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  1. #1621
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    Quote Originally Posted by Snoopy View Post
    From the prospectus, page 87

    "Medium Term Wholesale Electricity market Risks: <snip>. An example would include a sustained period of higher than average water inflows, combined with higher than average temperatures (such as amy occur during the late winter and spring). Conditions in take or pay gas contracts may result in the company burning gas in its Rankine Units from time to time when it would not otherwise choose to do so."
    I think it is worth looking into the gas supply and demand situation at Genesis a little further. The following information is taken from the statements of Comprehensive Income for the respective years.

    Year Gas Revenue Gas Purchases & Transmission
    2014 $251.3m ($249.8m)
    2013 $212.5m ($217.2m)
    2012 $235.8m ($249.4m)
    2011 $189.9m ($215.7m)
    2010 $131.6m ($130.7m)

    The above table shows that 'Gas' when it was profitable has only been marginally profitable for Genesis. Where this gets more interesting is if you look at the segmented results. For FY2014 this is on page 43.

    Now Genesis is an energy wholesaler (under the 'Energy Management' section) and an energy retailer (under the 'Customer Experience' section) and an energy producer (under the Oil and Gas section). Then we have the additional complication of Genesis selling gas both directly as gas and indirectly as electricity.

    Under 'energy management' there is a further additional entry for 'fuel consumed' ($246.7m). That might be coal or gas or a combination of both. I note from the Solid Energy FY2014 annual report (page 2) that total coal sales in New Zealand by them amounted to $150m to all NZ customers. That means Genesis burned 50% more fuel that Solid Energy sold for all their New Zealand customers combined! So why is 'gas purchase' a separate expense entry?

    Furthermore, how do Genesis decide to allocate the purchase and transmission costs the way they do? I presume the fuel bought for 'Energy management' goes straight to Huntly to be burned. So given this is along one big pipeline, I wonder why that (apparently?) has much larger transmission costs than transporting the gas in small pipes and trucks all around the rest of the country?

    I am not sure I am asking all the right questions. But there does seem to be a lot of opportunity to manipulate the figures between the different segment categories. And this matters because with gas only marginally profitable, there is some real incentive there to manipulate the individual segment results to mask the overall bleak picture.

    SNOOPY
    Last edited by Snoopy; 15-07-2015 at 06:54 PM.
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  2. #1622
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    snoop I have been buying up lots of genesis as I am really optimistic about their future-so I have a very biased view.It makes no sense to burn coal as your post implies-gas down a pipeline when you produce if from an unmanned rig must be very cheap-and kupe has lots more gas and heaps more gas yet to be quantified.It looks to me as if kupe output can be varied according to genesis needs so? no need for storage.

    demand appears to be increasing and inefficient units being closed-2nd rankine unit now permanently closed.Genesis will stop using coal and both the flexibility to produce and the cost production will improve.
    Electricity demand this week is greater than ever.
    Interest rates falling will further decrease genesis costs.
    As to immigration to nz-will increase and increased power demand
    Cheap oil will increase manufacturing and transport throughout the world-more tourism etc -all leading to more electricity use

  3. #1623
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    Quote Originally Posted by fish View Post
    snoop I have been buying up lots of genesis as I am really optimistic about their future-so I have a very biased view.It makes no sense to burn coal as your post implies-gas down a pipeline when you produce if from an unmanned rig must be very cheap-and kupe has lots more gas and heaps more gas yet to be quantified.It looks to me as if kupe output can be varied according to genesis needs so? no need for storage.

    demand appears to be increasing and inefficient units being closed-2nd rankine unit now permanently closed.Genesis will stop using coal and both the flexibility to produce and the cost production will improve.
    Electricity demand this week is greater than ever.
    Interest rates falling will further decrease genesis costs.
    As to immigration to nz-will increase and increased power demand
    Cheap oil will increase manufacturing and transport throughout the world-more tourism etc -all leading to more electricity use
    Oh yeah, who cares about analysis when you have optimism anyway? Any view on the take or pat gas situation and the future of E3p.
    Flare the gas I say, a gigantic monument to human stupidity.

  4. #1624
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    Quote Originally Posted by Snoopy View Post
    I think it is worth looking into the gas supply and demand situation at Genesis a little further. The following information is taken from the statements of Comprehensive Income for the respective years.

    Year Gas Revenue Gas Purchases & Transmission
    2014 $251.3m ($249.8m)
    2013 $212.5m ($217.2m)
    2012 $235.8m ($249.4m)
    2011 $189.9m ($215.7m)
    2010 $131.6m ($130.7m)

    The above table shows that 'Gas' when it was profitable has only been marginally profitable for Genesis. Where this gets more interesting is if you look at the segmented results. For FY2014 this is on page 43.

    Now Genesis is an energy wholesaler (under the 'Energy Management' section) and an energy retailer (under the 'Customer Experience' section) and an energy producer (under the Oil and Gas section). Then we have the additional complication of Genesis selling gas both directly as gas and indirectly as electricity.

    Under 'energy management' there is a further additional entry for 'fuel consumed' ($246.7m). That might be coal or gas or a combination of both. I note from the Solid Energy FY2014 annual report (page 2) that total coal sales in New Zealand by them amounted to $150m to all NZ customers. That means Genesis burned 50% more fuel that Solid Energy sold for all their New Zealand customers combined! So why is 'gas purchase' a separate expense entry?

    Furthermore, how do Genesis decide to allocate the purchase and transmission costs the way they do? I presume the fuel bought for 'Energy management' goes straight to Huntly to be burned. So given this is along one big pipeline, I wonder why that (apparently?) has much larger transmission costs than transporting the gas in small pipes and trucks all around the rest of the country?

    I am not sure I am asking all the right questions. But there does seem to be a lot of opportunity to manipulate the figures between the different segment categories. And this matters because with gas only marginally profitable, there is some real incentive there to manipulate the individual segment results to mask the overall bleak picture.

    SNOOPY
    I am not analysing this company to your level snoopy as I am not a holder.
    Does energy management refer to the loss that genesis makes selling it's gas on the wholesale market?, as you say the Maui pipeline is cheaper than trucks.

  5. #1625
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    Quote Originally Posted by Snoopy View Post
    I think it is worth looking into the gas supply and demand situation at Genesis a little further. The following information is taken from the statements of Comprehensive Income for the respective years.

    Year Gas Revenue Gas Purchases & Transmission
    2014 $251.3m ($249.8m)
    2013 $212.5m ($217.2m)
    2012 $235.8m ($249.4m)
    2011 $189.9m ($215.7m)
    2010 $131.6m ($130.7m)

    The above table shows that 'Gas' when it was profitable has only been marginally profitable for Genesis. Where this gets more interesting is if you look at the segmented results. For FY2014 this is on page 43.

    Now Genesis is an energy wholesaler (under the 'Energy Management' section) and an energy retailer (under the 'Customer Experience' section) and an energy producer (under the Oil and Gas section). Then we have the additional complication of Genesis selling gas both directly as gas and indirectly as electricity.

    Under 'energy management' there is a further additional entry for 'fuel consumed' ($246.7m). That might be coal or gas or a combination of both. I note from the Solid Energy FY2014 annual report (page 2) that total coal sales in New Zealand by them amounted to $150m to all NZ customers. That means Genesis burned 50% more fuel that Solid Energy sold for all their New Zealand customers combined! So why is 'gas purchase' a separate expense entry?

    Furthermore, how do Genesis decide to allocate the purchase and transmission costs the way they do? I presume the fuel bought for 'Energy management' goes straight to Huntly to be burned. So given this is along one big pipeline, I wonder why that (apparently?) has much larger transmission costs than transporting the gas in small pipes and trucks all around the rest of the country?

    I am not sure I am asking all the right questions. But there does seem to be a lot of opportunity to manipulate the figures between the different segment categories. And this matters because with gas only marginally profitable, there is some real incentive there to manipulate the individual segment results to mask the overall bleak picture.

    SNOOPY
    I am not analysing this company to your level snoopy as I am not a holder.
    Does energy management refer to the loss that genesis makes selling it's gas on the wholesale market?, as you say the Maui pipeline is cheaper than trucks.

  6. #1626
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    Quote Originally Posted by PSE View Post
    Oh yeah, who cares about analysis when you have optimism anyway? Any view on the take or pat gas situation and the future of E3p.
    Flare the gas I say, a gigantic monument to human stupidity.
    I think he did some analysis (electricity demand increasing, coal reduction through 2nd Rankine closure, falling interest rates, high immigration increasing demand, increased tourism) and drew his own conclusion from it - that this stock is currently under-valued.

    If everyones analysis returned the same result and conclusion for all stocks, the market would be very tough for low-speed private investors. Computers would be much quicker and likely dominate the market. The reason we have a functioning sharemarket is because people analyse the same situation differently, sometimes draw different conclusions, and then react differently.

    Genesis is a yield stock, and the yield is higher than most other stocks that are backed by tangible assets. The NZ electricity market is mature and growing slowly. I am not aware of any additional generation capacity under construction. Genesis both extracts & uses natural gas, so the E3P situation isn't an issue IMO.

    I see upside potential in this stock once exchange rate stabilises, which doesn't appear to have happened yet

  7. #1627
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    Quote Originally Posted by PSE View Post
    Oh yeah, who cares about analysis when you have optimism anyway? Any view on the take or pay gas situation and the future of E3p.
    Flare the gas I say, a gigantic monument to human stupidity.
    PSE, Kupe was developed ten years ago when the outlook for electricity and gas were very different. Back then it was the decline of the Maui field that was on everyone's mind. Auckland basically ran on Maui gas back then (Contact's Otahuhu B), and no new geothermal energy projects were on the horizon. Maui also ran on take or pay. But of course those Maui take or pay contract prices reflected 1970s and 1980s field development costs. So gas was dirt cheap. The economics of almost any gas project at the time was a no brainer.

    This was all pre GFC. So power consumption was going to rise 3% every year ad infinitum in line with continuous economic growth. Your comments PSE make sense today because you have the benefit of hindsight. To imply the development of the Kupe field was stupid is not a fair criticisim of the time. Further, IMO, having Kupe as a relatively clean (c.f. coal) thermal energy option does make sense today when you consider that more extreme weather events could hit our hydro resource in the future.

    SNOOPY
    Last edited by Snoopy; 16-07-2015 at 09:22 AM.
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  8. #1628
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    Quote Originally Posted by PSE View Post
    I am not analysing this company to your level snoopy as I am not a holder.
    Does 'energy management' refer to the loss that genesis makes selling it's gas on the wholesale market?, as you say the Maui pipeline is cheaper than trucks.
    'Energy Management' in the Genesis Annual report sense (Segmented Results section), I think is just a euphamism for the wholesale market, dreamed up by some marketing guru at Genesis. The price of Kupe gas, as I see it, was determined by the development expenditure summed up from the first prospecting days up to the construction of the offshore rig and maintenance expenditure of the present.

    Is Genesis making a loss selling their gas on the wholesale market? I am not sure I have the answer to that question. The answer is also complicated by the fact that Genesis have ceased all their gas exploration activities outside of Kupe. So Genesis are now harvesting cash from Kupe and to some extent the sunk costs spent on developing Kupe are now irrelevant.

    SNOOPY
    Last edited by Snoopy; 16-07-2015 at 09:33 AM.
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  9. #1629
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    Quote Originally Posted by fish View Post
    It makes no sense to burn coal as your post implies-gas down a pipeline when you produce if from an unmanned rig must be very cheap-and kupe has lots more gas and heaps more gas yet to be quantified.
    Burning coal over gas does make sense if by not doing so you breach the contract signed with your coal supplier.

    SNOOPY
    Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7

  10. #1630
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    Hey snoop, it's the take or pay gas I am against not the decision for kupe. There is no take or pay electricity or anything else, take or pay gas contracts should be banned as they cause development of uneconomic resources.
    Everyone else takes the risks associated with the market, so should gas companies.
    I could be wrong on GNE sure but I would encourage people to consider take or pay and how the company needs to run E3P regardless of electricity prices.
    I am thinking CEN doesn't need to carry the 172MW of Tiwai but GNE probably does. Maybe a writedown of E3P is in the works if this scenario plays out.

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