NZ Oil & Gas (NZO)

[Toddy]

RISK - real and perceived

I'll start the list for you and posters can add to it. Then we can go through the risks one by one and work out how these can be minimised and the SP maximised. NZO management can then do all of the 'enlightening' for you.

1. Unknown future revenue streams. e.g at the agm management made a prediction that TUI oil income would be $100 million for this coming financial year based on no real facts. The shareholders like Mick love this kind of gamble predicition based on floating targets.

[Mick100]

Another example I can add to my hedging experiece is that of Petsec energy in 2005. They had a good chunk of their nat gas sold forward when the Katrina and Rita hurricanes came through the gulf of mexico and knocked out most of their production - It wasn't actually their instalations that got knocked out, it was the pipelines to thier installations.
They had to buy gas in the spot market imediately after the hurricanes when there was a desperate shortage of gas - The GOM infastructure was a shambles so prices were very high. But when you sell forward you have to supply - doesn't matter what happens.
It cost them many millions

[Nitaa]

RISK - real and perceived

I'll start the list for you and posters can add to it. Then we can go through the risks one by one and work out how these can be minimised and the SP maximised. NZO management can then do all of the 'enlightening' for you.

1. Unknown future revenue streams. e.g at the agm management made a prediction that TUI oil income would be $100 million for this coming financial year based on no real facts. The shareholders like Mick love this kind of gamble predicition based on floating targets.

Toody

I disagree on a bit of your post.

Before i get into that, the dissapointment for me is no solid road map on how they are going to reach their target revenue. The most likely way as they have pointed out is through aquisition. Personally i dont want them to buy another similar company right now. Reasons being is they will have to pay a premium price for any producing or soon to be producing company. What i see is likely to happen is that capex will really start to kick in over the next few years as long as oil prices stay around these levels or go up. Also it is likely to mean that NZO will have to go to the market for the funds...further dilution. If there was any otakeover or merger then PPP would have been a good candidate imo. But that is too late or is not a consideration because NZO sold a big or all of their holding in the company. If they turned around and brought or mergered with PPP then that wouldnt make sense. It would mean that TR and AT are colluding.

Now to your comment on Tui revenue based on no facts. Well for this to achieve they need about $US77m. At present they are on about 40k bopd being pumped.
NZO equivalent (currently at call option price) is about 4.8k bopd ($NZ537,000 per day) is actually around $NZ196m. Is that correct? but with possible hedging, based on a conservative $US50 bopd then $100m is still easily achieved. Personally i think they are being way too pesimistic and may want to save the positive news as it becomes hard fact and when they annouce their quarterly cashflow report. Thats my guess.

Remember that oil from september exports were $NZ141m. At least 90% of that must have been from Tui. Meaning NZO share of the revenue for september is at least $15m. Of course we dont know exactly how these figures are measured but the next 2 months will give a clear picture on revenue streams from tui.

That is why PPP seems such a good buy and it was bloody crazy that NZO sold to AT. At least we know AT can do the maths

[tsb]

Bet it was an Ozzy bank!!

Read somewhere that OPEC was going to put an extra 500,000 barrels per day on the market from, I think, this coming Friday.
This could be starting a drop in forward prices and in 2 months time the oil companies may drop the price of petrol.
Sorry to be flippant - I filled my tank yesterday before the increase and that hurt!

The point - maybe the hedge will not be a big deal!

[tim23]

ACC would be deemed an institutional shareholder so theres at least one and some of the company comments suggests there are more; after all there are over 12,000 shareholders!

[sideline]

Bet it was an Ozzy bank!!

Read somewhere that OPEC was going to put an extra 500,000 barrels per day on the market from, I think, this coming Friday.
This could be starting a drop in forward prices and in 2 months time the oil companies may drop the price of petrol.
Sorry to be flippant - I filled my tank yesterday before the increase and that hurt!

The point - maybe the hedge will not be a big deal!

There may be a lot of talk about the 'extra' 500000 bopd by people interested in talking the price down,
however from memory the OPEC quota increase mainly sanctioned an already existing overproduction
by OPEC countries. So, will there actually be any additional barrels produced come NOV 1 ????

[Mingeathinaikos]

When is the next quaterly cashflow report due to hit our desks?
Thanks

[Unicorn]

When is the next quaterly cashflow report due to hit our desks?
Thanks

End of January.

[shasta]

When is the next quaterly cashflow report due to hit our desks?
Thanks

End of NEXT quarter will be 31 Dec - so late January

Oops didnt see Unicorn had answered that...

Also, do remember whilst NZO accrue around $5m per week, it is paid in arrears once sold by Mitsui on behalf of the JV.

The next quarter will show significant cashflow

[The BOWMAN]

I thought I explained this fairly well a couple of pages back but it seems some people still don't get it, except bermuda

if the oil price is above USD $86 then NZO lose the difference betweem $86 and whatever the oil price is - so if the oil price goes to $100, NZO lose $14/bbl on the hedged amount which is, as I have already said, 100,000 bbls over the next three yrs

put another way - NZO have sold forward 100,000 bbls at US $86. -
the amount of money NZO lose can't be determined because we don't know what the future oil price is going to be - NZO might not lose any money at all - if the oil price went to $200 tomorrow, then we lose $114/ bbl on 100,000 bbls
.

Mick100. From what I can remember, NZO did not hedge full production amount. They have hedged a percentage (vaguely remember 60%) of the daily production to $86. The other 40% can still be sold at a higher price.