval multiples more.

I tend to agree, in principle, that NZOG should look at liquidation in some form. My personal preference would be for the Cue shares to be distributed on a pro-rata basis to NZOG holders. Then we can decide over time if we want to keep them or sell them since they do actually have more production going on, and are domiciled in Aussie (much friendlier environment).

James proposes that NZOG return essentially all of the cash held by NZOG to shareholders now ($75M). I don't see how that is possible since about $20M or so is escrowed for our Ironbark commitment. If management have not found any opportunities generated by Covid to buy existing gas producing assets, then they could probably start the liquidation process by returning $50M (approx 30c per share).

Then we wait and see what happens with Ironbark. If it succeeds, shareholders make bunch of money. If it does not - then we sell Kupe and wind it up. As mentioned before, if the Cue shares have already been distributed then NZOG holders can decide later on whether they want to keep them or not.

I agree with his point about management and the board not reducing their fees. It is not a good look, especially given the company has been sitting on a pile of cash for so long with no clear strategy emerging. I am sure Mr Jeffries (for example) is not just drinking beers all day - but one does have to question exactly what these guys have been doing that justifies the expense.

Not sure about his stance that OGOG would take current management into the OGOG fold at no cost to NZOG shareholders. They have no obligation to do that, and management currently have employment contracts with NZOG. I assume we would need to make them redundant and pay them out if we were to liquidate. But I have no expertise in employment law or liquidation, so I can't really comment too much here.

[blackcap]

I tend to agree, in principle, that NZOG should look at liquidation in some form. My personal preference would be for the Cue shares to be distributed on a pro-rata basis to NZOG holders. Then we can decide over time if we want to keep them or sell them since they do actually have more production going on, and are domiciled in Aussie (much friendlier environment).

James proposes that NZOG return essentially all of the cash held by NZOG to shareholders now ($75M). I don't see how that is possible since about $20M or so is escrowed for our Ironbark commitment. If management have not found any opportunities generated by Covid to buy existing gas producing assets, then they could probably start the liquidation process by returning $50M (approx 30c per share).

I too would like to see the CUE shares distributed in specie. That way we the NZO holders can do with them what we will. Keep them for increased Ironbark exposure or sell for cash. Good point re the $20m in escrow. If we want to retain the NZO shares and Ironbark drill we will need the money to drill it. The rest definitely distribute to shareholders.
As for management and other expenses, they are exorbitant, especially for what is effectively a portfolio holding company with 2-3 investments at best. But will the NZO board listen?

[mistaTea]

Good point re the $20m in escrow. If we want to retain the NZO shares and Ironbark drill we will need the money to drill it. The rest definitely distribute to shareholders.
As for management and other expenses, they are exorbitant, especially for what is effectively a portfolio holding company with 2-3 investments at best. But will the NZO board listen?

I think we need to retain our 15% and fulfil our obligations to our JV partners. If we didn't then what would happen? It could end the JV and therefore the Ironbark drill.

I am not convinced the board will listen - they are mostly OGOG so they will naturally be looking our for their best interests. As much as James raises some good points, I think he ultimately does himself a disservice with his inaccuracies (around the cash that can be distributed to shareholders) and the aggressive nature of his accusations that management are just wearing out the carpet as they walk back and forth to the fridge.

It is one thing to have a little rant on Sharetrader, but if you are writing a formal letter that you wish to be taken seriously...I think a little diplomacy goes a long way.

Ultimately we all want to realise the maximum value for NZO. The story has changed over the last year or two, and James is dead right that they should seriously look at some form of liquidation.

Realistically though, that won't happen until after Ironbark I think (in a scenario where Ironbark fails). The company will need to maintain a certain amount of working capital in addition to the escrow amount to ensure it is a viable going concern while the drill happens (BP would not be happy if NZOG took it right down to the wire by distributing all of the rest of the cash to shareholders now).

They could do the in-specie distribution of Cue shares now I suppose. But why bother? If Ironbark is a success we would probably want to keep them in the NZOG family. If Ironbark fails then they could be distributed as part of the liquidation and we are no worse off.

There is some chance they might find an interesting producing gas asset to buy into now thanks to Covid. I am not holding my breath, but realistically we are going to need to sit tight for the next 9 months while we wait to drill Ironbark and get the results in my view.

[Marilyn Munroe]

Major(ultimate) shareholder Mr Ofer has other investments in oil and gas services and cruise lines.

Both these industries have been severely affected by recent events. Mr Ofer may turn over his sofa cushions looking for cash.

Boop boop de do
Marilyn