NZ Oil & Gas (NZO)

[macduffy]

Are you having us on. I can not tell if you are joking, trying to scare shareholders or just talking Rubbish. With Opex costs of $10 a barrel Tui is will be okay (for now)

Maybe not cashflow negative but certainly struggling to post an after-tax profit.
NZO chairman's address to the AGM on 29 Oct. included these per bbl figures re Tui:

Production expense $17
Marketing $7
Dpn and Amort. $ 16
Royalties $16
Tax $19

Total NZD75

Royalties and Tax will be less with a lower PoO, of course, but not a lot of margin with current prices and exchange rates.

[Balance]

Maybe not cashflow negative but certainly struggling to post an after-tax profit.
NZO chairman's address to the AGM on 29 Oct. included these per bbl figures re Tui:

Production expense $17
Marketing $7
Dpn and Amort. $ 16
Royalties $16
Tax $19

Total NZD75

Royalties and Tax will be less with a lower PoO, of course, but not a lot of margin with current prices and exchange rates.

Oil just dropped towards $40 so in NZ$ terms, now $75.

But royalty tax is 12.5% so now $9, and tax = $8.

Net profit per barrel now = $18.

Looking grim .... might as well leave it in the ground for future years.

[the machine]

Today's announcement that NZO joins that top 15 might explain the accumulation we saw last week on the chart.

the announcement made after market so hopefully will give a boost to sp on monday


M

[Dr_Who]

the announcement made after market so hopefully will give a boost to sp on monday


M

Na mate, the institutions have already factored into the sp, hence the large volume seen last week. There are further downside risk to NZO compare to other Aussie oilers.

Industrial Natural Gas Demand Slump Adds Pressure To Prices
NEW YORK (Dow Jones)--Big industrial companies are sharply cutting back their natural gas consumption as the economic slowdown erodes demand for their products, adding downward pressure to already sinking gas prices.
The front-month futures price for gas is now down about 58% from its early July peak, as a surge in domestic U.S. supplies raised fears of a glut just as demand was starting to crumble. Between April and September, monthly gas consumption by industrial users dropped 14% to 4.756 billion cubic feet, the lowest monthly figure since at least 2001, according to U.S. Department of Energy statistics. And anecdotal evidence indicates consumption is falling even further as gas-intensive industries ease back production.
According to an informal survey by the Industrial Energy Consumers of America of eight major industrial companies, gas usage is down 22%, on average, from a year ago. The Washington, D.C.-based lobbying group said its survey comprised a cross-section of major industrial companies, including fertilizer, brick, glass, and automotive businesses. Industrial companies account for about 30% of total U.S. gas demand, according to the Energy Information Administration, the statistical arm of the Department of Energy.
"We think consumption will continue to fall into 2009," said Paul Cicio, the president of the IECA. "Capital expenditures are being put on hold."
Cutting Back
Natural gas is the base ingredient for products including plastic, fertilizer, antifreeze and some fabrics. Companies also use natural gas for onsite power plants and heating systems.
The falloff in natural gas demand has been particularly noticeable in the fertilizer industry because gas is an essential raw material for nitrogen-based fertilizer production.
Agrium Inc. (AGU), a Canadian fertilizer company with extensive U.S. operations, has cut its natural gas consumption by between 5% and 10% this year, compared to last year, said Richard Downey, the company's vice president of investor relations. Agrium shut down one unit of a large fertilizer plant in Alberta indefinitely in September amid falling fertilizer demand and high natural gas prices.
But the company's gas demand could rebound in the spring as planting season begins, Downey said.
"We've seen a slight decline in our gas purchase requirements, but we do think it's a short-term phenomenon," he said.
CF Industries Holdings, Inc. (CF), a Deerfield, Ill.-based fertilizer company, hasn't reported a decline in natural gas demand or fertilizer production, but the company is "monitoring the situation closely," said spokesman Charles Nekvasil.
Expectations of lower industrial demand have led analysts to slash their natural gas-price forecasts for next year. U.K.-based energy advisory firm Wood Mackenzie said last month that it expects U.S. natural gas prices to trade in a range of $5.00 to $6.00 a million British thermal units for the next five years. Gas for January delivery was recently trading down 4.4% at $5.752 a million British thermal units on the New York Mercantile exchange.
"In coming to our conclusions, we have taken account of...the decline in demand due to a prolonged recession to (the fourth quarter) 2010," said Jen Snyder, head of Wood Mackenzie North American Gas Research, speaking at the company's Houston Energy forum in November.
Meanwhile, Morgan Stanley has cut its 2009 natural gas price expectation Tuesday to $7/MMBtu from $8/MMBtu.
"Industrial demand trends continue to weaken, as chemical demand looks to be a key area of potential weakness in '09," Morgan Stanley analysts wrote in a note to clients.
The Federal Reserve's Industrial Production Index, which includes gas-intensive industries such as petrochemicals and refining, fell 6% in September, compared with the previous year.
Dow Chemical Co. (DOW) Chief Executive Andrew Liveris on Thursday told CNBC that he expects the company to announce cost reductions in coming weeks to deal with "miserable" economic conditions.
Spokesmen from chemical giants DuPont Co. (DD) and Dow didn't return calls for comment.
Looking Beyond Winter
In the near term, sliding industrial gas demand could be offset by unusually cold winter weather in the major gas-consuming regions, which could spark significant heating demand. WSI Corp., an Andover, Mass.-based private forecaster, is predicting below-normal temperatures in the Northeast, Southeast and Midwest in December.
But beyond the winter heating season, falling industrial consumption, combined with continued production growth from natural gas-shale reservoirs and rising imports of liquefied natural gas, is likely to pressure prices lower, analysts said. Falling petroleum prices are also likely to drive the natural gas market lower, said Amy Sweeney, a statistician at the Energy Information Administration in Washington, D.C.
"A lot of industrial consumers can switch between natural gas and petroleum products to fire their plants, and petroleum prices have dropped a lot," she said.
(Christine Buurma covers U.S. power companies and the natural gas market for Dow Jones Newswires, and can be reached at (201) 938-2061, or christine.buurma@dowjones.com)

[neopole]

from a laymans point of view,
i think opec is letting the poo slide for now to help the global financally world try and recover.
the world couldnt live on plus $100 oil, and the house of cards colapsed, but the skill to rebuild it still exsists and every will be ok sometime soon, untill then, dish out cheap oil to help the rebuild, after that, those than run or control the economies will play with a bit more foresight......... hopefully.

everyone is aware that cheap oil for too long is not good for future growth, just as expensive oil is also not good.
as the worlds web of interactivity gets tighter, world leaders and power brokers need to work together more to curtail the excessive highs and lows.

which does seem to be happining......... slowly.

now is a good time to stock up if planning for the long term.

[Major von Tempsky]

So, Nita was wrong....she was talking about $50 oil and was rubbished for her pains for being too pessimistic.....now its $40 oil.... come back Nita, all is forgiven and retracted....

[boysy]

This graph is quite interesting in horizon oil presentation showing oil supply costs on page 17. You really do wonder how long oil can stay at present prices in the long term though im sure oil will test new lows in the short term theirs just too much negativity in the market even "good" news is treated with extreme sceptisism.

http://www.asx.com.au/asxpdf/2008112...w5d53zmwj4.pdf

[digger]

This graph is quite interesting in horizon oil presentation showing oil supply costs on page 17. You really do wonder how long oil can stay at present prices in the long term though im sure oil will test new lows in the short term theirs just too much negativity in the market even "good" news is treated with extreme sceptisism.

http://www.asx.com.au/asxpdf/2008112...w5d53zmwj4.pdf

Very informative graph boysy.Also note on quick look that is the cost of existing in place oil production.It is not the cost that each country can produce in the future from wells not yet discovered or discovered but not yet began developing. So sadly for consumers that means this low current price better not hang around for long or we will all pay dearly in the mid term when demand restarts.
Cheers Digger.

[duncan macgregor]

DIGGER, You are looking at the wrong things then trying to come up with a logical answer. First of all the price of oil is a manipulated price commodoty not ruled by supply and demand. Right now supply exceeds demand with the powers that be manipulating the price.
The second thing to take note of is certain parts of the world are off limits to oil exploration, example being artic and antartic areas of great potential.
The thing to remember is that the future oil price will be manipulated to a greater extent up to the point of an alternative coming on track. Follow your oil stocks up in a rising market, but be prepared to get out quick when the market turns.
That is a logical position to get into in a manipulated market. The rich get richer as the poor dumb clucks bleat on about this company or that. Peak oil is in the distant future. The Chinese at this moment have about 2 million electric scooters on the road increasing at a very fast rate. If peak oil is a worry buy uranium stocks. Macdunk

[shasta]

DIGGER, You are looking at the wrong things then trying to come up with a logical answer. First of all the price of oil is a manipulated price commodoty not ruled by supply and demand. Right now supply exceeds demand with the powers that be manipulating the price.
The second thing to take note of is certain parts of the world are off limits to oil exploration, example being artic and antartic areas of great potential.
The thing to remember is that the future oil price will be manipulated to a greater extent up to the point of an alternative coming on track. Follow your oil stocks up in a rising market, but be prepared to get out quick when the market turns.
That is a logical position to get into in a manipulated market. The rich get richer as the poor dumb clucks bleat on about this company or that. Peak oil is in the distant future. The Chinese at this moment have about 2 million electric scooters on the road increasing at a very fast rate. If peak oil is a worry buy uranium stocks. Macdunk

Macdunk

Funny you using Uranium as an example, you don't think it's as manipulated as Oil, then think again!

Look at the Uranium highs of 2007 (like oil), & see how they seemingly went up together & back down together, coincidence i think not!

Uranium & all other alternatives need Oil much higher, so what chance OPEC allowed oil to drop off to quell off the alternatives just long enough to ride oil up again in the future?

Natural Gas appears to be the more likely oil replacement, along with it's CSG & LNG counterparts.

NZO has set itself up nicely, with oil, coal & gas/lpg.

Don't be too surprised if it looks a little closer into CSG/CBM, especially in the lower South Island.

LMP are looking around down there too...