NZ Oil & Gas (NZO)

[gambier33]

You must remember that gas processing plants are fairly complex and potentially dangerous systems (remember the Longford gas plant explosion in Victoria a few years ago). Also remember that all those pipes, compressors, vessels, valves, instruments, and control systems etc haven't yet been exposed to gas or condensate yet. The insides of "empty" pipes etc now have air or moisture in them. Therefore, production will not start with a simple turn of a tap.

Prior to introducing raw gas from offshore into the onshore gas processing plant there needs to be a period of equipment testing, preparations, and plant dry-out. I'd imagine the NZ workplace safety regulator will also need to be satisfied the plant is safe to licence and for people to work in and live near.

This is what Orign Energy advised in April 2006 about the start-up of the onshore Lang Lang gas plant which is the processing plant for the BassGas Project (offshore wells in the Yolla gas and condensate field):

"The steady and methodical process of working through the commissioning schedule and addressing each new issue as it arises is continuing, and is supported by equipment vendors and specialists on site. While there has been good progress, the commissioning phase continues to reveal a significant number of unexpected construction defects which must be remedied before the plant commences production.

As a result this phase of the commissioning and start-up is taking longer than initially anticipated. It is now expected that first product sales will take place in May, with production ramp-up and plant testing continuing during May and into June. The project is therefore not likely to make a significant financial contribution to Origin Energy for the remainder of the financial year ending 30 June 2006."

It's clearly not a simple process and for all construction projects, no matter how good design looks on paper, there are always unexpected issues that only commissioning shows up. Minor problems cost only a few hours or days to a commissioning schedule; big problems can swallow up weeks and months with rebuilds.

[Oiler]

You must remember that gas processing plants are fairly complex and potentially dangerous systems (remember the Longford gas plant explosion in Victoria a few years ago). Also remember that all those pipes, compressors, vessels, valves, instruments, and control systems etc haven't yet been exposed to gas or condensate yet. The insides of "empty" pipes etc now have air or moisture in them. Therefore, production will not start with a simple turn of a tap.

Prior to introducing raw gas from offshore into the onshore gas processing plant there needs to be a period of equipment testing, preparations, and plant dry-out. I'd imagine the NZ workplace safety regulator will also need to be satisfied the plant is safe to licence and for people to work in and live near.

This is what Orign Energy advised in April 2006 about the start-up of the onshore Lang Lang gas plant which is the processing plant for the BassGas Project (offshore wells in the Yolla gas and condensate field):

"The steady and methodical process of working through the commissioning schedule and addressing each new issue as it arises is continuing, and is supported by equipment vendors and specialists on site. While there has been good progress, the commissioning phase continues to reveal a significant number of unexpected construction defects which must be remedied before the plant commences production.

As a result this phase of the commissioning and start-up is taking longer than initially anticipated. It is now expected that first product sales will take place in May, with production ramp-up and plant testing continuing during May and into June. The project is therefore not likely to make a significant financial contribution to Origin Energy for the remainder of the financial year ending 30 June 2006."

It's clearly not a simple process and for all construction projects, no matter how good design looks on paper, there are always unexpected issues that only commissioning shows up. Minor problems cost only a few hours or days to a commissioning schedule; big problems can swallow up weeks and months with rebuilds.

Well said Gambier

Commissioning is the most dangerous phase of any O & G project and as you say problems can swallow up a lot of time. Lets hope that is not the case with KUPE

Design always looks good on paper but unfortunately there many other factors that come into the picture during construction and only show up when commissioning.

[Dusty]

http://www.stuff.co.nz/business/mark...ould-rise-by-2

Interesting article on the 4 projects and several broker valuations of NZO. Reckons Kupe could be producing by the end of the year. No doubt this article helped with the higher opening even though oil prices sunk under $70 a barrell on friday.

[friedegg]

i must congranulate the nzo media pr team for pulling off such a great stunt!
the monday before the dividend went ex the media released a report claiming if all 4 wells come in nzo sp could go up by $2 and the sp rose,yesterday the same media released on that day was released again,and the sp rose....
if they continue to release this same news every monday it wont be long before it hits $2

[digger]

i must congranulate the nzo media pr team for pulling off such a great stunt!
the monday before the dividend went ex the media released a report claiming if all 4 wells come in nzo sp could go up by $2 and the sp rose,yesterday the same media released on that day was released again,and the sp rose....
if they continue to release this same news every monday it wont be long before it hits $2

friedegg,you are correct in the way you put it but i think NZO is pampering to a slow learning audience. Saying something once and never repeating has some merit in theory but in the world of human communations it has a very poor record.In fact i am sure you can think of many instances where junk repeated often enought becomes real like. Think here the finanical world of swaps and deratives and how multiple crap said over and over by {trustworthy} individuals gave nothing a value.

[Casa del Energia]

friedegg,you are correct in the way you put it but i think NZO is pampering to a slow learning audience. Saying something once and never repeating has some merit in theory but in the world of human communations it has a very poor record.In fact i am sure you can think of many instances where junk repeated often enought becomes real like. Think here the finanical world of swaps and deratives and how multiple crap said over and over by {trustworthy} individuals gave nothing a value.

Well, I find it very annoying - what it has done is cranked up the price sooner than I exepcted forcing me to bring forward planned top up before the usual drill program price mania. The net effect of such 'helpful good news' is to simply loose me a bit of intrest from the bank. :mad:

[Zaphod]

Well, I find it very annoying - what it has done is cranked up the price sooner than I exepcted forcing me to bring forward planned top up before the usual drill program price mania. The net effect of such 'helpful good news' is to simply loose me a bit of intrest from the bank. :mad:

Assuming of course, that that was the real reason why the SP rose....

[digger]

Paul Grogan is standing for directorship of NZO at the upcoming AGM on the 28th. Today i received a letter from him regarding this matter. I have just retruned emailed him for more info and will give a detailed comments when i hear from him. In the meantime has everyone else got a letter? Fish if you are reading did you get one?
Until later

[mattyroo]

Article in today's PNN...



Upside on NZOG horizonNeil Ritchie, New Zealand
Wednesday, 7 October 2009

NEW Zealand Oil & Gas’s participation in the upcoming offshore Taranaki exploration campaign could more than double its share price, according to investment banker and broker McDouall Stuart.

The Wellington-headquartered broker released its latest report on NZOG this week, saying the company’s exploration strategy was “becoming clearer and more comforting”, although NZOG appeared to have “snookered itself” regarding significantly increasing its 14.9% stake in, or taking control of, fellow Tui oil fields partner and dual-listed company Pan Pacific Petroleum.

“NZOG continues to present a picture of outstanding corporate health. In addition to having cash on hand (of close to $NZ175 million [$A144 million]), it holds significant cornerstone stakes in three major and value-accretive producing or near-producing assets.

“In addition, over the past couple of months NZOG’s forward strategy has become increasingly transparent. Earlier concern over direction following the announcing of its Romanian and PPP plays has been eased by the more recent moves to lift its interest in local front-end exploration.”

McDouall Stuart said the New Zealand market’s aversion to pricing in exploration upside presented investors with an entry opportunity for a potential short-term return.

The broker said that while its valuation of NZOG’s existing assets remained unchanged at $NZ1.88 ($A1.55) per share, the results of the four-well program could either cut this by up to NZ50c or add up to $2 per share. Shares of the dual-listed company are currently trading on the ASX at about $A1.45 and on the NZX at about $NZ1.74.

NZOG is involved in at least three of the wells scheduled to be drilled this summer by the semi-submersible Kan Tan IV rig – Hoki-1 in licence PEP 38401 and at least two Tui near-field appraisal wells. It will also be involved in the more northern Albacore-1 well to be drilled by the jack-up Ensco Rig 107 for PEP 38491 operator Westech Energy and Mighty River Power.

McDouall Stuart said it was not as upbeat about Hoki-1 as was AWE, which believes the oil-prone prospect could contain up to 300 million barrels of crude.

“Although the Hoki JV is upbeat about prospects ... the area has been drilled only once before (the 1970s Tane-1 well encountered subcommercial hydrocarbons) and is regarded as a wildcat, therefore carrying a relatively low probability of success (POS) of about 10 per cent.”

However, all three Tui well options – Tui-Northeast-1, Tui-Southwest-1 and Tui-Southeast-1 – were extensions of the already-producing Tui area and as such had a substantially higher POS.

“On our estimated POS for each well, we calculate there to be an 80 per cent likelihood that at least one well will succeed over the program ... and consider it reasonable to assume that one will be commercial.”

But McDouall Stuart said the chinks in NZO’s armour were its non-core assets, Pan Pacific and the Pike River Coal Company.

“It remains unclear what NZOG’s end game is (and even was) with its PPP play.”

While the value of Pan Pacific had increased substantially since being acquired (from less than NZ30c to about 60c), it appeared NZOG was now behind the eight ball as the proportion of PPP it did not hold was valued in excess of $NZ320 million, “well beyond NZOG’s own means”.

And the Pan Pacific board, including directors with substantial blocking holdings, had to date shown no interest in any alignment with NZOG.

“Furthermore, at current pricing we consider PPP to be significantly overpriced,” added McDouall Stuart.

The PEP 38401 partners are operator Australian Worldwide Exploration (50%), OMV (21.25%), Todd Energy (18.75%) and New Zealand Oil & Gas (10%).

The Tui partners are operator AWE (42.5%), Mitsui E&P NZ (35%), NZOG (12.5%) and Pan Pacific Petroleum (10%).

The Kupe partners are operator Origin Energy (50%), Genesis Energy (31%), NZOG (15%) and Mitsui E&P NZ (4%).

[Nitaa]

NZ Farming Systems AGM for 15th Oct. Some points of note.

4. Resolution Not Supported by the Board

To consider and, if thought fit, to elect as a Director
of the Company, Paul Grogan who has been nominated by
ST & CJ Bell Limited.

He has provided the following biographical details. He is an Auckland based private equity investor, specialising in risk assessment and reward, with farming, forestry and primary industry interests and experience. He has a Graduate Degree and Diploma from Massey University.

For the reasons outlined below, the Board does not support resolution 3 and recommends that shareholders vote AGAINST the resolution to elect Paul Grogan.


(See Explanatory Notes)
Why the Board does not support Resolution 3

A current non independent Director, Samuel Richard Maling, will retire by rotation at the annual meeting, and has indicated that he will not stand for re-election. To fill the vacancy arising from Samuel Richard Maling’s retirement, the Board has not had the opportunity to undertake a standard succession planning process to review the experience, expertise and skill sets required of the Board, and identify and nominate potential candidates in a professional and structured manner. Prospective Director candidates should be fully researched for their professional experience, expertise, independence, cultural fit and references. Such a process balances the introduction of new skills to the Board while maintaining sufficient continuity, and ensures that shareholders are given the opportunity to appoint the most appropriately qualified and experienced candidates to the Board.

The Board would prefer to undertake a standard succession planning process in the best interests of the Company, and in which this Director nominee could participate. The Board also notes that other potential candidates did not put their names forward for election given that they were aware of the intended succession planning process. In addition, the Board proposes to consider Mr. Grogan’s nomination as part of this process.