Incorrect - for every seller theres a buyer and they aren't the mum & dads, they are likely to be sellers in this market not buyers, so whos buying? likely - institutions and private investors who see this as a market on sale.
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Incorrect - for every seller theres a buyer and they aren't the mum & dads, they are likely to be sellers in this market not buyers, so whos buying? likely - institutions and private investors who see this as a market on sale.
Normally I would agree with this.
But with NZO at present we have a special situation. The second quarter's reports due out in a couple of weeks will show a massive turnaround in profitability versus the second quarter last year, and versus the first quarter this year. We can expect somewhere around 42,000 barrels * 92 days * 0.125 NZO share of Tui * $86.25 price per barrel / 0.77 exchange rate = $54M (NZ) income, less say $10M in royalties and $3M in production costs ... lets say somewhere around $40M underlying profit for the quarter.
Tax losses taken to book and the way capital costs are accounted may mean the headline figure is different, but as a quantum of the underlying profitability I suggest $40M is a reasonable estimate. Compare to around $6M earned in the the first quarter and the loss in the second quarter last year that is a huge turnaround. With the NZO share price having been largely independent of crude price, it appears that the market does not see NZO as a producer ... yet.
I do not think NZO will start a long slow uptrend with the market, but will be rerated on the next quarterly. $270M market cap is just not logical for a company with $40M quarterly earnings - credit crisis or not. I think there is a lot of money out of the market at present, looking for a winner (and they are few and far between at present) so things could change very quickly - I am happy to be in NZO ahead of the upcoming announcements.
Nita, a truckload of options or heads??:confused:
The sellers are the people getting out the market in these risky times. The buyers are people buying more of the same averaging down with most buyers adding to their initial buy convinced that the numbers stack up in their favour. The traders are gone sitting in wait for the bottom to emerge. The options are now worthless unless you beleave in miracles. Macdunk
Unicorn
Firstly I agree with potential rerating at the quarterly, but then many oil companies are in the same situation. This sell down is not about fundamentals.
The timing of this attack is very similar to the very successful August attack. Don't be confused with fundamentals - this is about cash and liquidity. These are targetted attacks, this time under the guise of a liquidity crisis. By broker on any client they can expose, and to the detriment of those honest citizens who don't trade. If only everyone knew who to short and was unethical enough to do it. I think you might have to be an Australian.
A lot of companies who thought that they were doing very well today got sold down and some miraculously recovered - some didn't - perhaps it is their turn tomorrrow. Perhaps those that recovered a little are in for 2x tomorrow. All on small volume on the way down to ensure that no-one can sell. Millions taken on the way back up.
On another bad smell, when companies like PRC and NZO tell brokers more than their owners they leave a bad smell. The McDoull Stuart December report didn't print the whole story - just alluded to the PRC financials - while they organised $100M finance (now the size of that had Gordon stamped all over it).
The timing of the dumping of 50,000 PRC shares on the market at 1.01 was before the notice. See when I noted it above - see when the notice was posted. Perhaps it was just in response to my calling attention to the blocking order. Either way these events smell bad for insider behaviour. If only who was trding was more visible to the rest of us.
Sorry Brian, but I didn't like the timing of this report. It has been awhile in the making and to be unleashed today before the probable NZO sweetener was nasty for some of your shareholders.
I am looking at the options. Heads is a no brainer for a safe bet. If you want to hedge your bet then take a stake in both. Right now i am looking to pick up the options. It will not take much to turn the market around and in particular lift the sp for nzo. for me the risk versus the reward looks good. Having said that i now proably rate the options about a 70 chance of not being in the money. Even at 80% chance of not making it, the options look good at around 5 cps.
Again, make no mistake, only 1 of many bad news will send the options into oblivion. Significant problems at either Tui, Pike Kupe will do it. The you could have the decline of commodity prices, recession impacting on the local market and so on.
On the flip side, barrring unforseen circumstances (subprime being an exception) at around 20 to 30% chance of options binging in the money, we could have a 10 bagger in 6 months. Its not out of the realms of possibility.
Most will know when when the OC's went as low as 6 cps only to reach a height of around 60 cps. That is the pontential of options and especially now with the od's. Is it de ja vu? time will tell.
Its worth noting that the market has had 10 consecutive days of falls. Over a 15% correction from its high. If its only a correction then the buying opportunity is fantastic. If the market falls over then thats another story. Even so, NZO will prove to be a safer investment than many other top 50 companies
NITA, Surely the only safe bet is no bet at all in times of complete turmoil. Its much better to stay out the market money in the bank might make very little but sits there waiting for opportunities that will come when this is all over. Macdunk
Nita, you must have huge balls to be buying "out of the money" options in these uncertain market while PRC is doing a rights issue.
Given that PRC has been given the go ahead to raise $60M in equity, I assume that NZO has, at least privately, admitted defeat with the NZOODs. It would not make sense to raise $60M for PRC and $210M for NZO concurrently, from largely the same investor base.
Unicorn
As the PRC project gets closer to production the risks are minimised and therefore more options open up to PRC from the market. They have taken advantage of the progress and have refinanced the current debt structure. PRC was not in a position to negoitiate with Westpac when they did the initial debt deal. Hence, the expensive funding arrangement. This is positive news and shows that the project now has the full backing of the shareholders involved.