NZ Oil & Gas (NZO)

[notie]

are nzo part of the bahamas drill, west of tui?

would be nice if nzo clarified what awe are saying

m

yes they are and they are in for 18%. Remember it is AWE that makes all the running on these permits and NZO is just along for the ride, albeit a potential fruitful or bad outcome.

PEP 38401 with the Hoki prospect is the big upside drill for AWE this season. If that is sucessfully then their price will reflect that. It is a very large structure. NZO isn't in this block, although one of the other companies is looking to lay off a % so NZO might get involved.

The two wells at Tui don't have the potential to add too much in way of resource especially if they are considered on a risked basis, hence the drop in AWE's share value following the release of this report. Folk probably expected they would be drilling more wells there.

The other very interesting permit for AWE is Tuatara (38524) which they have 100%. maybe nzo might get involved in this. This permit was held by Austral Pacific but AWE got it from them cheap after they crashed. There is an offset well with good oil shows which makes the chances of a positive outcome better. rumour is NZO turned down a good deal on this block when it was being shopped around last year. Now will they get back in now?

[the machine]

yes they are and they are in for 18%. Remember it is AWE that makes all the running on these permits and NZO is just along for the ride, albeit a potential fruitful or bad outcome.

PEP 38401 with the Hoki prospect is the big upside drill for AWE this season. If that is sucessfully then their price will reflect that. It is a very large structure. NZO isn't in this block, although one of the other companies is looking to lay off a % so NZO might get involved.

The two wells at Tui don't have the potential to add too much in way of resource especially if they are considered on a risked basis, hence the drop in AWE's share value following the release of this report. Folk probably expected they would be drilling more wells there.

The other very interesting permit for AWE is Tuatara (38524) which they have 100%. maybe nzo might get involved in this. This permit was held by Austral Pacific but AWE got it from them cheap after they crashed. There is an offset well with good oil shows which makes the chances of a positive outcome better. rumour is NZO turned down a good deal on this block when it was being shopped around last year. Now will they get back in now?

thanks notie

nzo still to provide details

M

[Chris Roberts]

As previously publicly stated, there are numerous prospects within the Tui permit and the JV partners are still discussing which ones should be drilled by the Kan Tan IV later this year.
Within Permit PEP38483, AWE has identified the Bahamas prospect, but the JV partners have made no drilling commitment and this is also subject to further discussion.
Noties references to industry rumours are inaccurate and unhelpful.
When there are any decisions made, NZOG will announce them.

[OutToLunch]

Given the near-term outlook for the US and the US dollar, I hope NZO are paying close attention to where they are keeping their cash holdings. The US treasury situation looks increasingly volatile. As a shareholder I'd hate to see NZO's gains from Tui get eaten away by currency losses. Or am I getting paranoid?

[COLIN]

Given the near-term outlook for the US and the US dollar, I hope NZO are paying close attention to where they are keeping their cash holdings. The US treasury situation looks increasingly volatile. As a shareholder I'd hate to see NZO's gains from Tui get eaten away by currency losses. Or am I getting paranoid?

No OTL, you are not getting paranoid. This is an issue that has been exercising my mind too. The last Quarterly Activities Report (as at 31/3/09) said that "total cash on hand was NZ$208.7m. Around three-quarters of these funds were held in US denomination accounts with NZ-based banks." There is no mention of any hedging in place. Given the trillions of dollars of new debt that the US is issuing there are strong reasons why that currency will come under increasing downwards pressure, and many commentators make this point. Of course, the Kiwi dollar is also subject to similar pressures but, nevertheless, I do feel more than a little uneasy that so many eggs have been placed into this one US basket(case?). Hopefully the NZO Board is taking expert advice, and maybe the allocation/hedging policy has changed since March.

[fish]

As previously publicly stated, there are numerous prospects within the Tui permit and the JV partners are still discussing which ones should be drilled by the Kan Tan IV later this year.
Within Permit PEP38483, AWE has identified the Bahamas prospect, but the JV partners have made no drilling commitment and this is also subject to further discussion.
Noties references to industry rumours are inaccurate and unhelpful.
When there are any decisions made, NZOG will announce them.

Thanks for the clarification Chris .

Looks like Kupe is going to come on line at a very opportune time .
Chris -does nzo still have the provision to buy back 2.5% kupe from mitsui.
From a report about 5 yrs ago I found this-
NZOG said the purchase by Mitsui of a 4% Kupe interest would leave NZOG with an equity of 15% in the field. The sale contained a provision, subject to certain conditions, for a repurchase of 2.5%. NZOG, was Kupe operator at the time the field was discovered in 1986.

[shasta]

Given the near-term outlook for the US and the US dollar, I hope NZO are paying close attention to where they are keeping their cash holdings. The US treasury situation looks increasingly volatile. As a shareholder I'd hate to see NZO's gains from Tui get eaten away by currency losses. Or am I getting paranoid?

I hope it's not paranoia there OTL...

NZO have most of there direct opex costs in $US, incl all rig associated costs with the JV partners.

Whilst i agree NZO should be mitigating the downside risks by having the majority of there funds in $NZ, we don't really want NZO to start engaging in currency speculation.

I imagine the Kupe opex costs will also largely be in $US dollars, so it's a case of managing just how much cover you need?

NZO are in a very enviable position, other businesses having to take forward cover, swaps, puts etc are getting screwed by the points spread by the banks

Maybe this is a valid question for the AGM, i mean crystalling the gains could just about fund the divvie

[shasta]

I hope it's not paranoia there OTL...

NZO have most of there direct opex costs in $US, incl all rig associated costs with the JV partners.

Whilst i agree NZO should be mitigating the downside risks by having the majority of there funds in $NZ, we don't really want NZO to start engaging in currency speculation.

I imagine the Kupe opex costs will also largely be in $US dollars, so it's a case of managing just how much cover you need?

NZO are in a very enviable position, other businesses having to take forward cover, swaps, puts etc are getting screwed by the points spread by the banks

Maybe this is a valid question for the AGM, i mean crystalling the gains could just about fund the divvie

Just quickly calculating the actual gains over the last year...

From the Quarterly cashflow statements

30/06/08 - FX gain of $1.2m
30/09/08 - FX gain of $12.1m
31/12/08 - FX gain of $22.9m
31/03/09 - FX gain of $3.4m

Total gains = $39.6m/390m (shares on issue) equates to about 10cps!

Looking at a Findata NZD/USD chart, since 1 April the $NZ has dropped ~10% (from around 57c to 63.5c today)

As at 31/3/09 - NZO held just under $US90m cash

$US90m @ say 0.57c = ~$NZ157m, & @ 0.635 = ~$NZ141m

That would result in a FX loss of around $NZ16m, assuming the $US a/c hasn't moved. 16m/390m = ~4cps.

Will be interesting to read the June quarterly cashflow statement!

[the machine]

As previously publicly stated, there are numerous prospects within the Tui permit and the JV partners are still discussing which ones should be drilled by the Kan Tan IV later this year.
Within Permit PEP38483, AWE has identified the Bahamas prospect, but the JV partners have made no drilling commitment and this is also subject to further discussion.
Noties references to industry rumours are inaccurate and unhelpful.
When there are any decisions made, NZOG will announce them.

thanks chris.

regards

m

[the machine]

Thanks for the clarification Chris .

Looks like Kupe is going to come on line at a very opportune time .
Chris -does nzo still have the provision to buy back 2.5% kupe from mitsui.
From a report about 5 yrs ago I found this-
NZOG said the purchase by Mitsui of a 4% Kupe interest would leave NZOG with an equity of 15% in the field. The sale contained a provision, subject to certain conditions, for a repurchase of 2.5%. NZOG, was Kupe operator at the time the field was discovered in 1986.

fish, that question was asked a while back and clarified that option had well and truely passed

m