NZ Oil & Gas (NZO)

[777]

You have done well team. A lot of typing by some of you. Very much appreciated. Thank you.

[Nitaa]

You are completely miss quoting me on this Nita

NZO say they don't speculate....

I say they have done NOTHING in 6 months!

The trend of the USD/NZD has been quite evident to ANYONE who has looked at it over the last 6 - 9 months.

To simply accept the fact they have lost close to there whole revenue in 6 months due to FX losses is unacceptable, & to say "we don't speculate" is either plain ignorant or borderline incompetent.

They lost $22m last quarter & simply have chosen to look the other way, again losing $17m more this quarter.

Now the USD/NZD is much higher than it's historical range & may well start to "correct", but my contention is by doing nothing they are costing there shareholders money.

It's NOT management's cash, it's the shareholders

If you're happy with this practice fair enough, but as an Accountant i find this absolutely unbelievable.

I've said my piece now

I guess we agree to disagree. Upside umop has explained it better than me and he is right on the mark. What happens if the arsee drops out of the kiwi again then you will see nzo make a bundle again and everyone will be singing their praises. How knows where to currency will go and as a matter of fact the experts wont know either. Remember Shasta, if the direction of the currency was that obvious then everyone would do it and make money. I think not.

Another relevant point here is that the price of oil in $NZ terms have changed bugger all over the last 6 months. Effectively the weakening $US has been countered by the rise in oil prices.

To put it in very simple terms, what nzo gain on the swing they will lose on the round-a-bout. It is just a matter of time.

[shasta]

I guess we agree to disagree. Upside umop has explained it better than me and he is right on the mark. What happens if the arsee drops out of the kiwi again then you will see nzo make a bundle again and everyone will be singing their praises. How knows where to currency will go and as a matter of fact the experts wont know either. Remember Shasta, if the direction of the currency was that obvious then everyone would do it and make money. I think not.

Another relevant point here is that the price of oil in $NZ terms have changed bugger all over the last 6 months. Effectively the weakening $US has been countered by the rise in oil prices.

To put it in very simple terms, what nzo gain on the swing they will lose on the round-a-bout. It is just a matter of time.

Sorry but i have to reply to this.

You want to pay them very nicely to do NOTHING, with the rationale oh well it'll go back in our favour sometime?

Clearly very little on here know about FX

I'll stick to investing in companies that create value for shareholders

[Nitaa]

Sorry but i have to reply to this.

You want to pay them very nicely to do NOTHING, with the rationale oh well it'll go back in our favour sometime? No i do not want to pay for someone or a company to do nothing. Just as upside umop and myself have alluded to, NZO are effectively hedging the currency by keeping revenue in $US the same and with the intention to use the same currency for projects that require payment in USD. Why exchange it to NZD only to revert it back to USD. Yes they might get lucky or they might get unlucking with the timing. I dont want them to play the game by chance. Hedging the currency as what is common place would be to have the USD fixed at a certain rate for a specific period. Pedominately companies that export only would be inclined to do this so they can protect their income stream at a certain level. It gives them certainty and is just another form of insurance isn't it?


Clearly very little on here know about FX Tell me or others what we dont know about FX, or more specifically "Hedging a specific currency". What you are saying is that nzo should have hedged the NZD or USD at a certain level. Although i see no point and i fully agree with nzo's approach so far, no one has put their hand up to where nzo should have hedged a specific currency. It seems like too much looking in the rear view mirror and then saying what they should have done.

I'll stick to investing in companies that create value for shareholders

A little bit of ping pong here and nothing wrong with a good debate Shasta.

You have taken my comment out of context based on your post here and replied accordingly.

Should nzo's situation change and by that i mean have no need to spend USD for say 5 or ten years then your arguement has far more merit.

Please explain where i am wrong and as an accountant yourself what you you have done in the same situation. i.e. taken what action at what time and for how long? The second question i have on this is, with the benefit of hindsight what would you have done? i.e. again, what action, at what time and for how long?

This is a bit of a challenge, because now you are going to have to predict the future as well with the currency?

[geezy]

are the losses in FX a realised loss or just a paper loss?

[Nitaa]

are the losses in FX a realised loss or just a paper loss?

Exactly. Looking overnight they have made over $1m on paper.

[impacman]

Thanks all for the great summary's and your respective views of the AGM. Much appreciated.

I-man

[Casa del Energia]

Thanks for all the detailed posts, fellas.

[Sehnsucht888]

I wish that article in the paper hadn't been so negative... Down 7c as I write. Ouch.

[Snapper]

Might not just be the newspaper, First NZ Capital came out with an underperform rating today - reluctantly they said.

As a long-term holder, its all just short-term noise, though. PRC's the one real thorn in their side and in hindsight its one investment that they could well have got rid of earlier. Once they can overcome their problems and start meaningful production then their earlier hassles will quickly be forgotten.

One issue that I didn't get the rationale for was borrowing the $50 million when they had the money sitting in the bank. Not something I'd do on an individual level and surprised that they would do it on a corporate level. I always liked the fact that NZO had no debt. Who knows, maybe keeping their powder dry for a decent acquisition??