and a buyback only puts cash in the pockets of traders and speculators.
the longterm investor and supporter of the company misses out in the short term.
Printable View
and a buyback only puts cash in the pockets of traders and speculators.
the longterm investor and supporter of the company misses out in the short term.
A buy back reduces number of shares on issue and would increase earning per share?
I agree Neopole,
NZO should be worth well over $2 by now.
Management just don't seem to be active in increasing shareholder wealth.
The environment they have had of late I doubt will get any better, so why would you not reward loyal holders.
I believe that this is part of the reason holding back the price.
$2.50 should be around the corner yet posters are high fiving over $1.66 today.
Not me!
Paddie
Gee you guys are hard to please share price up 70% this year alone, management can't talk up the share price as such, I reckon they're doing fine.
[QUOTE=Paddie;216051]I agree Neopole,
NZO should be worth well over $2 by now.
Management just don't seem to be active in increasing shareholder wealth.
The environment they have had of late I doubt will get any better, so why would you not reward loyal holders.
I believe that this is part of the reason holding back the price.
$2.50 should be around the corner yet posters are high fiving over $1.66 today.
Not me!
Paddie[/QUOTE
Fully agree with you Paddie .
I hate it when management starts talking about taking shareholders funds overseas-we almost always seem to lose out-look what it did to Telecom in Australia and Air NZ with ansett.
TTP is another bad example albeit due to a majority shareholder and a board of directors not acting in the interests of shareholders.This saga taught me a lot about minority shareholder rights and thanks to all who participated we won at arbitration and the high court appeal .
NZO board have in my opinion in recent times acted well and made good decisions . However that doesnt stop them-as it didnt stop the air nz/tel boards getting carried away trying to expand overseas with disastrous results .
I believe we have shareholders posting on this thread with a wealth of experience who would make excellent directors acting in our best interests-eg digger , bermuda , unicorn.
The board has space for another director and additionally 2 directors have come up for re-election .
Maybe its time to make our votes count- Amongst family and friends outside this thread I could muster up over 3 million and digger has more than me -bermuda mentioned a few weeks back he had a 100,000 and fried egg must have more than this( I am just pointing out the magnitude of shares some posters hold and not that they agreee with me ).
If others want to explore this avenue please could they post here-or send me a private message so we could gauge if this road is worth exploring .
So a change of director or 2 is going to get the shares over $2 - the market decides what they are worth and today its $1.66
We live in uncertain times. All shares should be expected to be at a larger discount than in more settled times. NZO have just completed the largest fund raising on the NZX this year, which should be expected to force the share price towards the issue price for a while.
Management appear to have delivered an underlying operating profit well in excess of $100M, and the Pike holding is currently worth more than $100M above book value. Kupe appears to be progressing well for such a large project. I think management has done very, very well for their shareholders this year.
If you invest on NZX you need to accept that your shareholding will be at a discount to the underlying value, at least until an overseas buyer decides to take your company over. This is a legacy of the 1987 crash, a fixation with property, and a widespread preference for borrowing rather than investing. I don't think we can blame NZO management for that.
I am pleased to see that NZO is clearly not just resting on its Tui laurels. There are already things happening to grow the company further, and clear attention being paid to more growth into the future. Many of these things can't be rushed, so we should be pleased that there have been no hasty decisions made.
I am happy that short term panaceas like throwing dividends at shareholders are taking second place to the more important issues of sound financial management going forward. NZO shareholders have had a great year, and have a lot to look forward to in the year ahead. Can't ask for much more than that.
Well put Unicorn - I'm a satisfied holder and I suspect at this years AGM it will be the David Salisbury show - last year I felt he was a bit overshadowed by Tony Radford.
Can someone please remind me approx how much per barrel it costs to produce out of Tui - I have a figure of about $10 USD per barrel??
Thanks
SSB
Good post unicorn.
Fish, would you not consider NZO expanding overseas is just a not a little different to WHS and TEL?
Geology changes, yes..but not so much that NZO's experienced team couldnt exploit other areas overseas. There is no brand challenge (WHS had to try convince australians to convert to them...so did TEL). NZO will always be able to sell oil, because it is a common good at the market place. It doesnt have to convince people to buy it.
Well said, Unicorn.
I'd just add that many NZ investors also seem to have a fixation with dividends.
Absolutely-everycase is different . I have only recently sold out of air nz but you will recall it was the purchase of ANSETT that resulted in the loss of shareholder value and eventual near government buyout to prevent it going down . You have to admit nz companies buying overseas assets seldom preserves shareholders funds-so why do it ?-you need very good reason in my opinion
Have we really exhausted Staying in this country and trying to maximise shareholder value eg-by further drills in taranaki plus maybe taking a big stake in ppp plus other local oppurtunities -?csg etc.-this would allow dividends to be paid with imputation credits not forgetting lower royalties .?
If NZO ventures overseas it will likely need shareholder approval . I wonder how many shareholders would vote against it and seek minority buy-out rights .
This board needs to realise they should try and keep all shareholders happy . Rather than putting 280 million in bank accounts I think 200 million would have done and a 20 cent dividend with full imputation credits could have been paid
If this had been the case today I believe the sp would have been close to 2 dollars and we all would be very happy .
True oil is international sold and you sure do not have to convince people to buy it. If that was the only problem with this sudden desire to expand overseas i would be all for it .The problem is much greater.Here is my gut feelings against it.
Firstly i started in NZ in 1962 with nothing and as i finanically grew found i had to constantly leave behind former friends or go down the road they took. In nearly all cases this road was that at some stage most people get money and blow it.I would have to have many more fingures and toes to count them.So the problem is after a long time having no money then getting some and suddenly haveing to do a big spendup just because you can. That policy leads to the complete cycle where you soon have no money and are back to square one. Seen it too often .NZO could easily lose vast amounts by rushing overseas,and rushing overseas is any time in the interval of 5 years after you first find yourself no longer broke.
Changing laws and resource nationalisation is the first order of the day with oil development these days.Super oil companies are being pushed around all over the globe.What chance does little NZO have it this enviroment with the very small pot of gold we now have.Remember we just began to get money in the last year and i say are biggest threat is the way new money almost always burns a hole in the newbe wealth pocket.
NZ or AUS is where we should stay for the forseeable future.I love NZO too much to see us risk this just because we have two bob to rub together,and by international standards that is all we have.
Fish good call on suggesting that sellers consider holding off until after the quartely. Anyone taken that advise will be well rewarded from tomorrow.
Fish, steady on, If I read the announcements correctly, NZO currently has approx NZ$64m of debt on its books ...... perhaps the company should first neutralise the debt before contemplating more dividends.
And IMHO there's no point in raising big bucks and then immediately given a whole heap back to shareholders.
I'm picking that as PRC achieves the milestones to significant coal production we will see PRC further uprated.
Given robust coking coal and oil prices, seems to me that NZO's shareprice will continue to be uprated as well .... $2 per share is achievable provided the US doesn't hit the skids.
Overall I agree with Unicorn, I think NZO management are doing a good job -- the next three months leading up to the Annual Report and the Sept Quarterly Report plus the AGM will all be very interesting.
No doubt we should get some steerage on where NZO is heading.
Also agree with Digger and others that NZO has to be careful with overseas projects .... I wonder how much attention has been given to joining some of the big AWE permits to the north-west of Tui ?
Z
.
I've been thininking about that extraordinary finish on the market today (a buyer coming in and buying the large number of shares they wanted in the closing auction, with seemingly little regard for what price they had to pay compared with what prices were available earlier in the day). It is typical behaviour of institutional funds making adjustments to their portfolios on the last day of the month - unlike smaller individual investors they're not too worried about a few cents here and there in the price they pay - they need to buy a certain amount and they do it in the closing auction, and often on the last day of the month. Likewise all the crossings after market close. I assume that some of the funds will want or need to have increased their holdings in NZO due to increases in market cap weighting this month.
Unicorn excellent summary of what NZO has achieved in the last year and so correct about NZ borrowing habits and a failure to develop investing skills.Can you also give us some of your thought on tomorrow.Where should we put this new found monies and how much risk do you put on going beyond aus. On this subject we are in reverse rolls as normally i find you too consertive but here it is me who fears undertakeing risks beyond our understanding of changing international rules.Experience and competence here in NZ is no indicator of success in the international oil wars taking place globally.I fear you don't.WHY?
The only reason the SP went up today was because of the continuous ramping on this web site.
It looks like we are all going to be put on a two week holiday.
Thats no problem though, its going to take NZO management atleast two weeks to count all of that cash.
I would be happier with a close above 1.67, it's still nudging that old resistance.
Yeah Fish, I do remember AIR..I was a 5th form accounting student at the time, and my teacher said they would go under! But again, that is different circumstances. Its to do with operational management, and airlines are usually poor investments (very cyclical). Imagine though, if Ansett could have restructured into a low cost airline back then..could have been interesting.
Back to topic, they are very different IMO. Oil companies are best placed for international expansion apart from political risk, which digger mentions, but can be avoided.
Digger, those concerns are very real. Political/nationalisation are risks. Its also a risk here in NZ with our greenie members of public and parliament. What was that about no more gas power plants to be permitted? Austrailia looks to be the best bet. They are introducing a ETS which is the only risk i see in the medium term..but they wont risk their international competitivenss as this would be political suicide. I would however, be concerned if they had plans to invest substantially in 3rd world countries. Your just asking for it then arent you...
Diversification (people seem to hate this word) of their producing assets wouldnt be a bad thing. $280M is a lot of money, I cant possibly see how they would spend it in NZ (apart from PPP). Then when they offload PRC in the future, there could be another $300M or so. Maybe they will buy a company and leverage it somewhat with anticipation they can reduce debt when they sell PRC. Who knows.
NZO have also said they want their core business to be oil/gas, they dont want to deviate from this, which is a pity, given NZ govt has set standards to become less dependent on foreign oil. This could be an opportunity for NZO to do something with LMP/Solid Energy in the coal to liquids..be good to see them vertically integrate their business lines. Would keep more funds in NZ, and they would be less cyclical than other oil companies. Just my thoughts anyway.
Hi Digger
I am keen to see more exploration within the excellent Taranaki permits (PMP38158 and PEP3849 in particular). But there is clearly a difficulty in getting the rigs that are essential to that initiative - a look at the Diamond website shows that problem quite clearly. And the amount of cash that is available does mean there is a need to look elsewhere as well.
I would have been happier for the share price to have stayed down for a while, and the NZOODs to have lapsed. In these uncertain times I feel that would have been a safer outcome for all of us. But it did not work out that way, so now something productive needs to be done with the money - although not necessarily right away.
I take some comfort from NZO having a Chairman who knows the industry and has shown himself to be an astute operator. I also take comfort from the fact that nothing rash or hurried has been attempted since the growth strategy was announced. NZO has a board that knows the value of money - they have had many years of managing on a shoestring and I am sure they will not want to give their hard won profits away easily.
I am generally not in favour of overseas ventures, but in the current situation think it is an option that should be explored - but entered into only if the right deal can be found. I support the search for a deal, but that does not mean I will necessarily support any particular deal.
Exactly Unicorn.
If NZO find a "gem" of an opportunity, then go for it, otherwise wait...
One just needs to see how BPT destroyed shareholder value, chasing overseas projects all over the world!
Unicorn
If nzo did try and seek shareholder approval for a major overseas investment would I be correct in suggesting that minority nz shareholders who voted against this would be entitled to a fair and reasonable price for the purchase of their shares by the company .
The current share price would not be fair and reasonable as it is in a depressed market situation therefore a valuer would use what the components could be sold for-eg back of my cuff calc -cash 70 cents tui 70 kupe 70 and prc 70 -around $2.80 per share . The cash reserves of course would be much greater by the time of the compulsory purchase .Plus nzo might have to pay further interest and other costs-say $3 a share .
You would imagine the current board will have considered this -although they might not have the expertise and experience to understand the significance of the relevant sections of the companies act .
I actually want to be a longterm investor but preserving shareholder value would most likely take precedence if there is a change in direction of the company
The price of BPT has lapsed, but this has more to do with the huge capital raising they had a $1.43. Prior to the capital raising the SP had been bouyant, at $1.60's.
In saying that , it is true, that their foray into Egypt is perceived by the Shareholders with some trepidation, but this play could yet turn out to be immensely profitable for Beach.
Presently ALL Australian oilers are under the hammer!
I thought I should point this out as what you are saying is pure speculation;)
Hi Unicorn ,again i agree with most of your post except some of this quote above.The only comfort i take from NZO's decision to look beyond Aus is that TR has his neck on the block even more than i do,so yes i do agree he will not want to see that go down the drain. In fact none of the directors will desire that outcome,but my point is that apart from TR there neck is just not on the block as there shareholding is miniual.
We are strongly at odds over what makes up a useful value of money. Living on a shoestring and managing later to get money as NZO has done is only the beginning.As i pointed out before i have seen many people get money but not be able to make the next hard step of managing it to get more. 90% of them go for the big spendup and are soon back on a shoestring.
For me a dread outcome would be for TR to suddenly drop dead.If that were to happen NZO would pass entirely into the hands of the remaining directors who have put very little of their own monies into the company.As competent as they may be in their areas of expertize their assesment towards a spend up would be much more tempered if the money is coming from their own pocket than someone elses.
Reuters today:
"Western oil companies' output has fallen in recent years and oil producing countries now prefer to award their richest fields to their own national oil companies."
I mean Australia are onto it. They started with keeping Shell's involvement in WPL down. Yet NZ back Exxon. Well I suppose Exxon is the NZ super funds largest investment....but that is not the same as developing NZ for NZers.
It seems crazy to me that NZ explorers' are not required to be in on the ground floor with the most prospective territory. The rest of the world has gone that way. The "tender processes" used favours the big guys but there must be a way of structuring the tender so that more investigative work is conducted by NZ in conjunction with Crown Minerals and then get the NZ companies to farm out once the costs become astronomic. There must be a way of the little guys learning and growing bigger in their own patch.
Buy Kiwi I say to the government/Crown Minerals. Perhaps two tier tendering where foreign company dollars only count as 30pc of NZ company dollars in evaluating mineral tendering rounds. That way the resource tender's would have to be channelled through NZ companies. Does this sound way out?
And to NZO the most profitable field development in the world must be Tui - why would you risk off shore when so much is still to be done on your doorstep? So it takes time - we can wait for the right opportunities at home. NZO has some capital now, it needs to be preserved. NZO needs to be preserved and not sold to the highest bidder as Fletcher Challenge Energy disappeared just as they were becoming useful. When it comes to capital purchases NZ'ers have never (in my lifetime) competed because our cost of capital is kept at astronomic levels. Tilt the playing field back towards our companies I say.
Good news article this morning:
http://www.stuff.co.nz/4638685a13.html
In discussing acquisitions, Mr Salisbury "ruled out coalseam methane gas".
I take it this stands for the Volume Weighted Average Price? On the Direct Broking website I see 2,042,875 shares sold for a total of $3,347,758 - which results in an average of $1.639 and that is what the page says.
However, it also shows a low of $1.60 and a high of $1.63 - how can the average be higher than the highest price? Am I missing something?
BK,
The average will include the trades before the market opened; 1.2m were crossed at $166 at 9.24am.
Bob C
Still holding and buckled in for the ride north.....
Thanks Bob, that explains it. Although the volume traded then is the volume traded after market open, not the volume traded for the day, which has the potential to skew figures.
What I understand is that the total $ divided by the total shares traded gives the VWAP. This does include all those shares traded prior and after the market period but the price used for these is not used in the high/low for the day figures. Therefore the $1-66 is not shown for the high today.
Can anyone tell me if a liability for capital gains can occur before the shares are sold, ie at the end of a financial year? or will the gain only be taxable when the shares are sold?
Looking at some big paper gains in the 07/08 financial year and am wondering if I will be liable for tax even though I have not yet sold the shares.
Technically I qualify as a trader even though I currently only do 10 to 20 trades a year.
dsurf are you refering to overseas shares or just nz ones? I have never heard of nz shares being subject to what would be capital gains but there was some govt plan to do that on overseas shares.I am not longer a trader but when i was about 7 years ago i only paid tax on realised profits.Still it will be good to get an update on this for this site from someone with current experience.
NZ predominantly. I do not suggest this is a course of action for anyone else as borrowing to buy shares is dangerous.
However for a number of years I have used interest deductability from my NZO holdings financed via the mortage to lower my effective tax rate back towards 33%. I am currently thinking if I should continue to do this until I have no income, at which point I could then slowly sell down approx 30K a year and pay no / little tax on the capital gain
looks like same late interest again tonight, no buyes all day above $1.62 and just before 5.00pm they appear at $1.63 - $1.64
I would suspect that a financial year is irrelavent.....its "your intention at time of purchase"......tread carefully and pay someone good for advice.
I don't think it's just 'late interest'. Have been watching this for two days - steady but subtantial buying all day; last nights jump was just brokerage crossing up at end of day. Same pattern tonight. And yet.. no SHH notice.
Theories anyone?
Oh - and about tax on capital gains - no tax for unrealised stuff UNLESS its overseas shares held by private individuals with greater than 50k worth - then its 5% tax. And to make matters worse - there's no credit if you make a paper loss (Ratbags)
A trading gain is different to a capital gain. dsurf states he is "technically" a trader. The fact that he has deducted interest payments against previous income no doubt confirms this. You can deduct interest only against income producing assets. Shares producing a regular dividend would qualify but NZO over the past few years have not indicated that.
Personally I pay tax on my realized/unrealized profits/losses each year. Some years I pay tax others I get a refund.
Any discussion on this topic is going to get all sorts of "bush accountants" theories. An hour with an expert is worth paying for.
Because then I can claim all my costs incurred against them. Interest,magazines,internet,computer depreciation,telephone(part of), brokerage, meeting expenses etc etc.
It's tidy and the IRD don't complain.
Financial advisors know zip about tax!
Tax experts need to be qualified people.
777
Individuals are treated on a "cash basis" not accrual basis, therefore only realized gains are taxable (& losses claimable).
The IRD won't complain about you paying more tax now, just be careful in future years that this doesn't come back to bite you.
NZO would have plenty of shareholders sitting on unrealized gains.
I presume many here (like Digger, Blockhead & co) are buy & hold long term investors?
Sorry to be off topic - 777 Pm me if you have any questions ;)
[QUOTE=shasta;216299]777
NZO would have plenty of shareholders sitting on unrealized gains.
I presume many here (like Digger, Blockhead & co) are buy & hold long term investors?
Buying with the intention of being a long-term holder should make me bullet -proof from the point of view of the IRD and enable the best tax efficiency .
For the last 25 years -since emigrating to NZ I have worked long and hard and always been in the highest tax bracket .
This year my tax bill will be a lot less-I might even be in a low tax bracket-yet my gross earnings should be higher than ever
Using the ASB margin trading account I have bought a lot of NZO with the intention of long-term holding and no trading .
NZO have stated they will pay a reasonable proportion of earnings as dividends .
Hence I have borrowed to buy an income producing asset and all interest is tax deductible-as would any other expenses involved in this .
In general I agree with most of the advice given on this thread not to borrow to buy shares.However anyone that has an income that is higher than they need for living expenses and wants to invest in nzo this scheme is a good way of making it tax efficient .
Whoops - sorry, I missed the 'technically' a trader statement. (But one should check with your local CA on this as it gets a little grey where the crossover is - - besides - your CA often has a good relationship with the local IRD dude and can swing you a 'good result' if he/she/it is any good. Now - enough of this tax talk - really off subject.)
see nzo now have weekly average tapis price on website under tui section
thisis good
M
Yes. And the web site revamp has generally produced a far more informative site. It is now very good - - wonder if the groaning about the lack of detail info had anything to do with it. (or probably not - I'd imagine a six month lead time to produce it.) (Nice colouring too. Pity about the java script)
[QUOTE=shasta;216343]Shasta
For a trader I agree margin trading would be ill-advised during a bear market .
For a long-term investor the success or otherwise of margin lending depends on whether interest rate charged is less than dividend received plus capital appreciation .
About 30% of my holding is loaned by margin trading so I feel secure that i will not recieve a margin call
A simple alternative way of looking at whether it pays to borrow to buy this share is that the earnings per share look like being around 50 cents pa -the cost of borrowing to buy a share is 17 cents(10% interest ) which for me is tax deductable at 39% so net cost is 10 cents a share per annum .Therefore total profit is 40cents per share per year .
Nearly 300mil. in term deposits?
Makes me a bit uneasy in the present climate!
Invested in AA or better rated Inst. now have we not heard that somwhere before?
FABS.
.
Fabs,
Welcome to the thread .....
Yes, it also had me worried, AA rating, wot a w.ank on the part of our esteemed rating agencies, they should all be the subject of class actions for fraudulently misleading the global investment industry with there totally false and completely self serving AA and AAA ratings for those CDOs that where riddled with sub-prime c.rap. [And locally, Hanover goes from BB+, before collapse, to D for default, they day after default, thanks to Fitch for supplying us with that wonderous example of local ratings rubbish]
Just so long as the smart alec bankers sitting on top of there 210th floor super high rise downtown Manhatten sky-scraper, can put together a totally bull.sh.ite package and then get a huge bonus at the end of year, well I am not surprised that these "fast money" mendacious bankers got bombed !!!!
I hope some republican redneck is reading this, then we can hear some more reasons why they launched such an immoral invasion and splurging trillions of dollars on a corrupt military gung-ho errol flyn kind of "dont mess with us, or else we will show you" kind of yanki-doodle we will save the world and grab the oil at the same time.
Anyway I gues NZOG'ers should thank the republican rednecks, and there democrat lackeys, for driving up the price of oil with there completely stupid foreign policy military defecations. To say nothing of the 50,000 plus Iraq civilian deaths due to "colateral" damage. Frankly Bush and all his "PNAC" (google it) sidekicks need a colonoscopy to find more about how to purge them of their colateral cr.ap.
Yes, wot a rant, but its all true, if badly spelt !!!!!!!!!!!!!!!!!!
Z
Probably over $300 million by now fabs--Tui is still producing around $900,000 a day .
If you are planning buying overseas it would have paid to have some of it in overseas currency when the Kiwi was strong .
In fact by xmas there should be around a dollar a share in the bank -not counting what pike does .
I really think they should diversify the risk-eg return 1/2 to shareholders !
mon/tues looks like a good weather window tol ose the rig after momoho
one wonders how much the the cost is to keep rig on station waiting to move and who pays for it
m
We do ,so it looks like it turned out to be an unfortunate call to not explore both sides of the Momoho fault.Would imagine there would be a daily charge for having the rig on site but it will be less than drilling. As a farmer i know only too well how easy it is to call the weather wrong but that is what happens when you are up against nature.
This morning I've been thinking about what is going to make NZO's share price appreciate in the long term.
1. Tui - We all know it has performed beyond any expectation, and high oil prices have just further compounded this. However, the best is probably behind us, as production is set to decrease. The market knows how successful Tui has been and unless further reserves are discovered, I can not see this as a driver of a higher share price. The future revenues are factored in, along with market sentiment.
2. Kupe - Apparently 80% complete. As and when Tui revenues decline. Kupe will hopefully kick in, and will enable NZO to maintain a steady stream of revenue. However again, I don't see it as driving the share prices from where we are currently at. Tui down, Kupe takes over.
3. Pike - Is Nearing productions which should see a re-rate. It seems that NZO's intention, from what I understand has always to eventually sell out in one way or another. This will just add further cash to the kitty, and isn't really a long-term share price driver.
4. Momoho - A bit of a dead duck for the foreseable future.
So the long term share price appreciation seems to hinge on what NZO do with all the Tui and Option Cash. They are fundamentally sound; with the value of cash and PRC totaling about half the current market cap, along with steady income streams from Tui and then Kupe.
I'm not in favour of NZO paying out a 10-20c dividend for the sake of it. I want growth, and a heafty dividend is short term thinking in my view! Sure if they can't find something worth spending the cash on, then fine, give it back.
Even buying PPP and returning any revenue to shareholders above payback would be a better option than spending what cash we currently have on a dividend. Once it's gone, it's gone.
This is a bit of a thought dump. But interested to see other peoples views.
sounds like it's time for you to sell;)
I thought it was all to do with what the chart was saying?
Is that when you use the 30 day MA to pick up road kill from the blue eyed brigade?
Hey that is not how i see it.
TUI----you have tui all factored in.This is getting to be a bit of a stuck record.First heard that one about 3 years ago.In fact it was even factored out by some as costs were going to be higher and we were even supposted to sell it all at 40 dollars while the going was good.For the records TUI has proven it is still going to beat the conserative JV estimates which is the way we want it.Certainly not underpreforming. By world standards the TUI area is lightly drilled so much potential there yet.
Kupe is a winner for years to come.Do note that TUI with one year to production had little effect on SP as given today,and similiary Kupe effect is yet to come.The market just wants and will wait for the bank account to measure if Kupe has any hydrocarbons or not regardless of that our geologists tells us.
Pike.I probably was always the biggest supporter of this project from day one.I come from a mining family in Canada so the extraction of this coal in this world time always made good economics to me.Am starting to think that maybe NZO should hang onto this investment.It will be a good long term money earner,so ask why sell it.Certainly little point in selling it to go off chasing some overseas project that are increasingly in danger of being nationalised the moment they becomes productive.
Momoho---the productive of this one is a function of price.Remember Kupe was not economic because of Maui and the then current price.This one is for a future time,which is a time far longer than investers will factor in.You can be sure though that the info gathered will be carefully stored.OK the market has this one at a drill cost and nil value.
There are other reasons why the SP is so low which i would like to express MHO about some other time.
I had a chat with DS in Sydney at the oil conference about purchasing VPE. Was going to get some material for him but decided against. I realised that would be a stupid idea. VPE is destined for QGC. NZO would only get into a silly fight and come up way short on CSG experience.
But most of all NZO need to stay in their existing field of expertise/experience. They know so much about Taranaki and have numerous targets lined up.I know they have a corporate plan to double through an acquisition/s but in my mind it would have to be done in the Taranaki area and that is why PPP must be the strong contender. Remember they sold it under duress and it is a perfect investment for them.
Stick to your knitting NZO. Taranaki will make us a fortune.
Does anybody have any thoughts on NOG buying Horizon (HZN)? Would be a big undertaking but would generate immediate (well nearly) income from Maari (which appears to have have upside potential) as well as other opportunities in China and PNG.
Hi Gazprom1 (Rusian connection ?), welcome to the NZOG thread.
A T/O of HRN is perhaps possible but it might be difficult for their shareholders accept anything less than 40 - 45 cents a share.
A script plus cash take over might be cheaper and might work.
For me the best fit would be PPP .......
Also here is a thoght outa left field:
BG manages to buy Origin and then divests NZ operations, including holdings in Kupe (50%) and Contact (51%). Could this open up some interesting options for NZOG ?
Z
.
Z,
As discussed here before, I think PPP could be a first step and then look for something else...Origin's NZ assets? Cost???
Re the Russian connection, I spent 5 years working in Russia running the Hermitage Fund...at that time it was Russian specific and we were large holders of Gazprom! Thought Gazprom would be a good name as it is a oil and gas co. and it has been very good to me!!!
Any thoughts on NZO going upstream? If Contact gets sold off by Origin the new owners might be interested in selling off the swift energy assets.
Dividends
There have been several comments posted recently about pampering to shareholders by giveing out a dividend.Also another about a div just because you can.I would like to add my 2 cents worth on that subject.
Surplus money must be the one area of discussion that all we long term holders and directors have thought least about.Prior to very recently the only connection we have had with money is finding it somewhere somehow to fund the three projects.It is only in the last 6 months this situation has explosively changed,so whoever comes up with an idea how to best spend money is treading on virgin territory.
My own is radically opposed to what i would have thought years ago.Mostly i invested in shares that had blue sky and sold out as production and income sent the share skyward,so have little experience in dividends and there effect on SP..Now i am staying and retiring with NZO so have to face the what to do with surplus money question..In the past i would have said never pay a dividend and let the sp rise by that much.However if anything i am a pragmatist and it seems clear to me that the NZ investing public want a dividend and measure the success or otherwise of a share on yield.My recent approach to the bank to borrow money to fund NZOOD conversion came right up against'what is the three 3 yield?'. Many discussions i have had with potential investers have stalled as NZO has no established yield.My attempts to say otherwise were always dismissed as yeilds are the in thing on this market and i will just have to be a pragmatist and accept that it works.
The recent 5 cent dividend confirms this.To my suprise the share price went up when if i thought about it at all should have dropped by 5 cents.So it now seems clear to me that the SP is marked down on lack of consistant divs. My final conclusion then is that dividends should be given until the point of gain starts to drop by the amount of the dividend,and i now think this because that is how the market wants it. In fact i would go so far as to say that we could unlock a lot of potential future inflow of sp appreciations by a regular income stream that formally went to the finance companies.
And my 2 cents worth:
I philosophically favour dividends.
There will be further explorations/perhaps acquisitions but they 'should' be paid for out of debt or capital raising (and don't forget there has been a recent share issue) as it isn't 'normal' for one part of a business to subsidise another out of company profit. Remember that one of the costs of development of new business is legitimately the cost of capital - part of that is the borrowing costs. Releasing retained earnings to shareholders keeps a company focussed on the profitability of the individual business units and forestalls a tendency towards cross subsidisation. In a way it forces a business to concentrate on units that are worthwhile rather that 'nice to do'.
I could also rattle on about investors perception and share price effects - but you've already covered that to good effect.
I tend to favor dividends myself, especially if there is a tendency for the share price to stagnate as is happening at the moment. When the co. announces the full year result we will know what their policy is regarding a full year dividend There is no reason why they cannot use some of their earnings to pay a dividend, and still retain a significant portion to fund an acquisition, or drill some of the more promising permits.
At the moment the Co. is only making a lot of noise about their future plans, but once they come clean, and make a decision one way or the other, the SP will fire up again. At the moment uncertainty about exactly how they will spend the money is having an effect on sentiment.
Thanks Digger. I have been following this site for a while and thought it would be good to be involved. There are some excellent posters and great chat about NOG which I find informative.
Would be happy to discuss Russia and especially the oil and gas situation when I was there (I finished in 2003 - valued my life too much!). The Hermitage Fund was/is a very aggressive investor in Russia and we used to be involved in many lawsuits against oil/ resource companies so that we could protect our interests. Inevitably, this lead to counter-lawsuits and threats on employees from the "mafia" owners. Bill Browder, the founder of the fund, is now banned from Russia by the authorities (no reason given) but still does business there and has started up a global fund.
Gazprom is truly an outstanding stock story. Up until 3 years ago, "local" shares could only be bought by Russians which obviously kept the price artifically low. Foreign investors, including ourselves, set up structures in regions of Russia to comply with the law but which enabled us to buy local Gazprom shares. The market was then liberalised and the share price skyrocketed. For example, during the debt default and currency crisis of 1997 we were buying gazprom at between US$0.10 and US$0.15. This year the price has been to US$14 and currently sits around US$12. Not too many shares that you can get 100 bagger on. Huge risk, huge potential reward.
Sorry for the length of the post but wanted to give a little bit of background to my investing history.
I agree with Digger etc, seems that this market likes regular dividend payments and the share price reacts in a counter-intuitive way...up and instead of down when a dividend is paid.
Thanks Gasprom1 for your first story.Naturally you will have many more.Is this Russian company not now the biggest oil company in the world,now that they have taken over most of Europe---a condition if they wanted supply.And what happen to that guy that used to run Gasprom that the russian sent to jail so he would sell to the govt.Not a nice place from what i have read.
The guy I think you are referring to Digger is Mikhail Khordorkovsky who used to control YUKOS. Shocking what the State did to his empire but he was not a particularly nice guy.
Gazprom has too much control of European gas supplies IMO. Russians can be volatile especially since Gazprom is State controlled. That is why NZ is a great place to invest when we as investors in NOG can have a voice that is heard.
Does anybody think that NOG could be raided/ taken over for its war-chest??
Thanks for the support about dividends but i am complaining that so far all have missed the central point.What i was trying to stress is that if a SP rises many times on a dividend as it did on the last one it shows that the lack of income is suppressing the SP.Then a dividend sends up the SP by that much ,the market is saying it recognizing the base underliying value is higher. I used to invest in GPG that gave regular divs and for a time afterwards the SP went down.The market in this case is saying we know all about your underlieing value and the div just comes off the SP. So my certral point is that NZO should look at div as long as the market continues to also increase SP.Esentially i am neither for or against a div but say lets let the market decide,but am defitinatly against if it just comes off SP.
Gazprom1.
Welcome to the site.
Miller, the Head of Gazprom is forecasting $US250/bbl for oil next year. These Russians know what they are talking about. Russian output is in decline.
For anyone who has read Twilight in the Desert; you should also read The Last Oil Shock by David Strahan...
superbly written... puts everything into chilling perspective...
Check out http://www.lastoilshock.com/
Cheers
BigBob
Ya can't complain much about an average of 35,000 Barrels at day since 1 July.
Quote:
Up to 3 August: Approx 1.2 million barrels. NZOG's share of production approx 150,000 barrels.
I know it is all down hill from here and some of the guys dont know it.
That's why I made a recommendation to Vince about his competition that we have a Pick the DOW competition. The trouble is when I went to post it I think Vince had shut the site down. Which was a pity I think .
Yes, I agree, the DOW goes way below 10,000.
120 tested and found wanting...Bugger
Quote:
Crude oil prices continue to fall
New 9:30AM Tuesday August 05, 2008
Oil prices fell below US$120 a barrel for a time in overnight trade as tropical storm Edouard skirted away from oil facilities in the Gulf of Mexico.
Crude is currently trading at US$121, down more than $3 a barrel on yesterday's close.
Falling demand in Europe and America and rising output by the world's top exporter Saudi Arabia are also being credited for the price drop.
In mid-July, oil prices reached a record US$147 a barrel.
- NEWSTALK ZB
NZO back of envelope:
Cash net of debt: $280m approx
PRC Stake: $171m at market price
Current market cap $633m
So the market really is valuing the cashflow from Tui and the Kupe asset at around $180m!!
Why is someone not taking over this company? Am I missing something here?
Tui perhaps making $650k NZD profit a day...
I for one would pay $180m for that, in fact I would probably pay $400m for NZOGs Tui stake. But no the market values the Tui AND Kupe stake at $180m, just crazy.
The current price assumes a collapse in oil and coking coal prices in my opinion, like down to $80 USD and $150/ton respectively.
If prices/exchange rates stay close to where they are then the lucky owners of NZO/Pike are in cream.
Cheers
Drone quote "...Am I missing something here?...."
Yep....The worst global financial crisis since the 1930's or maybe worse...a rather hostile environment for everyone don't you think?
Without doubt, but there are plenty of unaffected individuals/firms that should/do have plenty of cash, a takeover of NZO would be more than self funding even done entirely with debt. This should be meat and drink for soverign wealth funds, private equity, even high net worth individuals.
Good deals will still get finance IMHO.
Private equity could break it up, get hands on the cash to repay purchase funding, sell the PRC stake to overseas steel maker (who are buying at the mo (http://asterisk.tmcnet.com/news/2008/07/22/3559253.htm), cash and prc sale would probably net $550m. On say a $800m takeover price ($2.05), that would leave $250m to be funded from Tui and Kupe cashflows, so maybe $30m/ year "cost". I think Tui and Kupe could look after that ok..... all this totally leaves out condieration of further tui/kupe upgrades, or the exploration rights/opportunities.
Yes the ripple effect from the subprime has gathered momentum. Stocks such as nzo although looks great great on face value poses a risk like most other companies. hence why nzo is trading at a significant discount.
take us back 2 years in time. someone said the $nz at usd0.73 and oil at $100 in august 2008, tui increased reserves by nearly double and produced 15mbo, pike almost penetrated to the happy zone and kupe going well then most of us would be extremely content. The only difference is oil at $120 at the mo.
Markets are very volatile but what a stella performance by nzo.
discl. hold
Recently individuals and institutions took the opportunity to enter NZO at what could reasonably be seen as discount levels.
Both had a fair while to absorb the info out there + given the low entry point, most probably entered at, or toward, their maximum comfort level, including leveraging (see Leveraged Equities shareholding...)
Both did so to the tune of nearly $200 million - huge & outstanding but justified in a difficult environment.
As such I think the curent unreasonably low SP is a result of the fact there are not too many individuals/institutions out there who want to "get in" or increase holdings substantually as it can be reasonably assumed they are already in - and to the hilt.
In saying so I'm sure institutions don't kind cleaning up undervalued shares as disenfranchised individuals sell at below medium term value.
This, coupled with short term oil downside and uncertainty on NZO forward investment strategy (well the strategy has been spelt out), re-read as contracts, I'm not surprised.
Whilst slightly frustrating I think the current low SP is undoubtedly short term & I'm looking forward to the Kupe upgrade!
Chalice
Energy producers all around the world are accumulating good revenue and are cash richer...but their share prices are also off their highs for the year, and are "perceived" now to be cheap. There seems to be a rather large risk premium built in these energy producing stock share prices at the moment for some reason.
NZO is no exemption....yes, local factors (exercised options) don't help.
I am not sure at what degree the local factors has influenced the NZO share price, or whether it is more to do with the shift of available money away from the Global energy sector market causing an overall lack of momentum everywhere incl NZO.
Drone
Personally, I think takeover activity just adds extra risk which could in the future turn out to be unwise... taking in the consideration of a worsening hostile economic environment. Bank loans to oil companies normally carry high risk status, and in this current environment those high risk loans could be expensive. E.g PPP example,,,and that was when credit was easy and in a less risk adverse environment.
There are many more worse options than money in the bank (safe?) earning 8 to 10% interest. Can't think of many better options at the moment..I have the feeling, neither can the NZO management.
Hoop,
I think your points are valid except perhaps in the case of PPP (and maybe others). If NOG could buy PPP for A$200 million (45% premium to current market and I have no idea whether or not this would be enough to be successful). Fund it through PPP's own cash (A$100 million) and NZ$125 million of NOG's cash. If PPP is netting in excess of A$400,000 per day then payback on T/O would be 500 days from Tui project alone. Obviously this more likely to be 600 - 700 days as the field production declines. Potential returns are very attractive IMHO and I would rather NOG invest in PPP than leave all their money in the bank. They would still have more than NZ$150 million in the bank and would have nearly doubled their daily revenue. Only requires one of the AA banks to go west and some of our money could be lost..highly unlikely though!
This thought might well be absurd, but I'd be curious to hear the reasons as to why. Experienced oilers, why is the following idea unworthy of pursuit?
NZOG and our partners know the Taranaki Basin. Our knowledge extensive but far from complete. I think this knowledge separates us from our giant global competitors. Our ace up the sleeve.
There is a global shortage of exploratory rigs. "Get in the queue buddy, we'll ring you in 2 years."
I wonder if an investment in a crewed exploratory rig of our own is a feasible idea. Perhaps with a venture partner that has expertise in this area.
When it wasn't drilling NZOG holes I could the imagine demand for such a piece of professionally manned equipment being strong from other oil exploration companies in our relative neighbourhood.
Even if it was a good idea (and I have my doubts) I am not sure how many built up ready to go rigs are lying around waiting to be sold, with or without a full crew.
Nope, leave drilling to the drillers finding and selling oil is the bizzo for NOG