NZ Oil & Gas (NZO)

[Sumnerned]

Digger

I'm going walkabout for a few weeks. I have enjoyed reading your informed and sensible posts over recent times. Keep up the good work.

[COLIN]

For the first time since the quarterly NZO has displayed a bearish divergence in OBV and in the oscillators (Stochs, RSI) over the last week. What may happen is a consolidation of prices around this level.

Good. A window of opportunity to add to my holdings.

[the machine]

If the upgrade to TUI is to 60 million barrells that is an increase of nearly 50% to the current published reserves (41.7m barrells?). McDouall Stuarts review in April valued NZO at $1.72 ("Our sum-of-parts rolling DCF valuation produces $1.72") of which TUI represented 84 cents of that valuation. So a 50% increase in the TUI reserves could add 40cps to NZO? Probably less though as some of the extra has probably already been factored in by the market as the water cut hasn't increased as expected, but would still be very good for NZO (and NZOODs!) shareprice. Here's hoping...

doubt the outcome of review will go that high.

before production began, it was estimated 1/3 rd would be produced in 1st year [ending july 31 2008]
using that then with 12m until may 5 and 86 days leftto july 31 @ 40,000 barrels per day = approx extra 3.5m = 15.5m for 12 months production = upgrade to 46.5 m barrels.

to me that is a more reasonable quantity to expect at this juncture.

yes there will be further reviews - maybe only annual from here on as companies need to state reserves in annual reports.

M

[COLIN]

NZO has just given an unexpected dividend so i do not expect one at this stage.The scariest thing that seems to be coming out of NZO is this acquistion talk.To aquire another company just because you can is the worst of reasons for doing anything.It gets doubly scary when you read in the last invester presentation that NZ may be too small and they may have to look overseas.That is a rush of blood to the head and for the next few years we should just stay here where we know what we are doing and slowly build the company.A steady growth for now.The sharks have overcome many a NZ company that did well here and decided to take on the world too early in there development.
Jenny Ruth are you listening. That is may first question for the Invester Interview on May 13 which is next TUESDAY.

Good to air that concern, Digger. They did signal in their latest interim report that their longer-term strategy was to double the business over the next five years (not too sure what the base for measurement of that growth would be - I think they related it somewhere else to proven reserves) but they need to be asked whether that goal is still operative.
As to whether there will be any further cash dividends in the near future, I agree that that is not likely to happen - would hardly make sense to pay out a big chunk of the incoming option conversion money, particularly with inherent taxation implications (don't dissipate imputation credits unnnecessarily.)

[the machine]

invester review subjects - which need to be posed as questions
===============================================
tui
which holes have been producing over which time span.

kupe
details of the 3 productions holes - vertical or horizontal and what length do they penatrate the reservoir.
was the snorkal used for drill final sections, inturn details of how thick are the reservoirs in the drilled section

momoho
more details of the size of the prospect [origin show as potential 100 bcf gas in their recent presentation]

thanks

M

[foodee]

Colin
I think the quarterly report stated ...'to double production and double reserves by 2012.'

Totally agree with Digger's question.

Cheers

[Nitaa]

I thought i would throw around some numbers for the ones who are interested.

Tui estimate 40,000 bopd for 2000 = 5,000bopd for NZO or 1,825,000 for calender year 2008

The following is RAW revenue less operating, tax, royalties etc.. Unicorn can help here please.

5,000 bopd = at $1.30 (est current Tapis price) = USD650,000 per day or $NZ845,000 per day for NZO

NZO revenue for calender 2008 USD237,250,000

NZO revenue for calender 2008 $NZ308,425,000

The actual figures wont look like that as deductions for shipping to refinery etc and other expenses will show about 90% of actual revenue shown. Then you have tax, royalites etc. Can some accountant help with the breakdown in this area? Either way for the calender year of 2008 based on todays prices and est recovery of 40,000 bopd then we can expect approx a net profit of around $NZ500,000 per day or about $NZ180,000,000 net profit

currently nzo have 256,423,355 shares on the registery and currently TUI alone would bring in a net 71 cps net for 2008

If all options get converted then we would have 395,223,100 shares available giving every shareholder a net profit from TUI only of about 46 cps. These figures are nothing short of sensational.. Lets not forget that oil could rise to over $150 pbo or drop below $100 in almost no time. Expect volatility.

havent evwen touched on PRC and by current values PRC is worth over approx $130m to NZO or an extra 55 cps cuurently or 30 cps if all options get converted.

Kupe.. This is one i am really excited about. Insificient datea for me at the mo but looking at what is happening with Origin then clearly Kupe will be bigger than Hawera. Here is your dividend puppy. PRC to be sold imo within 12 months.

Tui is only the start. I expect other tie ins to tui as the JV better understand the permit areas. also i see tui only operating on 3 cyclinders. There must be a certain model of efficiecy as the extra the oil at a certasin rate to maximise current and long term earnings. Tui will be on stream for the life of the lease imo.

This is quick calulations so i am sure there are errors. I am also aware that price of oil in january is not what it is now. However if you like numbers then have a play around

[Nitaa]

1 point that i left out whicj is also critical is the option conversion and how much cash it will bring in.

Should all the options get converted then $208m extra will go into the coffers. A total of up to 464,000,000 shares. If so then the conversion will add 50 cps to the value of each share.

With some of these numbers and over $1b invested into Kupe then its not hards to see why the smart money are buying up large with the NZOOD's

[duncan macgregor]

1 point that i left out whicj is also critical is the option conversion and how much cash it will bring in.

Should all the options get converted then $208m extra will go into the coffers. A total of up to 464,000,000 shares. If so then the conversion will add 50 cps to the value of each share.

With some of these numbers and over $1b invested into Kupe then its not hards to see why the smart money are buying up large with the NZOOD's

NITA, what you miss is that if you think the shares are worth more than $1-50 at this moment then converting the options will dilute the shares worth. They are selling bits of the cake at $1-50 making a bigger cake with each slice worth less than todays price. The options must hold back the share price simply because of the nature of the game. I would say the share price would have been higher on june 30th without the options. Macdunk

[temptation]

Ah Nita, You were getting me all excited, and then that Macdunc butted in and it was just like taking a cold shower!