Yeah who is pulling whose strings????
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Dont need to ask me. The NZO share price tells you who is pulling what strings making what works. LOL. Honestly, I would buy more NZO and RPL if they replace these chimps with a respectable leader. I am only repeating what the people in the market is saying which is reflected in the SP.
Yes OTM it seems you are correct and I was using price sales ratio. Frankly i pay no attention to any of these ratios and have long stopped thinking about them.See everything through fundenamentls or market reaction. Market reaction to NZO is in sharp contrast to fundamentals and in the end one will come through. Some many years ago i did read about price sales ratio as being the most indicative of future value as it represented the early signal that things would change. Cheers. Will we see you at the AGM?
MackD,
you continue to bag oil companies that are looking at exploration as a direction for the future...
New Zealand oil and Gas is up 10% or so this year and we got 3 high impact exploration drills at a chance for a much bigger future and they didnot come through.... So NZO still made a return with big potential return which was well worth taking on... at that time it was the type of investment I rated.... im now not so sure for the next period for a few months as we wait for more things to happen, NZO could boom or stay in limbo, we just dont know......one thing is safe and that is the future of this company I highly rate... sort term uncertaintly persists to keep NZO lidded....
....Going back to your fetish with oil stocks that explore....
.... are you suggesting that your AGM's AGS's MCR's shouldnot explore?....ReSoUrCe stocks that you so dearly love have to explore aswell... are you suggesting that its good for your stocks and not good for ours... get real buddy....... Next year will be more of the same with Felix (JV partner required and momoho 2nd quarter drill)... You go on about the options and how they are worthless, the holders should understand the risk, that level of risk caused them to explode 200% after you warned me off them and NZO...... NZO is undervalued, One indicator is the high price for the OD's....
The OD's are still trading over 11c which looks very pricey, but it is a signal that the shares are undervalued or with some sort of combination of over valued options... NZO trading par at $1 and no volatility in the shares lately which is not what Option holders want... its been trading in the same range for jonks.......
....
With either Pike in production before expiration date for the Options or a discovery from one of a few exploration wells next year will get them there easily ( 2 exploration wells prior to OD expiry ? and possibly a Felix drill but looking unlikely before option expiry)...Pike will trade around $1.25 just prior to first production I believe... and much much more after...
....some serious questions need to be addressed at the AGM... which I will no doubt address if I attend, but im still fence sitting on that...
im not actually holding any Nzo investments ATM... Theres still life in the options ....Pike derisks further and into produciton, Kupe production wells complete and project more advanced, bonus exploration targets with big upside and less risky than previous drills (namely momoho)...
20% stake in Felix free carried would go down well, And high end oil prices to throw into the mix.... I dont see much hope for any more oil reserves upgrades...not until project is much further down the track as I believe...
Market announcement of Tui project paying for itself (breakeven) should go down well, if it comes at all...
....
The biggest mistake NZO made this year was to sell its investment in PPP, The exposure NZO had through TUI was decreased and left me feeling 'why would JV sell if project was that great'? .....
I think it sent a bad signal to the market.... NZO needed to free cash to fund Pikes expenses before the Pike IPO raised cash to pay NZO back.... AWE had its own problems, PPP dropped big time, and NZO pulled back sharp profits that we rode all the way up, and some of us some of the way back down....
Dividends seem to be a major issue, and its all just rubbish talk...
focus on the company and then whatever NZO's capital gain or distribution of wealth will not make you any better off depending on which way it happens...
But IT majorly impacts on Option values
....
Mackdadunk, you need to accept that oil companies explore for oil....
it is the basic function of an oiler... without it then wheres the future?...
The long term revenues from NZO's 2 projects... and 1 short term big revenue earning will cause NZO to rise alone, and exploration in the mix will always be present to put newZ Oil on a new level...
:cool:
.^sc
SHREWD CRUDE, The first thing when investing to accept is that you are an investor only, not someone that passes the bibles about at sunday service. If you fall in love with a sector or company in the market place it shows a great sign of weakness in your ability to be a rational investor. YOU GOTTA WIPE THEM LIKE A DIRTY BOTTOM AND MOVE ON MATE WHEN THEY FOUL UP. We need all sorts of companies in this economy.
I rubbish the company attitude to investors. MACDUNK
http://www.stuff.co.nz/4229249a13.html
Enso rig arrives for Kupe drilling
By JAMES WEIR - The Dominion Post | Monday, 8 October 2007
The gigantic drilling rig for the $1 billion offshore Taranaki Kupe gas field project has arrived, marking the start of the drilling work for three production wells.
The Ensco 107 offshore drilling rig arrived from Singapore yesterday.
It will drill wells into the Kupe reservoir three kilometres below the surface, about 30km off the Taranaki coast. Gas from the Kupe field is expected to flow from the middle of 2009.
Kupe will be big enough to supply about 15 per cent of New Zealand's present total gas demand.
It is just a fraction of the size of the Maui gas field.
Kupe is expected to produce 254 petajoules of natural gas, 1.1 million tonnes of liquid petroleum gas and 14.7 million barrels of light oil (condensate).
Australian company Origin Energy is the project operator and a 50 per cent shareholder in Kupe, with state-owned power company Genesis holding 31 per cent. Origin also owns 51 per cent of Contact Energy.
Origin is presently trying to raise $200 million from New Zealand investors through the issue of preference shares.
The offer closed on Friday, but the company has not yet announced the results.
A large part of the gas from Kupe will go to Genesis.
During the drilling campaign, about 100 workers will live on the rig.
Weighing about 16,000 tonnes, the Ensco 107 stands 157 metres high and is 63m wide. The rig's first job will be to install the wellhead "platform jacket" about 30km off the coast of Hawera.
No mention of the other 15% shareholder !
SC - how can you attend the AGM without an invite let alone expect to speak?
I find it quite amazing how alot of investors don't rate the materials & resources etc sectors be it- grain,oil or U308 gold etc and of recent been selling out of alot of there shares
-My portfilo for one which is made up 100% of these sectors hasn't done much at all lately after falling 20% from the sub-prime scare (yet alot of the company's future incomes are growing fast.)
Yet the facts shown in there prices tells us how valuable they are
-Oil for one at $40bbl people where blown away talking up massive profits for the sector now its $80bbl alot of investor are so ho-hum with classic lines-etc- of the oil companys being risky investments because of there short term assets and your'd be better of investing in solid companys like retail or banks stocks much safer.
-Do these retail investors who buy companys like- JBH -really understand how much JBH relies on Crude oil-Not only from there mostly plastic Items there selling
-But the buyers who full-up there cars to get there from there wallets where there pay comes from most of there jobs which also relies on crude oil to mantain there incomes.
-Or the banks which have there rates increased by the inflation of Oil which effects nearly everthing.
-NZO has gone from an explorer to a producer yet the market doesn't really take much notice,and more so find reasons why not to invest in these sectors lately
1/ I would like to see NZO management start talking to the broker community more and in particular the share analysts. I say this not because I rate or like share analysts but purely as a way to redress some of the appalling spin from the NZ media who the company management have misled (Pike especially) for many many years.
2/ NZR freely issue statements saying "our margin is X", A one cent movement in the NZ$ versus US$ means a movement of X for npat. A cent movement in the price of oil = x movement in NPAT.
Transparency is paramount for investor confidence (AKA MErrill's sub-prime exposure) as how else do they feel comfortable in the company statements. Does NZO know the answers to the questions in 2/ above? I assume not or the research reports would contain them. Maybe they need to find out and publish it!!!! They only have ONE cashflow stream to work out.
Please release this to the market after hiring someone capable who can work it out!!! The investors need to know and you have a duty to inform the market.
If you want some help working it out please contact me or any of the other 10 posters on site capable of working it out.
We have had the tales - Now we want the facts!!
dsurf,traderchan,
The Company has already given several indications of future earnings. I doubt whwther they would have the time to divulge a whole lot of detail to sharetrader enquiries.
Have a look at the Annual Report.The anticipated mboe's are there out to 2013. Big numbers...and reading between the lines it is easy to see that Pike is going to have a much bigger impact with coking coal prices set to soar.
Thats why all good NZ assets will eventually go to overseas hands. I sometimes wonder why we complain so much about foreign investments when we ourselves bag our own firm and not support them. On the other coin, there have been too many promoters who run the firms like it is their own piggy bank losing public confidence. Two edge sword.
Bermuda - I want to know how much profit NZO get for a barrel of oil with the US$ worth 70C and the price of tapis at 80$. Knowing how many barrels are available is LAZY REPORTING by management. These numbers are assembled by the other operators ie NZO management do not have to do anything. Why can't ALL the owners of this company and not just management know the Tui operating costs??? It is not commercially sensitive as the costs are sunk.
mackdadunk,
Im not in love with the oil industry its just where I choose to invest...
I dont understand resource sector like others here do so why should I take on that risk !.... and when I have made those sorts of plays ive gotton it wrong...
Im sure you will understand that im oil and here to stay...
....
:cool:
.^sc
Good ann out on the ASX
http://www.asx.com.au/asxpdf/2007100...nxvqhmb1kv.pdf
I would have thought this would have added 5c to the SP, NZO on the ASX up 4% to 86c.
Interesting to find out how they intend getting to the 2mmbo per year reserves!
Hi Shasta, I had an email from NZOG to tell me that the presentation had been posted. No complaints about keeping the shareholders informed.
4% up on the ASX is still only about NZ $1.01 so its just catch up!
From todays presentation we have that to date[but i do not know what the last shipment date was] that NZO has sold 300,000 barrells or in NZ dollars approx 36 million. Given that production started on 1 aug we have about 72 days of earnings so still coming in at half million a day.
I am reposting this as a back up to one about 3 weeks ago showing income is still on track. But this means that total year income to from 1 aug 07 to 1 aug08 will be near 180 million. Maybe more as oil price will continue to track up,and not just the 100 million bermuda has stated before.
I note that in 09 income is expected to drop as show before in reports and also in this latest presentation. This expected drop could be why NZO is doing so poorly on the NZX. Share investers do not like things ever going backwards. However it is more than likely that the drop will never happen in reality. This because TUI will have more oil and the price will be higher.
Just my thoughts. I sure am not selling.
looks like the PR machine is warming up........
for all the disillusionment(sp?), disappointment and bagging of this company
the volume of shares traded in the last few weeks seems light ?
have a read of the AED thread on the asx board.
makes you wonder about NZO.....
Oil to soar above $90 next year says expert
By MARK SUMMERS
MANAMA: Oil prices will soar above $90 per barrel next year, a Bahraini economist has predicted.
Bahrain Economic Society senior economist Mohammed Habib Ali told the GDN that a combination of the growth of economies such as China and India, continuing global population increases and rising consumption within top oil-producing nations will push the price of crude to record levels next year.
He also said it was time GCC countries used their high surpluses to fund renewable energy projects and begin moves to end fuel subsidies in the region.
"Oil will reach above $90 next year and the problem is not politics or economics as much as it is geology," he said.
"Oil by many estimates has reached its peak and both production and the number of new oilfields found are decreasing - but at the same time world population is growing and is estimated to reach its peak around 2030.
"Therefore we can only gather that we will witness prices continue to shoot up in the next few decades to come unless the world economy goes through a tough economic depression or a breakthrough in some competitive alternative energy is found leading to immediate and sudden adopting of its usage - something which at the moment you would say appears very unlikely," he added.
Mr Habib Ali cited the example of China, where crude oil imports for the first half of this year were up 11.1 per cent on the previous year, as typical of global trends likely to increase oil prices.
"Chinese industries have not mastered the use of energy efficiency techniques and use 20-100pc more energy per unit of output than the US and Japan.
"Chinese consumers purchased more than seven million vehicles last year and demand is increasing by 20pc per annum," he said.
The economist warned that the top five net oil exporters - Saudi Arabia, Russia, Norway, Iran and the UAE - registered a 3.7pc increase in their own consumption from 2000 to 2005, a trend that is set to continue and one which will put further pressure on fuel prices.
"Net exports are decreasing due to major exporting countries consuming more of their own oil, hence the need to abolish subsidies and think of innovative ways to conserve energy within those countries.
"People in these countries continue to consume more of it because they are consuming it for cheaper relative to all other commodities that are rising in price. People are just going to abuse this more and more," he said.
That's why countries such as Bahrain should look to abandon fuel subsidies, he explained.
"I am not for abolishing it all at once, but I believe there should be a gradual letting go. You cannot let go of anything suddenly - that would just shock the economy and that is not the right thing to go with anything.
"They should do something with the subsidy money such as invest more into renewable energy. This money should go into something very much constructive and productive."
The consequences of higher oil prices for countries like Bahrain could be serious, he added.
"You will probably experience a bit more inflation and that is exacerbated by the devaluation of the dollar so you are getting hit by both sides.
"You can expect further rises in real estate prices, especially if interest rates are kept where they are right now and not increased substantially," he said.
"By accumulating higher surplus in the short-run, the GCC has a perfect window of opportunity to start diversifying its economy by investing their petrodollars into alternative energy technology," he said.
valid ? comment from over the tasman.....
"The problem with NZO lies in the inability of the chairman to communicate adequately with shareholders and the investing market in general. He is a very particular accountant who jealously protects the balance sheet and is forever fearful of any predator who might sneak up on the company and take control. This makes him secretive on detail and something of a control nut. Dissent on the board is not accepted, conferring control on both tenure and board behaviour. All this has created negativity in market perception, to which is added the loss of credibility consequent to over promising on past exploration. Despite this loss of confidence and consequent default of institutional fund support, the company have behaved perfectly ethically and will soon reap the rewards of 3 excellent energy projects. Those investors alienated by past failings have for the most part sold out, though it must be noted that 5 patient individuals with quite large holdings might still threaten the price with any overhang should they too become disillusioned. We now await the next phase of NZO maturing to a cash rich, productive oil/gas/coal producer when almost certainly a new wave of investors will become the dominant force on the share registry. The speculative blue sky traders are fast fading. "
I am meeting with David Salisbury next week. If any poster has any relevant questions on NZO or Pike please either email them to me or post them on this thread. I will post replies on this thread after I have cleared them through David. Cheers
Hi Clips, where did you get that quote from? What is the source on the other side of the Tasman?
bermuda it would be greatly appreciated if you could ask the following
what steps if any will be taken to ensure options are excised ?
if NZOG will increase there disclosure to market and shareholders ?
how if posible NZO will get brokers to change there stance about NZOG ?
What is Tui revenue being spent on ?
What are updated projected earnings from TUI ?
How PRC will effect NZOGs revenue ?
chhers
In addition to boysys six questions,
(7) What is NZO doing with Tui Revenue?
(8) What is the propose of the subsidiaries? is management getting paid through subsidiaries?
(9) Whats is the current water cut at TUI?
(10) Why is there no reply to inquires submitted buy shareholders to NZO through the NZO website?
(11) Is the OD expiry date getting extended ?
Look forward to the answers...
sharescene
Must say... I'm very much looking forward to the quarterly activities report due out at the end of the month showing how much dinero's flying in via TUI!
lets hope the pr machine is turned on also i mean honestly you would think with all the good news that NZO have had ( reserves upgrade/ higher oil prices / lower than expected water cut ) they would be blowing their own horn. Lets just hope the figures in the quarterly speak for themselves.
This quartely always seems to come out a little earlier than other quartely. Like not at the end of oct but in time to be read before the AGM.Now the end of march quartely takes the full month of April to get printed.But remember this report is only two months production not the full 3,so the first full one will be in Jan 08 covering oct,nov dec.
Bermuda,i would be very suprised if David would be releasing anything this close to the AGM. Most of the questions already asked i would be expecting to be fully covered at the AGM. Still it is a way of getting the feel of the shareholders and the questions out in advance.
My queiry is why is the SP so low given all the positive news that is flowing.Also when the water cut gets to the origional expected amount is it fair then to assume that 28 million barrels are left to develop?
What do people think about this announcement from AWE?
AWE’s Kopuwai-1 drilling update
AWE Ltd (“AWE”) reports that the Kopuwai-1 well is at a depth of 3,876 m. Current
activity is pulling out to change the bit.
Since the last report, the well has been drilled from 2,310 metres to 3,876 metres. Oil
shows were encountered in the Kapuni F Sand over the interval 3,655 to 3,690
metres, but the logs recorded while drilling indicate that the sandstone beds are either
poor quality or finely interbedded over this interval.
Once the well reaches total depth of approximately 4,050 metres, wireline logs will be
run in order to assess the economic significance of the F Sand interval.
Kopuwai-1 is in New Zealand’s western Taranaki basin in PEP 38482, approximately
10 kilometres north of the Tui Area oil project in 125 metres of water.
Bermuda
Thanks for the offer to relay comments to DS.
1. I would like to know how NZO hopes to achieve it's stated target of 2mmbo per annum, whether by outright acquistion, new exploration, or established farm ins, & what is there preferred option?
2. I would also like to know any of NZO's future contractual (or otherwise) committments with there current JV partners (AWE, PPP & Mitsui), & have they had talks with other Australian/NZ O&G companies?
3. Lastly, the GSB - Do NZO have any plans to apply for permits down there, & if not, is Taranaki still a viable option for NZO, or will they head to Australia in future?
Thanks again :cool:
Obviously not directly, but if it proved commercial, AWE and Mitsui may want to negotiate with the rest of the Tui JV to tie it back to the Urumoa: while this would obviously mostly benefit AWE, it would also improve the lifetime of the Tui field, thus increasing recoverable reserves for NZO. Also, AWE is the operator of a number of NZO's permits with remaining prospects, so for them to have confidence in Taranaki is important for a good portion of NZO's future drill prospects. Also, more generally, good exploration results are good for permit holders in the area in general: they increase investor confidence in the area, they make project finance a wee bit easier, and critical industry mass ultimately reduces costs for all the players involved.
I'm not trying to ramp this announcement: I'm not sure if it's good or bad news. I was just thinking maybe someone could decipher the technical terms they used in the announcement.
Disc: hold AWE
Yeah, hopefully. But you see what I mean?
I get what you meant, re-reading the ann, but given the $5m a week NZO pockets hasn't budged the SP an inch, i'm not holding much hope that NZO may benefit from AWE's non JV exploration.
The big Taranaki offshore drilling campaign has been largely disappointing & although nothing is a given in the O&G game, the Taranaki area has a better than avergae industry "strike rate".
As i posted to Bermuda before, will be interesting to hear David Salisbury's comments on whether NZO stays in the Taranaki basin or tries elsewhere?
I don't see any reason why it could not be tied back to the FPSO. The only inhibitors would be: JV agreement, distance from the FPSO and if the well was at a significantly different pressure to the Tui well.
As you point out, the more "critical industry mass" certainly reduces costs and generates some more enthusiasim in prospects. Whether this is a good or bad thing going on the last few dud wells is a moot point.
Cheers for the insight mattyroo. From that announcement, do you think that they have discovered an (if not commercial) geologically significant deposit of oil: ie significant volumes of oil have migrated along the same northwest-southeast diagonal up from Tui? I guess it adds persuasion to the notion of a more extensive working petroleum system in the F-sands. Anyone know what "poor quality or finely interbedded" sandstone beds means?
meanwhile in other (surely totally irrelevant, sorry to be slightly off topic) news from Bloomberg:
Oil Rises to Record on Concern Turkey May Invade Northern Iraq
By Margot Habiby and Robert Tuttle
Oct. 12 (Bloomberg) -- Crude oil rose to a record $84.05 a barrel in New York on concern Turkey may seek to quell Kurdish rebels by invading northern Iraq, a country with the world's third-largest oil reserves.
...................
Crude oil for November delivery rose 61 cents, or 0.7 percent, to close at $83.69 a barrel at 2:50 p.m. on the New York Mercantile Exchange, a record settlement. Earlier, the contract touched $84.05, the highest since futures began trading in 1983.
Nymex futures were up $2.47, or 3 percent, this week. They are up 37 percent this year.
Today's intraday high was less than a dollar from the all- time inflation-adjusted high reached in 1981 when prices jumped because Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars.
..................
Brent crude oil for November settlement rose 40 cents, or 0.5 percent, to close at a record $80.55 a barrel on the London- based ICE Futures Europe exchange. Brent was up $1.65, or 2.1 percent, this week.
Turkey's government will present a bill to parliament by next week authorizing a possible incursion across the border within a year, ..................................
So the saga continues
I cant really see Turkey invading Iraq. Turkey is desperate to get into the EU and wants to be in the good books. Most people in Europe is anti Bush and against the invasion of Iraq. The notion that Turkey will invade Iraq is total nonsense.
isnt turkey already in the eu? no no im wrong..one of those countries joined, bulgaria or something?
Turks have to sort the Kurds out somehow ... the Kurds are really pissing them off
I think the Turks are serious - Turkeys PM was quoted as saying the other day about the world (ie US) retailiation “If such an option is chosen, whatever its price, it will be paid,” and saying this about the US “Did they seek permission from anyone when they came from a distance of 10,000 kilometers and hit Iraq? ..... We do not need anyone else's advice.”
No doubt all of one big game ..... Turkey a key supply route for the US to Iraq and then all those US claims of genocide againt the Armenians
NZOG boss sticking to his guns
By GARRY SHEERAN - Sunday Star Times | Sunday, 14 October 2007
Come wind, come rain, oil explorer David Salisbury is sticking to his guns.
The government might decree all new electricity generation be renewable and not thermal, but the new boss at NZ Oil & Gas (NZOG) is gearing up his company to find more gas to fire thermal power stations. He has hired five top geo-scientists and a commercial manager from overseas as the core of a new 17-strong development team for the New Zealand-listed oil explorer.
"Sure, the new emphasis on renewables could cast a cloud on our activities, but there will still be times when the lakes aren't full and wind turbines stop turning," he said.
Having just spent $110 million on three projects the new Tui oilfield, the Kupe gasfield and the Pike River coalfield Salisbury is wasting no time to find more fuel for thermal stations.
Although he won't comment, it's likely NZOG is running a ruler over oil and gas assets owned by big Texan company Swift Energy, which is quitting New Zealand.
Exploration industry analysts say the government's new energy strategy, which is down on gas-fired power stations, is a factor in its decision to go.
On Friday Energy Minister David Parker said the government was considering legislation to prevent any new baseload thermal generation being built, whether by state-owned companies or the private sector.
Swift is now considering offers for its local assets, which include the Rimu-Kauri and Tawn fields, two natural gas processing plants, an oil processing plant and oil and gas pipelines.
On Salisbury's prospective shopping list is also the next Economic Development Ministry auction of permits to explore for gas and oil in onshore Taranaki, due for later this year or early next.
With all the talk of phasing out thermal generators, the exploration industry was not expecting a rush of interest like there was for the Great South Basin permits.
"It's going to be increasingly difficult to get these offers away," said Petroleum Exploration Association chief executive John Pfalert.
But Salisbury is keen to broaden NZOG's exploration focus, which has up till now been in offshore Taranaki with joint venture partners.
He's especially interested in onshore deep-well exploration below 4000m. "With new technology, and high oil and gas prices, such wells could now be commercially feasible," he said.
Then there is the list of known prospective drilling targets that NZOG has had in its book for some time. The first of them, the Hector-1 well south-west of Tui, disappointed in August.
NZOG had estimated the Hector prospect might contain 60 million barrels of recoverable oil. But the drill encountered no significant hydrocarbons.
"Oil exploration is a risky business we calculated only a 20% chance of success at Hector," said Salisbury. At the same time, he said, those were the odds being given to France to beat the All Blacks last weekend.
The next big hope is the Momoho prospect, south-east of Kupe, which will be probed by the Ensco rig after it has drilled three production wells in the Kupe reservoir.
While Salisbury is not ruling out the possibility of projects outside New Zealand for NZOG, local exploration will be the focus.
Salisbury has joined NZOG as the company migrates from its exploration to development and production phase.
Oil has started to flow from Tui, and NZOG will start to see significant revenue streams flow for the first time.
Total revenue for 2006-07 was $18m, and $7.5m the year before. Revenues could top $100m in 2008, mainly from NZOG's share in Tui oil production.
Then in 2009 it will benefit from its 15% interest in the Kupe gasfield, with first production beginning mid-2009.
Salisbury has worked in the oil and gas industry for a decade, first with Petrocorp (later Fletcher Energy), then Preussag and later OMV in Vienna.
He was appointed chief executive of NZOG in April when Gordon Ward vacated the position to spearhed Pike River Coal Co, which has since listed, and in which NZOG has a 31% stake.
nzo just hit 90c au.
with the ensco rig arriving then expect to see som nice pictures soon of it on location installing the jacket, before drilling the 3 kupe production holes.
wonder if tui development costs will be repaid by time of agm.
M
nzog spent $33.6m us on TUI by now they should have almost recouped that even with conservative figures as follows
lets say average of 45,000 bopd for the 75 days oil has been flowing with NZO share 12.5 % and at $100 barrel
45,000*0.125*75*$100 = 42,000,000 nz
Oil smashes $86 for the first time
Crude prices reach record high on worries about declining oil inventories, OPEC says production by non-member countries may fall; Turkey-Iraq tension.
October 15 2007: 3:28 PM EDT
NEW YORK (AP) -- Oil prices surged higher than $86 a barrel Monday for the first time after OPEC said crude production by non-member countries is likely falling even as global demand for oil is rising.
The price for light sweet crude settled at a record $86.13 a barrel, up $2.44 from Friday's $83.69.
Prices were also supported by concerns Turkish forces will pursue Kurdish rebels into Iraq, disrupting oil supplies, and by technical buying by investment funds.
Monday's intra-day high was $86.20 a barrel, breaking Friday's peak of $84.05.
Oil prices at these level makes NZO look cheap. :)
soon it cant get any better for nzo...in oil terms.
the call option comes in at $86.25 wti.
NZO up 6 in Aus yesterday, Tapis over $87, $NZ down a little ;)
Though not much depth on buyers side even with all this news on ASB securities
Call options should long be gone.
If the upcoming quarterly report does not clarify the status (quantity,strike price,expiry date) of
the call options before the AGM, could please somebody at the AGM ask the relevant question for those details and feed the answers back here for the rest of us who can't make it.
as ive said before, and stated in the may presentation, the call options were from june 2007 - 2010. we are within that period, so should be within the restrictions of the call options.
but yes, somebody check up at the agm.
Almost a year ago at the AGM Mr Radford advised that based on his expectations the price of oil would rise to approx $US90 per barrel by the 2007 AGM.
He also advised that ABN AMRO valued NZO at $NZ1.60 and that was back in October 2006.
Since then there have been 3 drill disappointments but I would put money on Kupe
Delivering substantially increased reserves through additional adjacent fields.Add on a Tui reserve upgrade plus further reserve potential and you have the ingredients for a big shareprice leap particularly with Pike which is well under the radar.
Pike will benefit enormously through the lift in coking coal prices which are forecast to rise by at least 25% in the next round of negotiations betwen the aussies and the Japanese/china.The current spot price is $US150 per tonne, well above the $US96 used in Pike's model.
Oil supply is getting tighter everyday and Parker's decision to disincentivise gas exploration will be overturned by the next National party.
I checked on the NYMEX some time after NZO announced the hedging which call options where in
existence at the time (=open interest).
The furthest out existing call options in the US$86, US$87 bracket were then for August 2007. Anything
further in the future was either $85 or $90 at that time. Long term (=several years ahead) options are only
traded in 5$ steps anyway.
I also remember that initially there were calls for 228000 (from memory) barrels, and a later announcement
reduced that to 186000 barrels. The drop coincided nicely with a bunch of June 2007 call options which
expired on the NYMEX. So that was the status as at 30 June 2007.
According to what I saw on the NYMEX the remaining 186000 barrel calls should have been July and
August ones.
Only the $50 puts should extend to 2010.
On the positive side, wellhead gas prices are bound to rise as realistically there's no show of meeting that 90% target, so known discoveries - "kupe" - will be worth a lot more !!!
Small companies like TAG oil / L&M must be mighty pee'd off with Govt, basically just ups the threshold for economic gas discoveries by quiet a significant margin. Methanex might as well just pack up and leave as well.
a prediction about POO in a Bloomberg article:
...........................
``It's going to soon hit $90 and go north of $100 next year,'' said Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, with $700 million in customer accounts. ``We should see $150 to $200 oil in the next two to three years because of the drop in the dollar. Once Asian countries allow their currencies to appreciate, demand will explode there.''
..........................
Maybe we should throttle TUI back a little in the short term????
its already being trottled back it could produce more than the current 45,000ish bopd
NZO winding up nicely - expect to see a good announcement in the next.... two weeks :D... with quarterly activity (i.e NZO counting the cash). Good times
I'm back boys. I just bought myself a nice tidy bag full of NZO's. I could not resist as the current SP is looking cheaper by the day.
looks like small time punters and speccies are moving in again,
is this the beginning of the end of $1 shares?
or are the sheep just grazing untouched fields?
im happy that i have finished my accumulation faze.
My energy portfolio is looking very healthy. :)
good to see 5:1 buy sell ratio at the moment on ASB securities . And with no announcements as such this could be seen as a change in sentiment about nzo and its future prospects ?
Just watching a commentary on CNBC re the oil price. The commentators are still referring to oil as a commodity.!! For goodness sake.....it is a precious resource.
I recommend everyone to read 'Twilight in the Desrt' by Matt Simmons and then google his latest presentation.
I hope NZO throttle back Tui to 30000 barrels per day because oil will be $US150 at least by 2010. Throttling back not only preserves the field but also allows more oil to be pumped out. And on a DCF basis...and assuming $US150 per barrel in 2010 it would be prudent.
The whole Oil Industry is at breaking point not just due to geopolitical factors but supply struggling to meet demand. The 200 year oil window we have all enjoyed is about to be closed .....not slammed ,..but gently closed.
No wonder Mr Radford (CEO ) recently upped his holdings
my post wasnt directed at you toddy,
while you posted i was writing mine.
but i hope you have a good feed this spring......... try not to get the staggers.
You're on to it Bermuda. I am with you, we arent going to see cheap oil again. I guess if the mainstream media or the major oil companies were to come out in public and say "we are running out of oil" all hell would break loose.
On another note we dont need Miz Clarke trying to kill the developing oil industry in this country with her politically correct ass covering posturing. She needs to get real :mad:
i tend to disagree that oil will hit 200 or even 150 a barrel.
think of it logically.
we have just broken all time inflation adjusted highs from back in the 70s. see what it did then? imagine if it was to hit 200 a barrel, this is say 2.5 times what its weighted average approx over last 4 weeks. that means, at the pumps, petrol will cost 2.5*1.60 = $4 a litre. if the nzd was to drop (which will happen), add at least 30-50% on that. $5.20-$6 a litre? c'mon, think about it fundamentally, nz is a reasonably well off country and not many/if any would own a car at those prices. it would be the same for the rest of the world...
it may eventually hit those prices, but not in real terms...i dont even see how it can hold at these levels. usa has the largest oil reserves in the world (enough for the states for 100 years) which are economically recoverable at $30 a barrel. do the maths, but ill take it while it comes with shares in oil companies...although its a pity nzo/ppp are only starting to move there was no strike on drills.
Upside Down...
how do you come up with the idea the US has enough oil reserves to last 100 years???? I am sure there are a lot of people who would love to know where all these low cost reserves are. ANWR is a no go zone so dont even include that in your calculations. The world is waiting ..:)
the oil shale reserves in the us. read it in the austrailian weekender one day at uni.
recoverable at $30 as they have to heat the shale up which big rods which make the oil seep out and then they can recover. what they're waiting for is certainty that oil will stay this high. remember in the 70's (i dont, but again, i've read), that oil companies set up camp trying to extract oil from us shale, the oil price slumped and they lost billions (yes, billions in the 70's, that was a lot of money). now, they wont go near there with a barge pole until they have certainty oil price doesnt collapse.
look at any oil reserves by geographical location and you will see the states has the highest by far, i thought you would have known this oiler.
i ask you the question, would you pay $4 a litre to fill up?
fill up 5 times and its worth more than my car!
Don't agree with your $4/litre Upside. Petrol may be $1.60/litre, however only a fraction of that is made up of the price of crude. Assuming refining costs, GST and the rest of aunty Helen's taxes don't change I suspect oil at $200/barrel would work out somewhere this side of $3 per litre (anyone got a figure?). They already pay those levels in some parts of the world.
If petrol ened up at $3 per litre or so and stayed there for some time then people would get acustomed to it. Back in late 70's or ealry 80's petrol was 99.9 cents per litre. It cost me $90 to fill up the Valiant yet i was only on $200 per week.
Only2 or 3 years ago many thought that oil at $50 was far fetched. Even when there was talk of possibly hitting $80 most laughed. If it does hit $100, $150 or $200 people will see it as reality and adjust accordingly. Just like CNG, LPG was the big thing in the early 80's other fuel options will become more viable. $200 per barrel is not the end of the world. Just possibly get used to it.
UU..... if there is one thing I have learnt about markets, it is the illogical actions that can take place in the marketplace in times of extreme demands or uncertainty....so I now expect anything no matter how absurd it may seem to me now at the present day
You asked the question whether I would pay $4/litre at the pump? ...yes I would if I had no other choice.
Would this happen within the next few years?
Oil shocks do happen and we haven't had one for a while...so it is not impossible.
yeah your right, i was being rather illogical on that one. didnt think about it too indepth.
anyone know an approx formula to work it out? taxes will remain the same and are applied for the end consumer, which means would increase linear with production costs. the world bank was suggesting of nz increasing their gst to reduce inflationary pressures...
they do already pay around the $3 a litre, your right again, but their top selling vehicle isnt a v8, and they mostly run diesel. their exchange rates are reasonably stable, compared to ours, so it cant change much apart from fluctuations in the oil price. the question is, would they pay much more? ie at 200 a barrel.
thinking about it more, the reason why some are saying it will hit that price is because of the usd declining further. in that case it shouldnt it have too much of an effect on foriegn purchases..but im sure it would, its never equal.
nita, you talk of a supply shock and other fuel options. fuel options now are getting more and more viable. sure they take a few years to get up and running, but it will sort itself out before oil hits 200 a barrel imo. i doubt anyone will come to party and have a go at the us shale for a while either. 1 billion barrels per square mile...amazing.
im not fully aware of how the supply shock occured back in the 70's, can someone explain if circumstances are similar? and how it would occur from here?
refining must have gotten a little more efficent since those days wouldnt you think? or maybe just a reduction of taxes etc...
can china/india the upcoming consumers, afford to pay that much more out of their already little disposable income?
we all know how inlastic gasoline is...but there must be a point where that stops, and becomes elastic and nz will be like the netherlands with bicycles from here to amsterdam.
also, what on earth were you doing driving a valiant around at those prices?
shrewd crude report :cool:
some very interesting topics ATM...
first of all, Great couple of days for NZO... backed up by PRC on a charge.... great for my NZO friends....
happy to see PRC run in the face of stiff opposition here at ST...
I reckon NZO sp will be strong after AGM ;)
....
Upside down....
Im with Bermuda and Oiler around high future oil prices,
it will get incrementally higher as time passes...
oil willnot run out, it will just be depleted to the point where it will become so expensive for the general population that we will be forced to stop consuming....consumption will go to the rich, or necessary input as raw material to create final product....
there are so many reasons why oil price ^ is the case.... and I guess thats a whole new thread's debate....
going back to your reasoning of saying that 'why is oil so high when we have shale idea'?
Yes Shale has some massive numbers in barrels terms, but Shale is far from the answer at this stage due to technological and enviornmental reasons amongst others.... Inground resource is just that, in the ground... it means nothing when I go to the petrol station and want to fill up.... its all about having the barrel in your hand... which is the underlying problem....
facts: oil shale provides .0001 of World Energy
:Oil shale contains 1/10 the energy of Oil
:Oil shale contains 1/6 the energy of coal
:$500m electricity expense per year to produce 100,000 barrels of oil shale per day....
:60% of worlds oil shale in Colorado and Utah...
Oil shale is capital intensive, inefficient, messy, a big polluter, consumes a massive amount of energy to produce....( 3 barrels of water for every barrel of oil)...
Shells scientists have concluded that "blasting, digging, hauling, roasting, disposing, and revegetating millions of ton of shale ore would never be economically viable or environmentally acceptable"....
....
At this stage technological advances are not quite there to produce oil shale....
The one idea (patented by Shell) is to somehow create some underground furnace and squeeze oil shale to the surface, but we are still awhile off that.... Can Oil shale takeover from conventional oil?... and will it halt decreasing oil supply?.... I dont think so...
with oil consumption at 80 something million...NO nation has ever produced more than 16,000 barrels per day in oil shale....
If you believe in the Idea then have alook at GRV... billions of barrels in oil shale resource, 20 something million market cap.... been watching it for years, and its done nothing.....
1.... 70's oil spike due to Iran invading Iraq or vice versa... factors nowadays are alittle different but more intense because of the demand, supply side problems and ever tighting excess capacity which will be minimal to none in 2012 and beyond... but the threat of a spike is there now, next year, and beyond.. A future oil shock will be on a different level to the 70's one... 70's was spike up and spike down.... I dont believe that next shock will be like that, but more like a sustained shock... events likeQuote:
1....im not fully aware of how the supply shock occured back in the 70's, can someone explain if circumstances are similar? and how it would occur from here?
2....can china/india the upcoming consumers, afford to pay that much more out of their already little disposable income?
Hurricanes, rebel attacks middle east, terrorism, war, and the further tension of increasing demand, cartel Opec straining supply and no incentive to change (extra capacity is minimal anyway), supply decreasing... if a problem comes up that cant be sorted out immediately, then we have prolonged spike due to the tight market... it willnot not take much to tip the scales..... back in the 70's b4 the spike excess oil capacity wasnot so tight...
2.....yes they can afford to pay even with increasing prices... to fill a car up is not really that expensive... it just appears so for us as NZ Govt slaps on taxes every which way possible, oil is still cheap... When I was in China this year it cost me 8 yuan or $1.6 for a 20min to 25min taxi ride which was cheap as....thats on top of expenses to run car, depreciation etc...
back to the question,
..the problem only gets bigger as India and China become richer...
The main point is that every economy needs oil to grow... as soon as oil consumption stops then so does GDP growth... the fight for who gets those barrels only becomes more difficult when those emerging countries get richer...
Thats what it will come down to one day when demand will outstrip supply and we will fight for barrels by signalling prices.... The current situation churning away and then a shock to finish it off is where we are heading......
the longer this goes on, then the smaller the shock required...
...
...
SC
Yes, in 1979 when iran and iraq went to war and ceased exporting oil, saudi arabia ramped up production from 3m bpd to 8m bpd - ie, there was plenty of spare capacity - that's no longer the case.
.
OMFG!
Crude brent hit a record 87.71 this morning!!! Time to buy a scooter, but then my energy stocks will cover the petrol cost for my cars.... LOL
Why would you or anyone else need to pay $4 a litre if you had no job to go to or couldn't afford basic foodstuffs. That is the bigger picture of $150bl oil prices - 1930's style global depression. Then the price of crude will tumble so you can afford to use it in lanterns to spin yarn by at night while waiting for the hunter-gatherers to return with the evening meal.
facts: oil shale provides .0001 of World Energy
:Oil shale contains 1/10 the energy of Oil
:Oil shale contains 1/6 the energy of coal
:$500m electricity expense per year to produce 100,000 barrels of oil shale per day....
:60% of worlds oil shale in Colorado and Utah...
Oil shale is capital intensive, inefficient, messy, a big polluter, consumes a massive amount of energy to produce....( 3 barrels of water for every barrel of oil)...
Shells scientists have concluded that "blasting, digging, hauling, roasting, disposing, and revegetating millions of ton of shale ore would never be economically viable or environmentally acceptable
That was a great report SC. However you could have summed it up very quickly on the fact that ROEI is negative and no-one knows how to bring it into positive territory
I find it somewhat a puzzel how people go on about all this oil and it will never run out. If in fact they changed there thinking away from oil in the ground to net oil flows to the pump ,they would quickly see the problem. Oil shale from my readings have a ROEI even worse than corn ethanol,which is just a subsidy game and is adding nothing to the energy net gain.
Just out for the Oil bulls...all good for NZO
Oil surges to record US$88 a barrel
New 7:30AM Wednesday October 17, 2007
Oil thundered to a record above US$88 a barrel this morning (NZT), extending a nine-dollar rally since last week driven by tight supplies, strong demand and growing tensions in northern Iraq.
Oil is closing in on the inflation-adjusted high of US$90.46 seen in 1980, the year after the Iranian revolution and at the start of the Iran-Iraq war. Prices this year have averaged US$67 a barrel.
At 1555 GMT, US crude was up US$1.92 at US$88.05 a barrel. London Brent was up US$1.60 at US$84.35 a barrel. Oil has set a series of records over the past three days.
The Organisation of the Petroleum Exporting Countries said it was worried by the record run but said it was due to rampant speculation by big money investors, not any physical shortage of crude supply.
"While the Organisation does not favor oil prices at this level, it strongly believes that fundamentals are not supporting current high prices and that the market is very well supplied," it said in a statement.
Investors themselves have cited rising tensions between Turkey and Kurdish separatists in northern Iraq, sturdy world energy demand growth, tight inventories in consumer nations heading into winter and unprecedented weakness in the US dollar.
"There's a lot of risk there and that is being reflected in the price," said fund manager David Dugdale of MFC Global Investment Management.
"This market has it all right now," said Peter Beutel, president of energy trading consultant Cameron Hanover. "It has supply concerns, projected increases in demand, dollar weakness, momentum and political fears."
The Turkish cabinet asked parliament Monday for permission to launch an attack on the separatists.
Iraqi oil exports via Turkey have been sporadic since 2003, although Turkey is also now a major conduit for Caspian oil exports to the Mediterranean.
But some analysts leaned toward Opec's view and argued the easing of a global credit crunch was a bigger factor driving oil.
Moves by the US Federal Reserve to cut interest rates and add billions of dollars of temporary reserves to the banking system have added liquidity that is finding its way into oil, seen by some as a one-way bet.
"We suspect massive long-side commitment by sidelined money has had more to do with it," said Edward Meir of MF Global.
Oil has climbed from below US$70 in mid-August and surged 10 per cent since Oct. 9. The rally has also been aided by fund buying as a hedge against a weaker dollar. Gold hit a 28-year high and platinum breached record levels.
"The market fundamentals are in balance. There is too much money coming into the market," Indonesia's Opec governor Maizar Rahman told Reuters.
Opec officials said they had heard no discussion within the organisation about raising output beyond the 500,000 barrels per day agreed in September, which takes effect on Nov. 1.
Oil prices have more than quadrupled since 2002 and climbed 43 per cent since the start of 2007.
"Barring a massive sell-off, the path of least resistance seems to be higher still, although like many others out there, we are hard-pressed to justify such high valuations," MF Global's Meir said.
"Still, we learned long -- and many dollars -- ago that it is best not to take on a speeding freight train."
- REUTERS
Big article in the Dominion post this morning. Refering to David Salisbury plugging the company with brokers etc over the last couple weeks- and a lot more..
although i am heavily weighted in oil stocks.. i have been for the last 5 years. I am expecting a signicant correction (around the 25% mark in oil prices when the correction occurs) by years end. This will of course still make the oil price relatively high. Like most corrections its only short lived. That is when we will see a huge spike imo over the next couple of years then the almighty crash..
im not trying to be pesimistic but history always repeats itself no matter what the commodity. Oil will be no exception.
Back to NZO. Short term the rise in oil is reaping in about $US1.0m ($NZ1.35m) every 2 days in revenue at current levels. No wonder NZO can afford 25 geek geo scientists onto their pay register. The numbers to come out in the next quarter will make interesting reading.
NZO is going from dog to darling this year. macdunk..where art thou.. this is your calling and its ok to change your mind
It has broken through the resistence price of $80 and heading north. Maybe someone can post up a better graph that goes back 5-10 years?
http://futures.tradingcharts.com/charts/BCW.GIF
NZOG on the hunt for funds and offshore oil fields
By NICK SMITH - Independent Financial Review | Wednesday, 17 October 2007
New Zealand Oil and Gas is seeking more oil assets and is prepared to look offshore.
With a new chief executive and oil revenues beginning to flow, the company has set itself the ambitious target of nearly doubling next year's production of more than 1.1 million equivalent barrels of oil in just four years.
"We're going to have to look at asset and corporate acquisition," says David Salisbury, a 40-year-old Taranaki native raised in the 1970s when Bill Birch's Think Big scheme pumped millions into provincial New Zealand's economy.
Salisbury, six months into the job and having seen subsidiary Pike River Coal successfully floated, says growth will come solely from NZOG's core business exploration, development and production of oil and gas.
Existing sources will peak around 1.3 million of barrels of oil equivalent in 2010, tailing off to just over 1 million in 2012 and 750,000 in 2015.
NZOG is confident of exploiting its existing Taranaki prospects but even so, for the equivalent of two million barrels by 2012, it will need to go to the market for funding to buy.
"The exploration we're looking at is New Zealand focused at this stage. We're going to have a very strong go at growing and we want it in meaningful tranches."
The high level of inherent risk and investment needed by the industry requires a sustained return.
"That's what makes us look at acquisition."
The company is working on a number of strategies to fund future acquisition. Much depends on the size of the target but Salisbury says it could include further debt, going to the equity market, share placement, issuing equity to another company or even forward selling oil production.
On the government's new energy strategy putting a 10-year ban on state-owned gas or coal-fired power plants, he says there is still a strong domestic need for gas and "any gas we find will find a home".
"It certainly doesn't put NZOG off from further exploration."
For a company that recorded revenue around $18 million last year "it was a series of one-offs" and whose production only started properly this year, its chief executive is bullish.
Are peak oil prices causing a rush of blood? "It's not a bad rule of thumb to look at a barrel of oil as being worth about $100," is his riposte, noting many expect the price of oil to top US$100 a barrel this year.
It costs hundreds of millions of dollars to develop a site but at those prices ``we expect the fields to be profitable for up to 10 years".
"This year we've already sold around 300,000 barrels of oil." By financial year's end it will be just shy of 1.2 million $120 million by Salisbury's rule of thumb.
The company has a record of moving quickly. While the Tui field is based on decades of data, actual oil discovery was recent: "To go from discovery to production in a four-year window is very, very good going."
Tui has transformed the company. "While we're not going to acquire Shell in the next couple of years'' it is suddenly earning significant cash.
How significant? In August, Statistics New Zealand recorded its largest amount of crude exports for one month. August also broke the record for receipts to Australia, our largest trading partner.
"September's presumably going to do the same."
It's not just Tui but Kupe, ``which most people think is only a gas field".
Gas is great but its off-products are more profitable. While Kupe holds 254 petajoules of gas, it will also produce 1.1 million tonnes of LPG and, more importantly, 14.7 million barrels of condensate, a light oil similar to the top-shelf product produced by Tui.
Kupe is on track for production in mid-2009, Salisbury says.
The 30 kilometres of pipeline connecting the well-head to the production station is at Port Marlborough and is ready to be welded and installed. The "jacket" the legs of the platform are in Port Taranaki. The platform top will be finished in Thailand and shipped to New Zealand by the end of the month.
It's Tonka toys times ten: "When you spend $1 billion, you get some pretty pieces of kit."
sc,
i think i backed myself up in my posts why oil shale was not yet viable.
refresh:
-oil companies lost billions in the 70's (yes billions in the 70's was a lot of money) when oil price crashed and it became uneconomic again and all their capex was a waste of time - they dont want to do this again until they know poo is sustained.
-your thinking of the old way they tried to extract oil from the shale..ie dig it up, take it to a factory, roast it etc etc..but seem to be mixing it up with the new way in which i was talking about.
like you said, shell has a new way which they're not letting out too much detail.
what they have let out is:
-they done a 'small' test plot scheme and have pumped 1600 barrels a day of some of the sweet crude they know of. no heavy refining. messy? no
-the energy input is 1 unit in and 3.5 units out.
-yes, they have to use ice wall technology, as has been used for years to isolate flows into mines.
-they WOULDNT be using electricity heaters down there, why use gas to convert to electricity then back to heat again? thats very inefficent sc, i think they would just use gas or even the oil from onsite, rememember 3.5 units return for every one unit used. its almost a perpetual motion device!
the only thing i have read is that shell isnt sure their heaters are reusable, which could be expensive...they didnt give figures though.
there is 1 million barrels per acre, 1 billion per square mile. 2000 square miles of this land. 2 trillion barrels. it will happen one day, but your right, wont happen tommorow.
http://www.dailyreckoning.com/rpt/OilShale.html
here is a similar article, its very similar to one i've read at canti.
digger, negative ROE? there is always a price in which its commercial, and that price is said to be $30 a barrel. would they be getting a negative ROE now? no, they're just scared of the price risk thats all.
u u. if they are scared of oil going below $30 in the forseeable future then i suspect they are in the wrong game. I would suspect it is significantly higher than that.
i tend to agree nita, but they are the experts and they want certainty.
it went as low at $50 this year didnt it? thats volatile prices, and gives them no certainty.
we will need to see prices sustained at this price for a while longer yet before we see commercial quantities of that sweet shale oil come from the ground.
Nita,
I am pleased you are long on oil. But please dont refer to oil as a commodity.
It is a precious resource.
I have studied the Oil Sands for years and the more I read the more problems surface.Even with present planned expansion they will be lucky to increase their production by more than 3 mbpd in the next 5 years.
As I have said before China has spent the last 5 or so years gearing themselves up to be in a position to 'fuel ' their economy by negotiating contracts with many Opec countries including options to take delivery at prices up to $US200 a barrel.
Take a look at Matt Simmons latest presentation and you will realise that the infrastructure behind pumping this most precious resource is sadly crumbling.As long as China and India keep growing then I cant see the oil price coming down much, but rather it will continue to climb.
just trying a picture - WTI futures Nov 07
What a beautiful graph!! If only NZO graph can track the oil price graph.
NZ Oil & Gas chief spreads good news about production
By BRUCE MCKAY - The Dominion Post | Wednesday, 17 October 2007
http://inl-images.adbureau.net/inl/a...images/AE0.gif
During the past couple of weeks David Salisbury, chief executive of NZ Oil & Gas, has been doing the rounds of the brokers and journalists doing what CEOs do not do often enough; meeting those people face to face and answering their questions.
Mr Salisbury joined NZ Oil & Gas earlier this year when the company was going through something of a quiet revolution.
As an exploration company, the prospects for revenue have often seemed somewhat distant, but now the company is enjoying its first real revenue in quite some time.
Also, NZ Oil & Gas has managed to get the Pike River IPO away after a few bumpy moments. Given the state of financial markets since August, it is an achievement to have raised $85 million from the public for a coal company.
But what's next?
Mr Salisbury's message is that the company is hunting for the next big thing, having boosted its exploration staff, and is ready to tackle some new offshore targets with all the cash flow coming in from, firstly, the Tui project and then from Kupe.
Though the company's share of these two projects is only 12.5 per cent and 15 per cent respectively, they are significant investments and profit generators.
The nature of the reserves means that Tui will flow strongly in the first couple of years and then rapidly reduce to a long tail, while Kupe, which is due to start production in the middle of 2009, will have a longer, more stable profile.
The company is planning to produce about two million barrels of oil equivalent on a continuing basis from both Tui and Kupe and from new discoveries. That's where the new staff come in.
One of the near-term opportunities for the company is drilling new wells in prospects that are near both the Tui and Kupe platforms.
The idea is that any new fields can be hooked into the existing production facilities, making the new fields relatively cheap to develop and prolonging the useful lives of the existing production assets.
There is also the possibility that the recoverable reserves estimates will increase from new drilling and testing in the existing fields.
The focus remains on offshore Taranaki assets rather than looking for new targets in areas such as the Southern Ocean.
NZ Oil & Gas knows the Taranaki structures very well and will continue to work in that area. It seems that the Taranaki basin is still highly prospective, even if a big replacement for Maui hasn't been found yet.
Mr Salisbury reckons that the company is in a good cash flow position, with no need to ask the bank or shareholders for money, at least in the foreseeable future.
The very nature of oil and gas exploration means that shareholders always risk being tapped on the shoulder for more money.
NZ Oil & Gas has a commitment to provide funding to Pike River. However, it would seem that if the company has to lend money to Pike River, it will do so only on commercially advantageous terms.
Mr Salisbury has been at pains to point out that the two companies are now separate entities in every sense, with the only contact between them at the board level.
It would also seem that NZ Oil & Gas will look to exit its holding in Pike River, but that is unlikely to happen for some time.
Pike River isn't due to start producing coal till March next year and any sale would probably happen only after Pike has established a production track record.
So will the company pay a dividend? It would seem unlikely.
Firstly, the company has $139 million of exploration and other tax losses that it can use, so it won't be generating any imputation credits in the foreseeable future.
It doesn't make sense for companies to pay dividends without imputation credits, so the most likely form of any payment to shareholders is likely to come from share buybacks.
Whether a share buyback programme is instigated remains to be seen as the only time a company should undertake a buyback is when the share price is trading at a deep discount to fair value.
In the oil and gas game it's a bit of a moot point to determine fair value, due to the volatility of the oil price.
NZ Oil & Gas has been in the NZX 50 Index for some time now, but is not that widely followed by analysts.
The company has more than 12,000 shareholders, but less than 20 per cent of the shares are held by institutional investors.
Given the "wall of money" hitting the market each week it seems surprising that the level of fund manager investment in the company is so low, given that it is in the headline index.
It could be that institutional investors have a hard time understanding the company.
There aren't many oil and gas analysts in New Zealand and the Australian analysts aren't about to divert their attention from much bigger companies in their own market to look at NZ Oil & Gas.
Another reason could be the need for the company to improve its corporate governance performance before institutional shareholders start taking more interest.
One of the issues here is the presence of Tony Radford as chairman of the company. He has been a key driver behind the company since it first listed in 1981.
However, at times the governance of the company has been somewhat opaque.
During the 1990s, Ron Brierley and GPG had a crack at Mr Radford and the cross shareholdings between related parties that were linked to NZ Oil & Gas.
While that has all gone away, it might be time for the company to look for a new chairman that has a good market profile and a sound corporate governance track record.
NZ Oil & Gas has certainly had a big year. The start of production from Kupe next year will be another major step forward and will provide ongoing cash flows and profits for the next few years. Mr Salisbury's challenge is to find the next Tui and Kupe to ensure that the company can produce two million barrels a year. If he can do that, then one day the company may start paying tax and dividends will start to flow. That will be a major achievement.
Very good post. Thanks Seti.
If they change the chairman that the market likes this stock can add on 20-30% and I would probably look to add more NZO to my portolio. I am liking what the CEO is saying. Good, clear direction that is positive. Good to hear there will be no further capital raising in the near future.
Nice to see some momentum is share price, hope stays till AGM - many of you going? I am -1st time its been in Wellington for ages and its at the citys best hotel!
well the sp is certainly moving up 3 to $1.10