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  1. #5621
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    Quote Originally Posted by Unicorn View Post
    We live in uncertain times. All shares should be expected to be at a larger discount than in more settled times. NZO have just completed the largest fund raising on the NZX this year, which should be expected to force the share price towards the issue price for a while.

    Management appear to have delivered an underlying operating profit well in excess of $100M, and the Pike holding is currently worth more than $100M above book value. Kupe appears to be progressing well for such a large project. I think management has done very, very well for their shareholders this year.

    If you invest on NZX you need to accept that your shareholding will be at a discount to the underlying value, at least until an overseas buyer decides to take your company over. This is a legacy of the 1987 crash, a fixation with property, and a widespread preference for borrowing rather than investing. I don't think we can blame NZO management for that.

    I am pleased to see that NZO is clearly not just resting on its Tui laurels. There are already things happening to grow the company further, and clear attention being paid to more growth into the future. Many of these things can't be rushed, so we should be pleased that there have been no hasty decisions made.

    I am happy that short term panaceas like throwing dividends at shareholders are taking second place to the more important issues of sound financial management going forward. NZO shareholders have had a great year, and have a lot to look forward to in the year ahead. Can't ask for much more than that.
    Unicorn excellent summary of what NZO has achieved in the last year and so correct about NZ borrowing habits and a failure to develop investing skills.Can you also give us some of your thought on tomorrow.Where should we put this new found monies and how much risk do you put on going beyond aus. On this subject we are in reverse rolls as normally i find you too consertive but here it is me who fears undertakeing risks beyond our understanding of changing international rules.Experience and competence here in NZ is no indicator of success in the international oil wars taking place globally.I fear you don't.WHY?
    digger

  2. #5622
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    The only reason the SP went up today was because of the continuous ramping on this web site.

    It looks like we are all going to be put on a two week holiday.

    Thats no problem though, its going to take NZO management atleast two weeks to count all of that cash.
    Toddy

  3. #5623
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    I would be happier with a close above 1.67, it's still nudging that old resistance.
    Disclaimer: Do not take my posts seriously. They are only opinions.

    AMR has sold all shares and is pursuing property.

  4. #5624
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    Yeah Fish, I do remember AIR..I was a 5th form accounting student at the time, and my teacher said they would go under! But again, that is different circumstances. Its to do with operational management, and airlines are usually poor investments (very cyclical). Imagine though, if Ansett could have restructured into a low cost airline back then..could have been interesting.
    Back to topic, they are very different IMO. Oil companies are best placed for international expansion apart from political risk, which digger mentions, but can be avoided.

    Digger, those concerns are very real. Political/nationalisation are risks. Its also a risk here in NZ with our greenie members of public and parliament. What was that about no more gas power plants to be permitted? Austrailia looks to be the best bet. They are introducing a ETS which is the only risk i see in the medium term..but they wont risk their international competitivenss as this would be political suicide. I would however, be concerned if they had plans to invest substantially in 3rd world countries. Your just asking for it then arent you...

    Diversification (people seem to hate this word) of their producing assets wouldnt be a bad thing. $280M is a lot of money, I cant possibly see how they would spend it in NZ (apart from PPP). Then when they offload PRC in the future, there could be another $300M or so. Maybe they will buy a company and leverage it somewhat with anticipation they can reduce debt when they sell PRC. Who knows.

    NZO have also said they want their core business to be oil/gas, they dont want to deviate from this, which is a pity, given NZ govt has set standards to become less dependent on foreign oil. This could be an opportunity for NZO to do something with LMP/Solid Energy in the coal to liquids..be good to see them vertically integrate their business lines. Would keep more funds in NZ, and they would be less cyclical than other oil companies. Just my thoughts anyway.
    Last edited by upside_umop; 31-07-2008 at 09:57 PM. Reason: spelling..grr late at night
    By the way - it's upside_down, not upside_umop

  5. #5625
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    Hi Digger

    I am keen to see more exploration within the excellent Taranaki permits (PMP38158 and PEP3849 in particular). But there is clearly a difficulty in getting the rigs that are essential to that initiative - a look at the Diamond website shows that problem quite clearly. And the amount of cash that is available does mean there is a need to look elsewhere as well.

    I would have been happier for the share price to have stayed down for a while, and the NZOODs to have lapsed. In these uncertain times I feel that would have been a safer outcome for all of us. But it did not work out that way, so now something productive needs to be done with the money - although not necessarily right away.

    I take some comfort from NZO having a Chairman who knows the industry and has shown himself to be an astute operator. I also take comfort from the fact that nothing rash or hurried has been attempted since the growth strategy was announced. NZO has a board that knows the value of money - they have had many years of managing on a shoestring and I am sure they will not want to give their hard won profits away easily.

    I am generally not in favour of overseas ventures, but in the current situation think it is an option that should be explored - but entered into only if the right deal can be found. I support the search for a deal, but that does not mean I will necessarily support any particular deal.

  6. #5626
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    Exactly Unicorn.

    If NZO find a "gem" of an opportunity, then go for it, otherwise wait...

    One just needs to see how BPT destroyed shareholder value, chasing overseas projects all over the world!

  7. #5627
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    Quote Originally Posted by Unicorn View Post
    Hi Digger

    I am generally not in favour of overseas ventures, but in the current situation think it is an option that should be explored - but entered into only if the right deal can be found. I support the search for a deal, but that does not mean I will necessarily support any particular deal.
    Unicorn
    If nzo did try and seek shareholder approval for a major overseas investment would I be correct in suggesting that minority nz shareholders who voted against this would be entitled to a fair and reasonable price for the purchase of their shares by the company .

    The current share price would not be fair and reasonable as it is in a depressed market situation therefore a valuer would use what the components could be sold for-eg back of my cuff calc -cash 70 cents tui 70 kupe 70 and prc 70 -around $2.80 per share . The cash reserves of course would be much greater by the time of the compulsory purchase .Plus nzo might have to pay further interest and other costs-say $3 a share .

    You would imagine the current board will have considered this -although they might not have the expertise and experience to understand the significance of the relevant sections of the companies act .

    I actually want to be a longterm investor but preserving shareholder value would most likely take precedence if there is a change in direction of the company

  8. #5628
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    Quote Originally Posted by shasta View Post
    Exactly Unicorn.

    If NZO find a "gem" of an opportunity, then go for it, otherwise wait...

    One just needs to see how BPT destroyed shareholder value, chasing overseas projects all over the world!
    The price of BPT has lapsed, but this has more to do with the huge capital raising they had a $1.43. Prior to the capital raising the SP had been bouyant, at $1.60's.
    In saying that , it is true, that their foray into Egypt is perceived by the Shareholders with some trepidation, but this play could yet turn out to be immensely profitable for Beach.
    Presently ALL Australian oilers are under the hammer!
    I thought I should point this out as what you are saying is pure speculation
    Last edited by Rabbi; 01-08-2008 at 03:17 AM.

  9. #5629
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    Quote Originally Posted by fish View Post
    Unicorn
    If nzo did try and seek shareholder approval for a major overseas investment would I be correct in suggesting that minority nz shareholders who voted against this would be entitled to a fair and reasonable price for the purchase of their shares by the company .

    The current share price would not be fair and reasonable as it is in a depressed market situation therefore a valuer would use what the components could be sold for-eg back of my cuff calc -cash 70 cents tui 70 kupe 70 and prc 70 -around $2.80 per share . The cash reserves of course would be much greater by the time of the compulsory purchase .Plus nzo might have to pay further interest and other costs-say $3 a share .

    You would imagine the current board will have considered this -although they might not have the expertise and experience to understand the significance of the relevant sections of the companies act .

    I actually want to be a longterm investor but preserving shareholder value would most likely take precedence if there is a change in direction of the company
    I doubt that NZO would take on a 'major transaction'. Therefore there is unlikely to be a need for a special resolution, and no compulsory share purchase.

  10. #5630
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    Quote Originally Posted by Unicorn View Post
    Hi Digger


    I take some comfort from NZO having a Chairman who knows the industry and has shown himself to be an astute operator. I also take comfort from the fact that nothing rash or hurried has been attempted since the growth strategy was announced. NZO has a board that knows the value of money - they have had many years of managing on a shoestring and I am sure they will not want to give their hard won profits away easily.
    Hi Unicorn ,again i agree with most of your post except some of this quote above.The only comfort i take from NZO's decision to look beyond Aus is that TR has his neck on the block even more than i do,so yes i do agree he will not want to see that go down the drain. In fact none of the directors will desire that outcome,but my point is that apart from TR there neck is just not on the block as there shareholding is miniual.
    We are strongly at odds over what makes up a useful value of money. Living on a shoestring and managing later to get money as NZO has done is only the beginning.As i pointed out before i have seen many people get money but not be able to make the next hard step of managing it to get more. 90% of them go for the big spendup and are soon back on a shoestring.
    For me a dread outcome would be for TR to suddenly drop dead.If that were to happen NZO would pass entirely into the hands of the remaining directors who have put very little of their own monies into the company.As competent as they may be in their areas of expertize their assesment towards a spend up would be much more tempered if the money is coming from their own pocket than someone elses.
    digger

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