GNE - Genesis Energy

[peat]

I would have thought it added a useful amount of diversity to their resource base. we should go back and see what they said when they bought it.

[Jantar]

Strategic review ofvKupe

I hate it when they give this veiled warning - It is not expected that the outcome of this strategic review will impact our ability to maintain the current level of dividends

http://nzx-prod-s7fsd7f98s.s3-websit...038/336214.pdf

I knew I’d timed this dividend game wrong ...without DYOR on an industry I know squat all about

The possibilities for the Kupe field are that they find the gas reserves are larger than previously thought, or they are not larger, but an additional well could tap the remaining reserves faster. It is very unlikely that they would find the reserves are diminished on what was previously counted. The upfront costs of drilling are not cheap, and hence the reason for the review.

Couple the positive aspects of this drilling programme along with the government's stated policy of no fossil fuel electricity generation after 2030, and it would seem prudent for Genesis to consider selling their interest ion Kupe at a time that the value is increasing. I see this as having more upside for Genesis than potential downside. If they keep their interest in Kupe as is, it will be costlier in the short term, but will increase earnings long term. If they sell now they will have a small cash mountain (special dividend perhaps), but the ongoing cost of their fuel for Huntly units 5 and 6 will increase. However these units have only 10 years left if the government has its way.

I hope they do decide to sell now.

[Getty]

Beagles are very good at sniffing out tasty morsels at ground level, but sometimes they need a bigger beast to see the enemies & storm clouds on the horizon.
As you would already know, GNE has a lot of thermal capacity, and despite the wishes of some, it isnt going to be turned off tomorrow.

However, medium term it will be.
What is happening globally, institutions, pension funds & the like are withdrawing exposure to such investments.
Recent examples are NZR, and AGL on Asx, where capital is being withdrawn, ahead of future dents to cashflow.

So while your divvies are safe for now, the capital value of such stocks will be eroded, as that capital takes flight, & these companies re invent themselves. to wind, hydro, geo, nuclear, oops, who said that?, and may have to capital raise to do so.

Exodus, of capital into hydocarbon projects.

The Greens well be riding their push bikes around in circles over this one.

[ratkin]

Beagles are very good at sniffing out tasty morsels at ground level, but sometimes they need a bigger beast to see the enemies & storm clouds on the horizon.
As you would already know, GNE has a lot of thermal capacity, and despite the wishes of some, it isnt going to be turned off tomorrow.

However, medium term it will be.
What is happening globally, institutions, pension funds & the like are withdrawing exposure to such investments.
Recent examples are NZR, and AGL on Asx, where capital is being withdrawn, ahead of future dents to cashflow.

So while your divvies are safe for now, the capital value of such stocks will be eroded, as that capital takes flight, & these companies re invent themselves. to wind, hydro, geo, nuclear, oops, who said that?, and may have to capital raise to do so.

A lot of the attractiveness of Genesis depends on your own circumstances. For anyone in their 70s for example who just wants an income stream then they are pretty good.
If you are just going to stick them in the draw from 30 years then maybe not so much. However at 7% plus it does not take that many years to recoup your initial investment back in dividends. They have plenty of time to transition away from thermal, they recently did a deal with tilt for example

[Davexl]

Beagles are very good at sniffing out tasty morsels at ground level, but sometimes they need a bigger beast to see the enemies & storm clouds on the horizon.
As you would already know, GNE has a lot of thermal capacity, and despite the wishes of some, it isnt going to be turned off tomorrow.

However, medium term it will be.
What is happening globally, institutions, pension funds & the like are withdrawing exposure to such investments.
Recent examples are NZR, and AGL on Asx, where capital is being withdrawn, ahead of future dents to cashflow.

So while your divvies are safe for now, the capital value of such stocks will be eroded, as that capital takes flight, & these companies re invent themselves. to wind, hydro, geo, nuclear, oops, who said that?, and may have to capital raise to do so.

Agreed. Sold out of AGL not long after their dividend. The Superannuation funds in Aust anyway have woken up to the climate risk on coal power. From now on in Aust at least, AGL for example is now a dividend trap in my view with medium term capital losses accruing to the shares.

The Super funds in NZ haven't fully woken up yet to the Climate risk of coal yet IMO, so while Huntly's baseload generation is needed, the dividend is safe. It comes down to how fast AGL and Genesis can transition to renewables eg gridscale batteries with AGL and wind with Genesis via TILT.

I also sold out of Genesis with medium term capital losses in mind recently before this announcement. Gonna miss Genesis, it's been good to me, but until the Govt wakes up to the transition fuel argument for Gas and its needed exploration in NZ - and the baseload generation puzzle is resolved with Tiwai and the possible Pumped Hydro option which looks tempting to the Govt, I'm out for now. Maybe if the transition to renewables accelerates markedly I'll reconsider, but renewables are somewhat on hold with all the uncertainty at the moment. Time will tell. Good luck to holders...

[bull....]

Agreed. Sold out of AGL not long after their dividend. The Superannuation funds in Aust anyway have woken up to the climate risk on coal power. From now on in Aust at least, AGL for example is now a dividend trap in my view with medium term capital losses accruing to the shares.

The Super funds in NZ haven't fully woken up yet to the Climate risk of coal yet IMO, so while Huntly's baseload generation is needed, the dividend is safe. It comes down to how fast AGL and Genesis can transition to renewables eg gridscale batteries with AGL and wind with Genesis via TILT.

I also sold out of Genesis with medium term capital losses in mind recently before this announcement. Gonna miss Genesis, it's been good to me, but until the Govt wakes up to the transition fuel argument for Gas and its needed exploration in NZ - and the baseload generation puzzle is resolved with Tiwai and the possible Pumped Hydro option which looks tempting to the Govt, no doubt. I'm out for now. Maybe if the transition to renewables accelerates markedly I'll reconsider, but renewables are somewhat on hold with all the uncertainty at the moment. Time will tell. Good luck to holders...

agl down 31% YTD

[bull....]

A lot of the attractiveness of Genesis depends on your own circumstances. For anyone in their 70s for example who just wants an income stream then they are pretty good.
If you are just going to stick them in the draw from 30 years then maybe not so much. However at 7% plus it does not take that many years to recoup your initial investment back in dividends. They have plenty of time to transition away from thermal, they recently did a deal with tilt for example

agl down 31% YTD, power companies not immune from downtrends.

on your theory it might not quite work to get that capital loss back in a hurry from dividends

[Davexl]

agl down 31% YTD, power companies not immune from downtrends.

on your theory it might not quite work to get that capital loss back in a hurry from dividends

Luckily I wasn't holding long term - just in an out...

[Getty]

Albert Brantley turned off the Rankines last year, but the ever pragmatic Gennie Shipley said give them another spin Albert, I like feeling the heat in the kitchen.

That was the sanitised version.

She really said; 'Albie, light up my fire'.

When he found out, Burtie said if ya cant the heat in the kitchen, get out!

To which she responded, we're going coaled turkey!

Albie was stoked.

[JohnnyTheHorse]

The GNE term deposit is performing well Beagle. Very strong weekly uptrend. Still 10% upside to hit last years highs so definitely lagging its peers though.