NZ Oil & Gas (NZO)

[777]

Last interview Sharechat did with NZO in 2004

http://www.sharechat.co.nz/features/...e.php/00d00a28

[JMKC]

It was an international trade crossed at the Oz price by accident.

[sideline]

That'll just be a typo, BK.
Should read 158.6 not 128.6.

Or, since it was an international trade they might have plugged
in the price of the Australian leg of the trade (in AU$) in by mistake

[tim23]

Exert from Salvus (SAM) monthly report

New Zealand Oil & Gas Ltd (NZOG) - relative outperformance +7.2%: NZOG has
stakes in three major developments: the Tui oil field, the Pike River coal
field and the Kupe gas-condensate field. The growth of the company is tied to
commodities that are performing extremely strongly. We also believe the
company has significant option value in its existing exploration portfolio
that is not adequately reflected in the current share price.

[steve fleming]

Huntley upgrade out tonite:

SUMMARY

• We are raising our FY08 and FY09 NPAT forecasts for NZO to NZ$123m and NZ$58m respectively as we have significantly lifted our short and long term price forecasts for oil and gas.
• NZO has 139m NZ$1.50 options outstanding that are currently in-the-money. This could potentially result in cash infusion of NZ$200m. Funds will be deployed towards new exploration opportunities. NZO has set itself an ambitious target of lifting production reserves to 25mb by 2012.
• We are raising our fair value to NZ$1.73 from NZ$1.35, reflecting our forecasts for oil and gas prices. Our valuation is predicated on Net Present Value calculation, for Tui, Kupe and other exploration projects. It also includes NZO’s 31% investment in Pike River.

[Wilkins_Micawber]

From NZO website ...
"Up to 13 May 2008 total oil production was approximately 12.4 million barrels"
12 millionth barrel was on 5th May so absolute worst case scenario is 350,000 (else website would show approx 12.3 million barrels) / 9 days (if 12m'th barrel was first thing on 5th May) = avg of 38,888 barrels per day. absolute best case would be say 450,000 barrels / 8 days = avg 56,250 barrels per day.

So the avg barrels per day from 5th to 13th May is somewhere between 38,888 and 56,250, with the median figure being 47,569 per day.

Oh yeah, and they are still saying "The 'water cut' - the amount of water being recovered with the oil - has been significantly less than predicted, allowing a high daily production rate to continue. However, production rates are forecast to decline in coming months."

[COLIN]

From NZO website ...
"Up to 13 May 2008 total oil production was approximately 12.4 million barrels"
12 millionth barrel was on 5th May so absolute worst case scenario is 350,000 (else website would show approx 12.3 million barrels) / 9 days (if 12m'th barrel was first thing on 5th May) = avg of 38,888 barrels per day. absolute best case would be say 450,000 barrels / 8 days = avg 56,250 barrels per day.

So the avg barrels per day from 5th to 13th May is somewhere between 38,888 and 56,250, with the median figure being 47,569 per day.

Oh yeah, and they are still saying "The 'water cut' - the amount of water being recovered with the oil - has been significantly less than predicted, allowing a high daily production rate to continue. However, production rates are forecast to decline in coming months."

Bear in mind, of course, that the vessel can only take a max of 50,000 barrels per day, giving a median figure of around 44,000 barrels, on your calculations.

[Wilkins_Micawber]

Bear in mind, of course, that the vessel can only take a max of 50,000 barrels per day, giving a median figure of around 44,000 barrels, on your calculations.

Good point Colin, but it doesn't lower the median of 47,000, just means that the max can't have exceeded 50,000 barrels per day.

[airedale]

I notice on the Sharechat daily news links that Salvus Investments have increased their stake in NZO and AWE.





at News: Salvus increases energy stocks weightings

Salvus Strategic Investments Limited - Intra-day3 month1 year2 year

-By Philip Macalister
Wednesday 14th May 2008

Listed investment company Salvus is increasing its weightings to two energy stocks due to a strengthening in global commodity prices.
The stocks are New Zealand Oil & Gas and ASX-listed Energy World Corporation. (EWC)
"The growth of both these companies is tied to commodities that are performing extremely strongly," Salvus says.
NZOG provides exposure to the oil, gas and metallurgical coal markets and EWC provides exposure to the LNG market.
"Despite the mounting evidence of a substantial slowdown in the US and the OECD, strong demand growth from non-OECD emerging markets combined with current supply-side constraints lead us to believe that the possibility of a pull back in commodity prices in the near term is relatively low."
Both these stocks were good performers for Salvus in the past month. During that time Salvus;s net asset value rose 5.7% compared to an increase of 6.1% for the benchmark NZX SmallCap Capital Index.
Salvus says although it underperformed in the month its year-to-date performance "is very strong with the NAV outperforming the benchmark by 7.7%."
The other stock to do well in the month was Comvita which showed relative outperformance of 45.6%:
"Comvita outperformed over the month on the back of expectations of a weaker New Zealand dollar as a result of a slowing domestic economy."
The portfolio's laggard was Abano even though there was "no new fundamental news" to effect the stock.
Core holdings as at 9 May 2008:
Abano Healthcare Group 20.0%
Methven 15.9%
New Zealand Oil & Gas 14.1%
Energy World Corporation 14.1%
Wellington Drive Technologies: 6.4%
Hallenstein Glasson 6.3%
Mainfreight: 5.2%
Cash: 2.6% Get quotes for Salvus Strategic Investments Limited - (NZX: sam)

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[Bilo]

This NZOOD option issue is indeed unusual and may not play out as other NZO option issues.

• NZO does not need cash to do as they have been, growing capitalisation steadily from a small base. They say that they need this cash to give growth opportunities a quantum boost. It is always better to be looking for more money when you don't need it!
• There is an argument that the share market (major players) factored the increased share capital into the share price of NZOOD+NZO when they were issued.
• The phenomenal performance of the Tui development and the timing of the high oil prices has blown away share valuations based on PE ratio.
• DCF valuations have erred on the very conservative (hopelessly misguided might be more appropriate) side of oil/gas price inflation.
• The blockbuster prices for coking coal no-one ever dreamed about until they were brought into focus by the Queensland mines flooded adding to the woes of increasing mine development costs and insufficient port and rail infrastructure. Should add to the NZ HCC quality premium.
• The NZD heading south v USD rapidly.
• Kupe Area looking better all the time as wet gas becomes very much prized and profitable.
• Taranaki Region still under-explored and finds like Tui and Maui are encouraging to explorers – NZO has opportunities in front of its nose.
• Increased share market liquidity from greater use of Margin loans and Contracts for Difference CFDs.
• Unlike past conversions the value in NZO is more obvious – copious cash.

To conclude: IMO the value is there to support a much higher share price at the increased capitalisation (plus some). So Tony Radford's whim of a few years ago may yet raise him to "RGV" Resource Guru Visionary status - from much maligned.

As they say in Australia - winners are grinners

History may show that Kiwi investors have been seeing problems that shouldn’t have been a consideration, again.