NZ Oil & Gas (NZO)

[macduffy]

Do we know whether they have a forward contracts policy?
As an aside, failure to deliver under forward contracts can have a disastrous result if production volumes don't meet targets and prices rise, as more than one Australian goldminer has found!

[digger]

If NOG locked sales in at the current oil price (forward contracts) then the SP would more than likely be rerated. If they gamble that the oil price will stay high then the NZO SP will continue to under perform others in the same industry.

Its simple. Lock in the cashflows please.

Let us review this locking in so called profits. Firstly it came up two years ago at the AGM.Then someone wanted to lock in all forward sale at US $40. I lost little time saying that was just dumb. Thankfully that idea was shelved.
Last year it resurfaced again this time at US$50.
Now you want it locked in at US$90.
Well i don't. In fact i should say this cracked idea of locking in a vanishing presious resource should be brought up at the AGM and and thrown out.
Remember the locking it in crowd--supported by small thinking banks-in fact do not have any oil to lock in,as they gave it all away at 40 dollars two years ago. Locking it in today at 90 will just chop the haed off future price rises.
The lock it in crowd always find someone who thinks oil will return to sub 20 so better grab your profits while you can. Well you can still find people that believe the world is flat,so i say lets assess this idea for less than two seconds and see it for what it is.---Dumb

[Crypto Crude]

digger,
g8t post....
Some banks want prices locked in because they dont benefit from higher prices, and they suffer if prices are much lower by taking on the risk of default....
Banks get paid no matter what...it is in their interest to demand such a proposition...
If you are a bank, or think like a bank... then.......
get some bonds in a blue chip...

.^sc

[Toddy]

Digger/Shrewd


Good risk management is the way to win every time. Good company management run their ships by risk management practices. Lloyd Morrision is a good example of a risk manager.

Yes, company's without the appropriate skill levels do seek advice from bankers. However, this should not be confused with bankers advising clients to take out derivatives for the banks own pockets.

I'll take US $90 PB any day of the week and I think NZO should too. Now is a good time to lock in a good proportion their production at a good rate.

[shane_m]

ok I read the report? where is the water cut rate?

[arjay]

Quarterly out - I see they've dumped the Felix prospect.

[shasta]

Let us review this locking in so called profits. Firstly it came up two years ago at the AGM.Then someone wanted to lock in all forward sale at US $40. I lost little time saying that was just dumb. Thankfully that idea was shelved.
Last year it resurfaced again this time at US$50.
Now you want it locked in at US$90.
Well i don't. In fact i should say this cracked idea of locking in a vanishing presious resource should be brought up at the AGM and and thrown out.
Remember the locking it in crowd--supported by small thinking banks-in fact do not have any oil to lock in,as they gave it all away at 40 dollars two years ago. Locking it in today at 90 will just chop the haed off future price rises.
The lock it in crowd always find someone who thinks oil will return to sub 20 so better grab your profits while you can. Well you can still find people that believe the world is flat,so i say lets assess this idea for less than two seconds and see it for what it is.---Dumb

Digger

I agree with both yourself, & Toddy.

We need a mix of "locking in" approx 50% around $US80-85/bbl & leaving approx 50% to the open market...

As Toddy states, the market would like the revenue assurance, & also for brokers/institutions to calculate DCF's, NPV's before covering NZO.

I did read somewhere (cant recall the source sorry) where an "oil expert" mentioned oil was overvalued by around $US10/bbl & would "correct" itself.

My personal belief is that we are heading for $US100/bbl & sooner than people think!

Nice quarterly ann too

[Mick100]

those people who are suggesting forward sales may be interestad to know the futures prices for crude as of today:
dec 07 $88.00
april 08 $84.00
dec 08 $80.00
dec 09 $76.80
dec 10 $76.00

IMO. if any forward sales were to be made they should be very short term - like for the next 6 months at the furtherest out

Probably not worth it at all with the market in backwardation as it is at the moment. Markets are expecting lower oil prices in the future - I doubt whether this will eventuate. More likely to be higher in the future.
.

[bermuda]

Herewith the answers to some questions I asked David Salisbury on behalf of Posters.
David gave an excellent 2 hour Broker presentation and I am sure that those going to the AGM will be impressed with both his mana and experience.

Here we go

1.You mentioned the possibility of a dividend some time back. This was of course before Hector and Taranui came up dry. What are your thoughts now particularly as the oil price has increased ?

Answer.

2008 Tui revenues will be used to repay debt, fund existing exploration commitments, meet administration costs and pay government royalties, and there is a need to keep $NZ 25 million spare just in case PRC make a call on it. Pike is independent from NZO but NZO will be there to help if required. Any such funding assistance would be at commercial arms length. Also as far as Dividends are concerned it would not be prudent to pass a dividend while NZO will not be paying company tax because of accumulated tax credits.

2. At $1.09 do you think NZO is a takeover target?

Answer

NZO is not in the game of commenting on it's shareprice but suffice to say that the current shareprice could be very attractive to any Predator.


3. How do you plan to to improve value for shareholders and achieve the $1.50 option target by 30 June 2008. Will the Option date be extended?

Answer

The company is very conscious of the options and is working on a plan to increase it's awareness and shareholder value. Factors that could enhance the value of the company include

the emergence of Pike, particularly with a very strong coking coal price,

the strong Tui revenues at record prices and the potential for further Reserve upgrades

the Kupe drilling programme and in particular the drilling of nearby wells in the 2Q 2008

the addition of further expertise on the exploration front and

the possibility of an aquisition to acheive the target of 2mmbo per annum equivalent.

4. What is Tui revenue being spent on ?

Answer

See question 1.

5. What is the purpose of having all these subsidiary companies?

Answer

The company is undertaking an exercise to eliminate them by 1 April 2008.


6. What is the forecast and actual water cut rates at Tui?

Answer

Water cuts are expected relatively early as Tui production continues. To date NZO have experienced less water cut than forecast.



7. Enquiries to the NZO website apparently do not receive replies. Why?

Answer

There is one known instance of a reply not being received, and this is regetted. A new Public Affairs manager Chris Roberts has just been appointed and we will be working to ensure that enquiries are answered swiftly. NZOG has increased its total staff from 10 to 17 – mostly technical specialists - which means it now has the staffing resources to respond more quickly on a range of issues.


How are you going to acheive the 2mmb of oil per annum target?

Answer
This cannot be realistically acheived by exploration alone although it is possible. The Board have agreed to this target to introduce a new culture to the Company and in that regard aquisitions are being looked at.


9. Do you have any further contractual commitments with the Tui JV partners? Are you in discussions with Australian oil companies?

Answer No.

10. Does NZO have any desire to be part of the GSB.? ( I hope not! )

Answer The GSB is too capital intensive for NZO. It is high risk high reward and is not part of NZO's thinking.


11. Does NZO wish to explore the deeper Taranaki waters e.g Romney?

Answer

NZO have a lot of experience in Taranaki but exploration will be focussed in and aropund Tui and Kupe and others that have been highlighted


12. When do you think you will have a rig ready to drill Toke?

Answer

A lot more work has to done on this project before a drill is contemplated.


A whole host of other detail about NZO was thoroughly discussed and I applaud the Company for making the effort to do these very thorough Broker presentations.

If anyone is going to the AGM I would be interested to hear your comments and whether there were enough sausage rolls.

Exploration, Development and now Production. Well done NZO. A 15-20 year solid earning stream. The March 31 2007/2008 Financials will turn a few heads.

I should add these are my answers after digesting what David said.

[shasta]

Herewith the answers to some questions I asked David Salisbury on behalf of Posters.
David gave an excellent 2 hour Broker presentation and I am sure that those going to the AGM will be impressed with both his mana and experience.

Here we go

1.You mentioned the possibility of a dividend some time back. This was of course before Hector and Taranui came up dry. What are your thoughts now particularly as the oil price has increased ?

Answer.

2008 Tui revenues will be used to repay debt, fund existing exploration commitments, meet administration costs and pay government royalties, and there is a need to keep $NZ 25 million spare just in case PRC make a call on it. Pike is independent from NZO but NZO will be there to help if required. Any such funding assistance would be at commercial arms length. Also as far as Dividends are concerned it would not be prudent to pass a dividend while NZO will not be paying company tax because of accumulated tax credits.

2. At $1.09 do you think NZO is a takeover target?

Answer

NZO is not in the game of commenting on it's shareprice but suffice to say that the current shareprice could be very attractive to any Predator.


3. How do you plan to to improve value for shareholders and achieve the $1.50 option target by 30 June 2008. Will the Option date be extended?

Answer

The company is very conscious of the options and is working on a plan to increase it's awareness and shareholder value. Factors that could enhance the value of the company include

the emergence of Pike, particularly with a very strong coking coal price,

the strong Tui revenues at record prices and the potential for further Reserve upgrades

the Kupe drilling programme and in particular the drilling of nearby wells in the 2Q 2008

the addition of further expertise on the exploration front and

the possibility of an aquisition to acheive the target of 2mmbo per annum equivalent.

4. What is Tui revenue being spent on ?

Answer

See question 1.

5. What is the purpose of having all these subsidiary companies?

Answer

The company is undertaking an exercise to eliminate them by 1 April 2008.


6. What is the forecast and actual water cut rates at Tui?

Answer

Water cuts are expected relatively early as Tui production continues. To date NZO have experienced less water cut than forecast.



7. Enquiries to the NZO website apparently do not receive replies. Why?

Answer

There is one known instance of a reply not being received, and this is regetted. A new Public Affairs manager Chris Roberts has just been appointed and we will be working to ensure that enquiries are answered swiftly. NZOG has increased its total staff from 10 to 17 – mostly technical specialists - which means it now has the staffing resources to respond more quickly on a range of issues.


How are you going to acheive the 2mmb of oil per annum target?

Answer
This cannot be realistically acheived by exploration alone although it is possible. The Board have agreed to this target to introduce a new culture to the Company and in that regard aquisitions are being looked at.


9. Do you have any further contractual commitments with the Tui JV partners? Are you in discussions with Australian oil companies?

Answer No.

10. Does NZO have any desire to be part of the GSB.? ( I hope not! )

Answer The GSB is too capital intensive for NZO. It is high risk high reward and is not part of NZO's thinking.


11. Does NZO wish to explore the deeper Taranaki waters e.g Romney?

Answer

NZO have a lot of experience in Taranaki but exploration will be focussed in and aropund Tui and Kupe and others that have been highlighted


12. When do you think you will have a rig ready to drill Toke?

Answer

A lot more work has to done on this project before a drill is contemplated.


A whole host of other detail about NZO was thoroughly discussed and I applaud the Company for making the effort to do these very thorough Broker presentations.

If anyone is going to the AGM I would be interested to hear your comments and whether there were enough sausage rolls.

Exploration, Development and now Production. Well done NZO. A 15-20 year solid earning stream. The March 31 2007/2008 Financials will turn a few heads.

I should add these are my answers after digesting what David said.

Thanks Bermuda

It seems there is a new culture forming at NZO headquarters, going by the answers DS provided.

Time for NZO, & it's shareholders to start to look forward to the future as an O&G producer