-I will be one as of the next couple days my first purchase on the NZX for over 3yrs now absolute bargin at these levels
Printable View
NZO is a bargain at $1 only if it produces a good return for the purchaser of that share. As NZO does not as yet return anything to the shareholder it remains to be seen as to what the bargain price will be. As someone pointed out earlier, even if NZO has a zillion bucks coming in, the shareholder sees nothing while all that money goes into further company building and directors pockets. Let's see some crystalized benefit to the shareholder, then we'll see the SP head north.
I think its obvious to most people that the company will not offer dividends for some years to come this being said their are otherways of getting the SP up such as some sort of sharebuyback scheme. For the options to be in the money in 7ish months time it would probably take a good quarterly cashflow pike producing coal and a sharebuy back. Alot will depend on coal oil and gas prices in the months ahead it sure is going to be interesting.
If you want a company to yeild divies buy a retail stock .. etc personal I don't know of any emerging Oil energy company's that do or are planning on pay divies ,more likely once their more advanced in the developments they may do a share-buy back-like what boysy was saying.
IMHO futher Oil Gas Coal developments is were the extra funds should go or maybe some JV's with others in there sector and if there got zillions of $$$$$$$$$$ in cashflow I can promise you there SP will increase -
---Increasing -Reserves+Cashflows+further drilling & developing =Increasing SP & Mrktcap
-As I've said before if you don't want you NZO's I'll buy them for $1
Jbmurc,
I'm not so worried about dividends - I'm just suggesting why the SP is languishing and why the ODs won't get exercised. Nevertheless, as I have said, it sticks in my craw that the NZO exec are telling us to wait while they fill their pockets. Plenty of oilers pay dividends - Southern Petroleum was one, and our own NZO was another when they were producing from Ngatoro. Now they're producing from Tui... let's hope Greymouth doesn't buy them out.
Brave talk. I think you will get them at $1.00 tomorrow. Let's see how many get bought at $1.00?
NZO pumping money into more explorations makes little sense as its track record in drilling and exploration is poor. The three projects underway have been around a long long time and have become economical due to higher energy and coking coal prices. Take away the higher prices (still a possibility) and they go back into non-production.
Have you had a look at figures balance TUI was given the go ahead based on oil at $40 the case is similar with coal and gas prices.
Balance would say you are correct .... and that the market knows that .... and factored the additional profitability in to their calculations .... and come in at just over a $1
Maybe the converse to what you are saying is if oil wasn't $90 going on $100 then NZO might be considerably less than a $1
what sort of discount rate are we using to get the dollar figure then ?
I think it was Digger that earlier said it doesn't make sense giving out dividends now because in effec tthey'd be double-taxed. From an economic point that makes sense, however if NZO says to me, "hey, here's a pot of your money, we can either put the lot (less a little something for the directors Xmas stocking) into the slot machine of exploration at odds of 1:5, or we can use half of it for that purpose, double tax the rest and give you what's left"..... I think I'd take the $ even if it is double taxed.
Oil price rising slowly in US$, NZ$ has dropped..... NZO price fell 1%, about the average fall of the NZSX for the day.
Another (many) example that NZO shareprice is running on emotion rather than fundamentals.
Arjay, you have to look at the long run perspective of drilling. It is very attractive on expected returns but is definately risky on stand alone basis. But the more drills done, the amount of risk deviated from the expected return decreases.
You also have to ask yourself how they got to where they are now. They took the risk at Kupe and struck. They have taken risks at Hector, Taranui, but not. Its all risk and return, and in the long run it is in our, the shareholders interests.
Bermuda, what do you think oil will top out at?
Also, were you still so bullish when it dropped below $55 this year before bouncing back? Is there scope for this to happen again?
Anything can happen in this game but if you want my opinion the USA is stuffed, the $US dollar is struffed, and oil is going higher.
"For the options to be in the money in 7ish months time it would probably take a good quarterly cashflow pike producing coal and a sharebuy back. "
- two of those are very possibile, and maybe three......
"A lot will depend on coal oil and gas prices in the months ahead it sure is going to be interesting."
- well they look unlikely to be going down.....
1/ A good quarterly cashflow is a given isn't it? This thread has worked it out so many times before.
2/ Pike - The tunnell will be finished and Pike will be reporting production - From an accounting perspective will be interesting to see when in the transport chain revenue gets booked.
3/ Buyback - A sensible option - we will have to wait and see - Could be announced for the next year at any time - would be best after the next qaurterly for the year ahead and large - not only for the shareholders but also so the company doesn't get taken over.
4/ Kupe not mentioned - will get increasing press especially if looming gas shortages are predicted
5/ Takeover? This is a real possibility - NZO is getting substantially de-risked & has a strong revenue profile looking forward
Of course there are a number of things that could make things worse but look at the current position before being drawn into overall market gloom.
The real price of the commodoties you mention is measured in american dollars which as you say is stuffed. the price is not going up as much as you seem to think if you take that into consideration. The only thing that is not stuffed is the chinese economy in whose money the prices will be worked out against in the future. America is on a big downtrend even although they havent worked it out as yet. The NZ economy is being stuffed my investments are all on the ASX. Macdunk
Duncan,
There is a very good essay on petrodollars on www.petrodollarwarfare.com by William Clark dated 15 January 2007. It is 53 pages so it does take a bit of chewing through but it is well worth the read to get his opinion.
Would like your opinion on his opinion if you get time
Cheers
Worth to note:
AWE is over 20% off its 2007 high
PPP is about 40% off its 2007 high
NZO is about 30% off its 2007 high.
The main factors are the dry wells and the sell down when the subprime issue hit.
Now oil is at extremely high levels and its short term future direction could go anywhere. With the volaitility in the markets investors are most likely looking at defensive stocks compared to a couple of months ago. All of this amounts to NZO being rerated down in effect. I guess it is no surprise we see the current SP where its at.
Dont write the options off just yet. Although they are now in the "high risk basket", one would be a fool to say they wont be exercised. There is plenty of money to be won or lost over the next 7 1/2 months
There was a sale of 300 thou options yesterday @ 09c, maybe someone who couldn't make the NZ Cup in ChCh today so decided to back the OD's
scamper's constantly amazed at the popularity of this share and interest in this thread.
have just looked over the three-year chart, and i see that it specialises in 30% bounces.
Can someone tell me if this is because the fundamentals bounce around, or whether there are a bunch of TA traders behind the moves.
Given that three years ago it was about where it is now, are there any such creatures as long-term investors? I hope all the posters have been dabbling profitably! cheers.
1/ Quarterly cashflow means little - it's what and where the cash is coming and going to. More drilling?
2/ Tui started production. Share price went backwards.
3/ Buyback means giving money back to shareholders. Less money to go into drilling. Unlikely to happen.
4/ Like PRC and Tui, Kupe is already known.
5/ Big miners buy other miners to add to their reserves. NZO has finite reserves.
Current position is that NZOers are still looking through the window (from the outside in the cold) at the hottest party in town.
interesting release in PPP announcement about possible 4th TuI production well and PPP outlook is interesting from ppp anouncement
"Outlook
Pan Pacific's directors, who together represent a substantial equity in the
company, don't want Pan Pacific to rest on its Tui laurels.
The Board is evaluating ways to expose the company to greater upside by
getting involved in new exploration drilling plays, possibly assisted via
recruitment of an exploration-focussed geoscientist as a full-time CEO and/or
through structuring an alliance with another like-minded company, or through
conventional farm-ins. "
here hoping they do im sure they will be doing the figures
I'm not sure that it would be attractive to AWE. They have 42.5% of Tui already and, while its a great money-spinner for them they also have 3 other significant producing fields. I guess it depends on whether they regard the Taranaki area as more attractive/prospective than their other options.
Disc: Hold AWE
I do notice that the options is down to 8.2c on a turnover of about three thousand bucks. I would hate to be lumbered with a heap of them trying to bail out. I hope the poor bugger didnt buy them at 30c or buy them at all. I reckoned they were worth 5c at the start sold my lot for nine now i think they are worth whatever some poor mug will pay for them which will be nothing at all shortly. The pass the parcel game is speeding up who is dumb enough to be holding when the music stops. Macdunk
never mind the fool writing them off just yet, think about the fool writing them off in july. Then you might say the fools that bought them at 30c have written themselves off. Its not what the company earns, its what the market perception of the company is that dictates the sp. To many snouts in the trough, to many disgruntled shareholders, to little disclosure of company intentions. PASS THE PARCEL from now on up to when the music stops for the options. Macdunk
sure it could be pass the parcel though come june 30th next year it might be worth actually paying for the parcel only time will tell.
Now now McDunk, there I was feeling all smug because someone bought my ODs off me for 30c. Now you're making me feel guilty.
NZO managment really does owe it to its shareholders to spell out how and when shareholders will benefit from the now accumulating wealth. As someone recently commented, shareholders are currently outside in the cold watching the champagne flowing inside.
IMO the options will be well in the money and exercised when due next june-management can easily manipulate shareprices when they will (eg look at Collins who was ramping up the Brierley share price whilst selling his holding ).
TR holds millions of options-you can be assurred they will be worth a lot by next june .
Like macdoogle I sold all mine ASAP after issue at 9c but differ in that I am vastly overweight in NZO .
.
The question is.. what will push up the NZO SP?? Definitely not the movement of the oil price and we are not likely to see any dividend or a share buyback.
I understand what you are trying to tell us McDunk. I too have reservations about some of the people running NZO, hence I only have a small holding. The brokers out there are also saying the same thing. Without the support of the brokers and institutions, this stock sp will struggle.
I personally think everyone needs to:
a. chill out a bit
b. ignore macdunk and his neverending rant
c. stop with the conspiracy theories; and,
d. be patient.
money's pouring in, pike's coming online in a quarter, kupe's progressing well...
:) I have told Dunc before that he spends too much time hanging around on NOG Corner.
In the old days the Glasgow Police used to send a couple of big Highland constables on to Sauchiehall St to move them along:D
dunk---
I spend hours reading this thread and I get pissed off when you think I've got alzheimers!
Please give the dog a bone.
When mcdunk stops posting negative thoughts we should phone his quack, it will indicate he is poorly.
You should have listened to McDunk in the last two years and saved yourselves a lot of grief and also, made a lot of money.
Remember the predictions?
NZO was going to be worth $2.00 plus when Tui, Pike and Kupe started moving. Not so.
Pike was going to be a hot IPO and stock was going to be very hard to get. Not so.
NZO sp will go up when Tui started producing. Not so.
Meanwhile, resources and their prices have been zooming up and big, big gains have been made in other resource stocks.
Yes, you ahould have listened to MacDunk. Instead some of you are wanting to shoot the messenger and the correct predictor!
There's also another way of looking at things - - - Maybe the price of the options lingers because MacDunk keeps on saying it will!
Sorry but you have the general concept wrong.
The talk of future sp etc is speculative and everyone will have a different opinion. Some might have thought $2.00 but i am sure many thought its worth more and many thought way less. Your post suggest that all NZO investors think exactly the same.
Im not sure when mcdunk bailed but clearly he took a hit but has since done well. A fact that no one can ignore is someone who has held steadfast on the heads for 4 or 5 years have more than trippled there money. So your agument is biased to suit your position. The long term holders (ie 5 years) dont gloat everyday how they have turned $100k into $300k plus. That is the point where many of the posters get sick of the broken record that Mcdunk goes on about.
To get back where NZO is at the moment there have been many sceptics who have said that Tui, Pike and Kupe will never get off the ground. Now of course they cannot say that. There has been many who said that oil will never go above $50 per barrel, Yadi ya. What happens in the future no one can tell. all option holders know that their options may well be worthless in 7 or 8 months time. But most will know that they are not out of the game just yet. Stranger things happen every day.
No problem with having an opinion but one thing i can tell you is that Macdunk, sooner or later will shoot himself in the foot. But then of course like the rest of the doomsdayers he will disappear into the sunset with his tail bewteen his legs.
Personally, i am waiting on the options to hit my strike price then wham. I have set aside an amount i am prepared to lose. If i lose i can live with that, if i break even or win then of course i can live with that also.
[QUOTE=Balance;173136]You should have listened to McDunk
Listen and listen and listen and listen to the same thing
But wait!!
Yes, you ahould have listened to MacDunk.
and listen and listen yet again to the same thing.
watch out for tyhe awe agm next thursday - re tui H4 etc
M
The beuaty about this thread is that I know a few of the big sellers. Once the overhang goes watch out.
NITA, it is you that has the general concept wrong. Get to know the difference between rational investment, and gambling. It is not rational to hold an option at 30c watch it downtrend to 8c then say if you lose the lot you can live with it. Why didnt you average down buying as the op dropped when you are so right, and the market so wrong that way you might have lost more. The Macdunks never leave with their tail between their legs, infact there is a MACDUNK GOT IT WRONG THREAD.
Rational investment is take the emotion out of the decision. A perfect example of this is arranged marrages which seem to work better if you go by the divorce rate. Is it rational to think that the NZO sp will be above $1-50 in seven months time that is all that matters not who is right or wrong. I doubled my money twice with my 9c option money in hindesight i could have tripled it by selling on the way back at 27c but thats life we all make mistakes. Macdunk
Yes I do have some - You cannot predict the future believe it or not - they may (50% chance IMO) be worthless - but the may be worth something - we will have to wait 7 .5 months (assuming the date is not extended (5-10% chance IMO) to find out. As an example can you tell me what the PRC SP will be at the end of May 2008 and can you gaurantee PRC will not be taken over? I doubt it.
But in the meantime all is well at NZO. Absolutely coining it.[/QUOTE]
Pity the shareholders weren't coining it!
Paddie
the p/e ratio is shown as 35:1, which by my reckoning will drop to less than 5:1 once the half yearly reports come out.
we know nzo are creaming in the $
items that may give upside to sp in next month are
-payback announcement for tui - it must be close and hopefully a new world record in recent times
-tui upgrade - awe agm next thursday and ppp agm gave us a tasteof what to come re tui
the half yearly financial will be the big item in about 3-4 months
M
well, i sold down 40% of my holding over the last couple of days. Very uninspiring shareprice performance since I bought in, two, three years ago.
I still have a little faith that the share will improve over the next few months, due to PRC performance and possible Tui reserve upgrades.
I'm off to buy a bike...
PRC performance wont make much difference to anything as far as NZO are concerned. They are only a large shareholder waiting on dividends or sp escalation like every other holder. I would imagine they will sell their shares in PRC when they need more money to further explore for oil. They managed to sucker the punters with the float, with to many shares at to high a cost, but thats in the past, the sp reflects that, struggling to get back to issue price. So much for looking after the best interests of the shareholders, by giving them a win instead of screwing the last cent out of them. They still havent learned that you cant fool all the people all of the time, most wake up as we are seeing on this thread and move on. Macdunk
mackdadunk,
You hammer NZO for wanting to explore for oil... thats what this business is all about... oil exploration companies explore for oil.... yes there are associated costs, thats what the payoff is all about...
...... If your so concerned about oilers that drill wells then you shouldnot be talking about investing in NWE as thats what they will do with large cashflow also...:p....
...
:p
.^sc
How did your exams go shrewd?
[QUOTE most wake up as we are seeing on this thread and move on. [/QUOTE]
Everyone other than Macdunk that is.
pretty well mick...
although, Its been my 1st experience ever that a Lecturer lied about what would be in test, got thrown off abit but pulled through ok....
...
Im moving away next week and doing a stint in Ashburton for 12weeks over holidays, wont have internet but will be back home one day a week...
Ive got well over 10k shares in meo...hoping to open cfd long next week...
...
Im competing in a share picking comp with mackdadunk over on another forumn, and he picked NWE and said he would invest also....
Im not sure what the big cat will do seeing that he doesnot like oil companies that explore....:D
:cool:
.^sc
Nothing wrong with exploring oil companies crude one as long as its done in an honest above board manner. I picked NWE rather than MEO after a little research so i suppose you will have to pick MEO. I dont care if i invest in companies producing weapons of mass destruction or printing bibles as long as they dont try ripping me off and the sp heads north. I would almost bet my last dollar you wont pick NZO in our little contest. GO ON SHREWDY I DARE YOU i will even give you a 5% start on that one. The boys and girls on this thread would luv you for it mate. Macdunk
The volumes are up today on the od's. I'm picking that the od price will settle between 6 and 7 cents as this value represents a fair 'punt' price.
I'm also picking that the NZO SP will increase by a whopping 30% over the next 6 months. I'd be happy if that happpens as it represents a very good return based on todays prices.
mackdadunk,
Im not going to pick NZO given that your picking something that will return more... I reckon I can outperform NZO and you.... and wont be taking head starters... Id give you a head starter before I took one on mate...
I will be looking closely if OD's around 6-7c just prior to momoho...
:D
.^sc
MD,
Im quite keen to make a side bet with NZO though...
toddys onto it...
:cool:
.^sc
SC, what about PRC then? I also noticed that CMC Markets now have a PRC CFD with 10% margin.
For the record, I am holding PRC still but am contemplating selling my holding and buying them back as CFDs.
Perhaps they ever owned them.
Perhaps they acquired the short around early August and have been able to wait until someone will come up with enough cash to buy them all back.......at about $1.00....
These are the marvels of the fair market - the indicator of current price and value - for those who want to participate on McDs playing field.
Daft idea enabling people to short shares that lack liquidity. As well as be incapabable of tracing who might have manipulated the market.
If its like the ABN Amro case it might all be revealed in another year...and we will have someone else rapped over the knuckles for allowing a minor trading indiscretion.
xxamr_corpxx,
I would never recommend CFD's in the current market unless you think the company has a short term announcement, or something to get the stock moving fast... inside info, or a sure bet then go Yeeaahhh haaaaa
....
what you want is more volatilty with the share and Im not so sure that PRC has that... Im expecting PRC to go sideways in the range PRC has had or tick tock up slowly until pre production days.... If you feel comfortable with the risks, and maybe prepared to open a few positions next year when things are more set, and prepared to lose abit now then why not? it could rise up.... PRC will come right and as long as you are persistant at opening a few positions and build on them then eventually you will make good profits...
rule one, never over extend yourself on one position...
I learnt the hard way after over extending myself on what was a sure bet thing, but came unstuck with a minor operational delay and big market drop...2 weeks later it went kabamm...
rule two,understand what you are getting yourself into...
Dr WHO...
where have you been for the last 5 years?....
CFD-contract for difference... Its a derivitive...
its kind of like buying a house,....you only pay down small deposit and use providers/banks money as leverage, you pay interest on your position... you can go short and profit from falling prices...
stocks, indicies, exchange rate,commodity positions can be opened...
you can open up a big investment with small outlay of cash...
:cool:
.^sc
SHREWD AND CRUDE is no mug to be set up by a wily old macdunk. He did not swallow the bait, and select NZO with a 5% starter over NWE. Good on you mate you think for yourself. I selected an oiler previousely raved on by the crude, one knowing full well that he would either select NWE or MEO. I got in first, did the analysis then selected NWE then give him the hero bait to select NZO which he is to smart an operator to fall for. This is a good second opinion from the crude one about what he really thinks about NZO prospects over the next twelve months without upsetting the worshippers. SHREWD CRUDE has now stated that NZO will gain less in sp by at least 5% in the next 12 months than NWE. It will be interesting to see what he selects as i have a lot of respect for his judgements in the oil industry. Macdunk
What interests me is what miner will he select and why.
Hey Mac,
What is it with you?
You and I both know;
1. NZO is substantially undervalued.
2. The Tui project is absolutely coining it at record crude prices
3. The Pike project, while still full of risk in the investor's mind, is going to be a seriously good project at record forecast coking coal prices
4.The Kupe project is on track and there is a better than even chance that there will be a huge reserve increase once additional drills are made in the area.
Are you trying to knock the price down and have yourself a private feed?
I value your posts but really your obseession with NZO blunts your mana.
DISC: NZO,PRC,BAS,BOW,VPE,VPEO,NWE,TEX,PES,
Macca,
These are the only stocks I own. Do you think I would hold NZO,PRC if I didnt think there was a big future for them?
Check out the others.
Agree Bermuda - looks like a serious case of downramping to me; he may be succeeding!
BERMUDA, Looking back in hindesight in what i have posted on sharetrader show me one thing that i got wrong with NZO. I lay the challenge out to all the blue eyed investors tell me what i got wrong up to this point in time, now that you can judge me with hindesight. I also lay the challenge out that i stated at the start that i valued the options at 5c I now state that they are worthless. Hindesight is the proof of the pudding which is still in the making. So far Macdunk 10 out of 10 blue, eyed brigade still with fingers crossed. Dont judge me in what might be, judge me in what i said would happen, and has come to pass. When it all comes to pass the parcel will you blame me for your stupidity?, or will you learn from the experience and move on. Macdunk
You still don't get in Macdunk. Its the constantly repeating the same phrases time after time. If you want to pick one thing is you lack of foresight in picking the options to more than triple on what you sold them at. If that isnt wrong nothing is.
The flip side to what you are saying is, where has Bermuda got his points wrong in hindsight? I would have to say hes been far more accurate than you. The big difference is Bermuda doesnt gloat on how much he sold his options for (at a profit).
Bermuda can you give me a email. I do not seems to have got through with my last two to you.
Good on you NITA you can give me a real blast at the st meeting on the 15th. Bad language at two paces i promise to let you have the first five minutes. Seriously though you should keep emotion out of investing or gambling decisions all the time. I backed Lenox Lewis to beat David TUA in Australia at four to one and david Tua to beat Lenox Lewis in NZ at four to one. I really didnt give a sh*t who won i only knew it was going to be me. I always back Australia to beat NZ in NZ and NZ to beat Australia in Australia you should think about that, and learn when it comes to money leave emotion out of it, or join the losers. To many emotional investors throwing money away being all emotional. Macdunk
I've opened an account with cmcmarkets.co.nz .. ask them and they will send an info pack...
plenty of info on their site tho.
you need $1000 in an account to trade forex/metals, need $5k to trade share cfd's.
Forex has 1% margin requirement, and no charge to trade. i.e. as many trades as you like for no commission. (share cfd's attract fees) Software seems good too (and free).
my friend. i have never ever backed nz teams in nz tab, not the warriors, crusader or whatever. However on several occasions i have backed other countries or overseas teams on the local tab if they have playd in nz subject to me believing the odds warrant it.i f you have read my post in the off market forum i even stated that the odds for the ab's to win the world cup was one of the most silliest bets. not just in nz but with overseas bookies. simple reason if you go by stats alone (not just world cup stats) you would have backed them with the odds they were paying. to clarify your point, i avoid where possible to take any emotion out of gambling or investing.
I am already in profit of nzo plus i have free carry on what is left in my nzo portfilio. Remember, i first brought nzo back in early 2002 or 2003. this is when nzo got as low as 25 or 25 cps and the options were at 6cps. You do the math.
Point is macdunk, i or most others dont keep gloating or keep repeating the same ol thing. You have some very good imput but i just dont get it when you repeat the same shet different day stuff
OK, I'll accept the challenge - not really much of a challenge for me though;)
I don't take much notice of what you say macdunk - one would have to be a total nutcase to take you seriously. However I do take notice of what you do - (I find it interesting to watch what the dumb money is doing)
you bought a truckload of shares at $1.18 and sold them two yrs later at 90c:o
It doesn't matter what you say or have said in the past - your not going to recoup your losses on NZO by continuously bad mouthing the company.
Although I am disappointed with the shareprice performance over the past 6 months, I am, along with other long term holders, sitting on a healthy profit with my NZO shares
,
You're both wasting money if you are using local bookies! www.betfair.com is the way forward, now sign up and get all those profits on teams at some decent odds! :)
mackdadunk,
you really cant be that silly trying to compare NZO to NWE are you?
they are two totally different companies, different market values, different capital setups, different cycles, different projects, different cashflow, different management style, different contacts and different exploration potential.... different different different... If my MOST important goal was capital protection then I prob would choose NZO....!
Its less volatile, more stable and im expecting it to go sideways/up....
But It is hard to think how SP will rise for NZO over the next few months, given all the down SP has had, when all the market info should send it up....
..... NZO has kupe development drilling, momoho, and PRC production in 2008, it does have something to offer.... PRC is discounting this company more than anyone would have thought....
Its a shock to see NZ's premier oiler at $1.... having more certainty now than we had before production is surely worth a premium... having bigger reserves and much higher oil prices also....
... It was worth taking on upside exposure through the exploration wells we had, in hignsight it was not the best outcome but good risk return exposure at the time....
....
:cool:
.^sc
Of course you hold NZO because you must believe that there's a big future for them. But is NZO really substantially undervalued?
If it is, why are the institutions not buying? Instaed it looks like they are happily selling out the placement stock they took at 90 cents (plus an option) to the punters lining up and buying off them? Nice quick profit for them, huh?
I have seen a valuation done on NZO and it goes along the lines of :
Tui $131m
PRC 60m
Kupe 45m (more funding required yet - like PRC)
Total 236m
There's 256m shares on issue so NZV = 92 cents per share. The cash that NZO is sitting on will be used up.
According to your "valuation", from an unidentified source ...
$40M Cash is worth nothing.
Tax credits are worth nothing.
The company has nil value other than the identified reserves in those 3 projects.
The Kupe partners are spending $1,100M for a $300M return.
Not a valuation I would give any credibility to.
(un) Balanced "saw a valuation done on NZO and it goes along the lines of :
Tui $131m
PRC 60m
Kupe 45m (more funding required yet - like PRC)
Total 236m
There's 256m shares on issue so NZV = 92 cents per share."
Maybe USD a couple of years ago?:p If you saw it on the net it must be true!
Try something like this:
Tui 32M barrels of oil (current P2!) @ USD 90 per barrel
=USD2,900M
less project cost USD270M
less FPSO 5yrs ~USD170M (plus 3more @ USD100M)
The Tui project could net USD2360M
To NZO USD295M
Forget about time value of money, margins on risk percentages and all that stuff, assume oil price rises will keep pace, the Tui area will yield more oil at marginal drilling costs so don’t discount for risk. It is all pretty near term now.
256M shares on issue
115 US cents per NZO share
and put whatever USD/NZD you care to choose (and Balance get the conversion around the right way. Oops it is over the NZOOD option conversion price - perhaps I have made some mistake, McD?
Potentially
For Tui
without anything else....
Now I don't want to become labelled a ramper, or mislead anyone in to thinking that oil exploration drilling is not more risky than investing in Vector or Telecom:rolleyes:, so spend the next six months doing your own calculations. The share price will be whatever whoever controls this illiquid share wants to make it...and my guess is that will be whatever makes them plenty...steal or sting comes to mind.
Bilo, your Tui valuation tells a lot!
You have forgotten cost of production, shipping costs, hedging costs etc.
No wonder the institutions are so happy to let you 'steal' NZO shares at $1.00 off them!
Meanwhile, in fantasy land, Bilo has just valued BP at US$10 trillion.
The company answered this at the AGM.
The costs associated with production are small and you should believe that - working people don't get CEO compensation.
The project hedging costs have also been established as negligible.
The shipping is cents per barrel.
How do you arrive at a valuation for BP? Comparing the major oilers to exploration companies is true fantasy land. BP are into retail, refining, petrochemicals, alternative energy, a diminishing activity exploring for elephant oil fields in countries where sovereign risk is major, poor safety record, poor maintenance management practices, doubtful safety responsibility, and living with the legacy of having a bent poofter as CEO for many years. Start another thread to get some more balance, Balance.
I certainly wouldn't attempt any comparison or valuation of BP on this basis.
In fact I only proposed a potential value for the Tui project to one member of the Tui consortium.
I am fully in Unicorn's camp on the valuation that you posted.
"not a valuation I would give any credit to"
The company has provided enough information about their three major activities to enable investors to make their own assessment of value. There is just not one "company valuer" in NZ whom I would trust. AIA shareholders should be concerned.
The issue for NZO is not value, it is one of an irrational head share price, and a currently stuffed capital structure.
I say irrational but:
if I included the ODs in a Company DCF valuation with a cash outflow of $200M in 7 months time (with the only prospective cash inflows to compensate for this substantial sum a reduction in bank debt!!!). My worst case DCF valuation of the company would also reflect a very serious situation.
The NZO directors' inability to see this from a shareholder's point of view is becoming a major concern. They had a chance to address this at the AGM but dismissed it at that time, and haven't progressed in the three weeks since. They have chosen to pursue a growth strategy. The company's failure to adequately address the potential variations to the OD issue with shareholders puts a damper on the share price for major investors this close to conversion date.
So tied up with a dual listing that they can't see the wood for the trees, value for cash or something like that....
Dump the dual listing is my call.
Unfortunately Bermuda, the company is coining it now, and could continue to for the next 20years without additional capital, but extend your investor DCF analysis with ODs included ......
And now I could be a down ramper...
Bilo,
I like your enthusiasm but I feel your Tui valuation is a bit optimistic. It may work out as you suggest, but at this stage I feel we are better to stick with something nearer mid-case rather than best case.
The two major aspects where our valuations differ is in the price of oil and the royalty payments (I allow 20% of gross profit for royalty). The key parameters are volatile at present so the estimate needs to be reviewed as the variables change. I see the present $86.25US per barrel (or better) as a bonus, rather than something we should expect going forward. For now I will stick with $100NZ per barrel. The longer we continue with these higher than expected prices and higher than expected production, the better it looks.
My current estimates for NZO share of Tui ($NZ, millions) are ..
Which gives npv of around 170M at 10% discount rate - say 65cps.Code:Year Income Expense Net
1 130 50 64 (includes capex repayment)
2 80 10 56
3 50 10 32
4 40 10 24
5 30 10 16
6 25 10 12
7 25 10 12
8 20 10 8
Unicorn thanks for that contribution.
Royalty
I had left out the royalty (and a few other expenses). I don't recall the exact liabilities wrt Tui but 5% ad valorem and 20pc profits was used by someone. Remembering NZO's Tax situation I think that I was almost justified in my rough treatment, in this case, at this time. And your treatment while fair enough as 12.5% of Tui, possibly understates Tui's mid case contribution to NZO.
Last month I posted the mid range number (I think based on NPV at 10% of company released information wrt expected EBIT) was $200M for Tui.
Price Of Oil
At OPEC yesterday someone mentioned USD200 a barrel if the USA hits Iran. Thankfully Saudi royalty value their relationship with the USA. The only thing holding back USD100 a barrel was the threat of worldwide recession cooling speculator's "enthusiasm". As DS recently indicated we have had USD100 TAPIS oil a week or so ago. The Tapis premium is not in your estimate, in fact NZD100 is only ~USD80. So I think the only way to treat the price of oil is to state what price you use and probably indicate what difference it makes to your calculations by providing reworked numbers at a low, and a high, as well as an expected oil price over the period under consideration. My assumption that the POO (TAPIS for Tui) will probably only increase from USD90 - as you suggest - may well eventuate.
Mid-case numbers
Rather than forever trying to hit a forecast with one "mid-case" number, valuations should include a mid-case low where most things turn out bad and a mid -case high where most things turn out smelling of roses. This treatment would add to the overall understanding IMO.
Enthusiasm?
Well currently not much really, for NZO/NZOOD. The NZOOD money is the major concern that I have. As DS said - NZO doesn't have a current need for more cash from shareholders. The growth "strategy" lacks substance. Current enthusiasm for PRC :)
Unicorn, using 10% for discounting Tui oil? That's where you differ from the institutional market and that's why they will not buy into NZO. Try 12.5% to 15%.
Bilo, you are starting to look desparate. You wrote - "The company answered this at the AGM. The costs associated with production are small and you should believe that - working people don't get CEO compensation."
You should try that with the folks who believed Charles Prince at Citicorp that they had accounted for their sub-prime exposure in early Oct and then, announced further write-downs of $9 billions to $11 billions less than 3 weeks later! Also, try that with Sky City shareholders who were told that Evan Davies knew what he was doing when he bought into Adelaide casino.
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Valuation as per :
Tui $131m
PRC 60m
Kupe 45m (more funding required yet - like PRC)
Total 236m
There's 256m shares on issue so NAV = 92 cents per share.
Now you know why the institutions are not buying.
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