release to the market goes further and if you look at the asx, with awe & ppp having to repeat it, the coverage is very good with 3 consecutive entties in the market sensitive section
M
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From the NZ Herald
Tui in tune as oil tops US$100/b
5:00AM Friday January 04, 2008
The Tui oil field has escalated production to just below its forecast peak of 50,000 barrels a day.
As oil prices top the US$100 a barrel mark, five-month old Taranaki oil field Tui has ramped up production to just below its forecast peak of 50,000 barrels a day.
Following modifications in November, production rates rose to an average of more than 48,000 barrels a day for December, or 1.5 million barrels for the month.
The oil is benchmarked against a regional crude, Tapis, which averaged around US$95 ($124) a barrel in December.
That valued the monthly output at around $186 million.
The field, 60km off the Taranaki coast, had produced about 6.4 million barrels of oil since the end of July and contains an estimated 41.7 million barrels of proved and probable reserves.
The oil is shipped to refineries on the east coast of Australia or in southeast Asia.
Estimated production for the 2007/08 year was increased to at least 11 million barrels from 10 million.
Tui partners are AWE, the operator with 42.5 per cent, Mitsui with 35 per cent, Pan Pacific Petroleum with 10 per cent and NZ Oil and Gas with 12.5 per cent
- NZPA
Sorry Digger, but I think your figures are unreasonably optimistic. It would require the FPSO to be producing at 100% capacity every day, for the whole year - meaning 18.3 million barrels being produced.
Current production is 48,000 barrels a day, and that has always been expected to decrease as the water cut increases. The realistic best case I can see is to average 36,000 barrels a day over the year - which indicates around 24,000 barrels a day at the end of the year. That gives an income close to $200M at current prices (which would still be a fantastic result for a company with a market cap around $300M).
The price of oil, and the exchange rate, over the year will have an enormous bearing on what the final result is. I really have no idea what will happen in either of those areas over the course of the year, but suspect that the sub-prime meltdown will in the end prove to be very detrimental to NZO shareholders. Meanwhile I just enjoy each month that passes with production and prices at current levels.
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Unicorn,
Agree with you that the sub-prime debacle has consequences for NZO, it's a serious mess and has brought US financial instituitions (particularly the three big rating agencies - S+P, Moody and Fitch) into serious disrepute, along with the Federal regulatory agencies for allowing such shoddy sub-prime CDO rip-offs.
As per the previous Tui JV announcements and see todays NZ Herald article, the Tui field is expected to deliver about 11 mmbo for 2007/2008 ......
Thus NZO share would be appox 1.38 mmbo @ say average price of US$90 barrel = US$ 124m = NZ$ 161m (NZ$/US$ = 0.77)
Less NZOG's share of annual Tui FPSO production and shipping costs of say NZ$ 30m
Therefore net Tui profit to NZOG approx NZ$ 130m for 07/08
Pretty good but some distance off NZ$ 200 million.
Because of likely increasing water cut and declining oil production over calender 2008, the Tui profit for calender 2008 will be less than NZ$ 130m ........ but maybe still around the NZ$ 100m mark (??)
Agree the final result for calender 2008 will be heavily dependent on actual oil prices and exchange rates. Water cut rates will also be a factor. Lets hope we are surprised by the direction of all three !!
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Unicorn
If we end the year with June at 24000 barrels avg and assume a linear decline from December's 48000 we average 36000 for 180 days or another 6.4M as per the first half. ie 6.4M in bag plus 6.4M = 12.8M....
Just suggest that you check your maths...
I think the NZD$200M is about right tho...
Sorry Unicorn
I think that I am simply agreeing with you...
Hi Zorba
The figures I gave were in response to Diggers post and were therefore best case, for income (rather than profit), for 2008 calendar, and at current ($US100) oil price.
If you are looking at profit, you need to also take off the royalty (allow 20%). But then again I think you will find the production cost is less than $30M to NZO.
You are correct that the 36,000 barrels per day (13 million barrels per year) I have assumed as best case for 2008 calendar is inconsistent with the 11 million barrels forecast for the current financial year. There are two reasons for this ..
1. 2008 calendar is 12 months production, current financial year is 11 months production
2. The 11 million barrel forecast looks very pessimistic in terms of what has been achieved to date. By mid January (halfway through the production part of the financial year) production should reach 7.1 million barrels (if current rate is maintained), leaving only 3.9 million to achieve target (being just 23,000 per day).
Pity there's no Hector-like drill now or this year at all.
Was the original model for Tui around 60 million barrels of oil in place?
Wonder if we are still not getting significant water cut, reserves could be upgraded to around 45 million or 1/2 the worlds daily use!.
Tok3n,
NZO do have a really great opportunity to make it pretty big with the Kupe wildcat coming up in May. This could lead the way to a doubling or tripling of Kupe reserves.
Remember they built the pipeline to cope with 3 times the amount of gas currently found.
It will be a fascinating June run down to the 30th vis a vis the oppies.
Just sit back and relax guys. Enjoy the ride. There are predictions by the Japs that oil can go to $150 due to Asian demand (Bloomberg). If top level management NZO is stupid enough to stick their hands in the kitty litter the market will punish the sp.
http://www.bloomberg.com/avp/avp.asx...HJpf1qiplg.asf