NZ Oil & Gas (NZO)

[tim23]

I still think PPP is a dead duck for a takeover by NZO (although i hold both). Simple reasons are, nzo sold ppp last year perhaps mainly for required cash. Secondly AT will have a very good idea of the true value of PPP and since he holds a sizable chunk he is not going to let it go at a discount unless there was other incentives for him.

Nita - Your first reason is no longer valid is it because they needed cash then now they have cash!

[Nitaa]

I still think PPP is a dead duck for a takeover by NZO (although i hold both). Simple reasons are, nzo sold ppp last year perhaps mainly for required cash. Secondly AT will have a very good idea of the true value of PPP and since he holds a sizable chunk he is not going to let it go at a discount unless there was other incentives for him.

Nita - Your first reason is no longer valid is it because they needed cash then now they have cash!

It would defy logic to sell something you intend to try and buy back especially at a price much more than what you sold it for. I am sure there were other alternatives.. eg get one of the Indian co's to loan money to Pike rather than NZO's last year or other financing arrangements.

On another note I am curious to know what NZO's intention on Pike. Do they wish to sell their stake over the next 12 months or so? Or are they now comfortable and are willing to accept a good size chunk and get long term revenue from it? My orginal thoughts were that NZO were going to sell Pike

[digger]

3. China after the Olympics
The numbers are now in, and China’s increase in oil product consumption during the first half of 2008 is truly impressive – “apparent consumption” of gasoline was up 16.2 percent, diesel up 14.7 percent and kerosene up 6.6 percent. While some of this increase is related to last winter’s blizzards, the earthquake, and preparations for the Olympics, a lot came from plain old economic growth which was 10.4 percent in the first half.

Currently China is faced with a power shortage partly due to the temporary closing of power plants in the vicinity of Beijing in an attempt to clean-up the air for the Olympics. Most Chinese authorities say the heart of the problem is the inability of China’s railroad system to move enough coal to the rapidly increasing numbers of power plants scattered across the country. Coal stockpiles have decreased by eight percent in recent weeks and two or three percent of China’s thermal power plants are reported to have closed.

To guarantee adequate electricity supplies while attempting to clean up the air during the Olympics, Beijing ordered a number of major industries, most notably aluminum production, to cut back on consumption prior to the games. Despite the shortages, China’s power generation increased 8.3 percent in June over 2007 and thermal power production increased by 6.8 percent.

Price caps on coal and electric power are complicating the situation. While long term coal contracts and retail electricity prices are capped, spot coal prices have doubled recently so that 80 percent of the power companies are sustaining losses.

In another month, the Olympics will be over as will the need for cleaner air and reliable electricity. Power plants around Beijing will resume operation as will the 100s of industrial plants that have been forced to shut down and the 300,000 trucks and 1.5 million cars that have been banned from operating around the capitol.

Increased transportation of coal over the short run seems difficult to achieve as various efforts to increase coal shipments over the past year are likely to have rung the slack out of the transportation system. This suggests that if China is to keep on growing at 10+ percent, there will be a need to import more coal, oil and natural gas. While increases on the order of 15 percent as we saw in the first half of 2008 seem high, continued growth in imports seems likely. Beijing also may seize upon the recent $24 a barrel drop in world oil prices as an opportunity to build its strategic oil reserves.

The rapid run-up in oil prices during the first half of the year and the recent drop may have more to do with Chinese demand in a tight oil market than is generally recognized.
End of article

Well i certainly agree with that last line.Good to see a few others are catching on.In another month i think we will see this retreat in oil was just a short passing phase to get that happy face for the olympics i have mentioned before on several occasions.Dispite China's big effort i still say 120 is the floor.

[Xerof]

They will sell Pike once it's producing a proven 1 mill tons pa and/or after Pike provide an upgrade on extractable volumes, which will certainly occur.....my pick remains late 2009

[tim23]

Agree they will get out of Pike but it will be a free distributions to NOG shareholders.

[Xerof]

10 cent fully imputed divvie plus a fistful of PRC shares - sounds Ok to me

[zorba]

Tim,

I like the idea of a distribution of PRC shares -- I would support that !!

Precedent was set with the main slug of PPP shares that NZOG used to own (they had 57% of PPP). Most of the PPP shares distributed to NZOG sharholders some years ago.

................................................

Just noticed that NZ$ exchange rate has dropped by up to 0.5 % against major currencies.

Could be under US$ 0.74 in the next few days ?

And oil price is looking like it has support around US$ 124 - 125 / barrel.

Z

[the machine]

Agree they will get out of Pike but it will be a free distributions to NOG shareholders.

doubt if nzo would give free prc shares to nzo holders as giving away the premium they have with 31% holding.

M

[bbob]

Some speculation.

NZ economy slows/tanks. RB drops interest rates. Banks may or may not follow suit dep on international risk factored into their offshore borrowing costs, but suspect over time they will, leading to a relatively gradual but persistent drop in the exchange rate over the next few years to US 60c. Hard to know what oil prices will do but exchange depreciation helping NZO significantly whatever. NZO one of the few brighter lights on the NZ stock exchange but dragged back from full realization of underlying share value by the prevailing negative overall local market sentiment. Heavy local shareholder weighting in NZO under pressure from local poor conditions leading to gradual increase in foreign investment and probable takeover by a foreign oiler at a discounted price.

Hope I'm wrong. Shareholder since circa 2000 and don't want this NZ company doing well to go to offshore interests.

[Sehnsucht888]

TUI Production Performance:

30 July 2008: Tui has now been in production for one year. Since production began on 30 July 2007, total Tui production amounts to more than 15.2 million barrels.

In the original projections, total production was not expected to reach 15 mmbbls until mid-2009.

--
So looking forward to the quarterly, and annual reports coming out..

I too would be quite keen on another div. 5c, 10c something like that.
There are those that say its daft to give back some of the money they just raised, but they didn't know they would have so much when they issued the options.
384 odd million shares out there.
10c div would cost 38.4 million - a lot,
but based on their income:
NZOG's share of production approx 1.78 million barrels at, say NZ$100 per barrel, gives about $90 million more than expected
The have the money they wanted, $193 million from the options, an extra $50 million from TUI revenue, and that gives a sizeable chunk they could give back to the investors.