NZ Oil & Gas (NZO)

[Drone]

More positive mentions in the SST on the weekend. Reasonable open today on back of $152 tapis I suppose.

Momoho progress report today?

[Chalice]

While bankers are crying into their Krug and sharemarkets sink at every turn, one group can smile amid the wreckage - oil investors.
For several years oil prices have performed strongly, but particularly in the past six months oil has soared as sharemarkets fell. Having oil in your investment portfolio would therefore ease the pain of the current bear market considerably.

So how do you get some oil exposure in the New Zealand market?

The most direct way is by mimicking the professionals and investing in oil futures, available through Auckland-based broker OM Financial.

Futures are not for the faint-hearted or the uninformed, requiring a disciplined approach and careful risk management, but they give investors a first-hand experience of the oil market and a way to make money when shares are not doing well.

OM Financial has hundreds of clients trading oil futures and a related security, futures options. The firm offers advice on whether to buy or sell and charges a fee per contract of about $25.

It works something like this. An oil futures contract is a bet on what the price of oil will be on a specified time in the future. Each contract is for 1000 barrels of oil and requires the investor to place an initial margin set by the exchange, currently $US12,000 ($15,800). At a price of $US136 per barrel of light sweet crude, that $US12,000 initial margin covers a position of $136,000.

If you bought a future at $US136, say, and the price moved to $US140 within the specified time (giving a contract value of $US140,000), you would sell a future with the same expiry to close the position and pocket $US4000, a return of 33% on your initial margin.

Similarly, if you sold a future at $US136 and the price moved to $US132, you would buy a matching contract to close the position and pocket $US4000.

Of course, those returns would be losses if the price moved against you.

OM Financial head of derivatives Kevin O'Sullivan says investors don't have to stay up all night watching the markets, but care is required.

"Obviously with the volatility you need a strong stomach for it," he said. "It comes down to your money management and discipline, your stop-loss, take-profit deals."

Although futures allow you to take a view on the price of crude out to 2016 (the market currently says $US137.50 a barrel), there are fewer people taking positions on those contracts (less "open interest" in the jargon), so O'Sullivan advises clients to trade contracts where there is plenty of open interest, which makes it easier to close positions.

A useful alternative to futures is the market in contracts for difference, or CFDs. The main provider of CFDs in New Zealand is Auckland-based CMC Markets. It offers a contract, based on market- traded futures, of 100 barrels of crude - West Texas and Brent are the main contracts used - and a 1% initial margin. At $US136, that means the contract is worth $US13,600 and requires margin of $US136 - a less capital intensive way for small investors to play the market. CMC's offer differs from OM Financial futures in another way - it has no expiry so does not require closing out within a particular timeframe. But the buy/sell process is similar.

CMC Markets general manager Sargon Elias said crude oil CFDs had risen in popularity as the commodity had surged in price. "Since the drive in oil six to eight months ago it has often been in our top five traded instruments," he said. "There is a lot of interest. That whole debate about whether oil is driven up by speculators is quite close to our hearts. I still believe a lot of it is driven by fundamentals."

While CFDs offer a cheaper alternative to futures and can be traded online in real time, CMC offers no advice on what positions to take.

Aside from the futures and CFD markets, another way to gain exposure to crude prices is to trade shares in oil production companies. Two such investments currently on the radar for sharebroker First NZ Capital are New Zealand-listed NZ Oil & Gas and Australian-listed Oil Search, Papua New Guinea's largest oil and gas producer.

First NZ head of research Barry Lindsay said the firm's view was oil would fall from its current peak, "but will be sustained at a high price above $US100 for some time to come".

Firms such as NZ Oil & Gas and Oil Search were clear beneficiaries of high oil prices, he said.

No doubt that takes some of the pain away from filling up at the bowser

[Casa del Energia]

Wotsup? Sp is going gangbusters. Is there an announcement imminent?

[Xerof]

http://www.energybulletin.net/node/45872

From Friday's Fast Money program - click on the headliner item to get to the article and Youtube replay

Casa - not a response to your question, just a contribution to the cause

[Casa del Energia]

http://www.energybulletin.net/node/45872

From Friday's Fast Money program - click on the headliner item to get to the article and Youtube replay

Casa - not a response to your question, just a contribution to the cause

Had me puzzeled for a 'mo

[Drone]

Wotsup? Sp is going gangbusters. Is there an announcement imminent?

My guess is that supply from people who leveraged to convert options and then sold down to reduce leverage is trailing off, but probably more importantly the next week will see very interesting announcements on the momoho drill, and people will want to be on board for that one.

[Casa del Energia]

My guess is that supply from people who leveraged to convert options and then sold down to reduce leverage is trailing off, but probably more importantly the next week will see very interesting announcements on the momoho drill, and people will want to be on board for that one.

Yeah, you're probably on the mark. (And the sp seems to have gone off the boil a little as well).

[trackers]

My guess is that supply from people who leveraged to convert options and then sold down to reduce leverage is trailing off, but probably more importantly the next week will see very interesting announcements on the momoho drill, and people will want to be on board for that one.

Yup thats how I see it too... In addition, tapis price is holding up well, and financials (which are going to be spectacular) are imminent. Oh and while we're at it, PRC is closing in on the finish line too.

[Casa del Energia]

Yup thats how I see it too... In addition, tapis price is holding up well, and financials (which are going to be spectacular) are imminent. Oh and while we're at it, PRC is closing in on the finish line too.

Yes, end of year coming up. Any picks for a dividend - here's my neck going out; I select a more conservative dividend cover and run 10c up the flag pole.

(Stand back, and wait for acerbic comments about my credibility and general financial nous)

[manxman]

The dividend for the year was declared and paid yonks ago. So my pick is 5 cents. Lots of shareholders would prefer that they used their (our) cash for getting into good exploration and development projects.

The only problem is the ability to use the imputation credits arising from the royalties.

Don't give the cash back to me. Last time I spent quite a bit of it on booze and women, then squandered the rest.