Digger.Are you going to stick with this stock or do I detect you are getting concerned?
I must confess that it is crossing my mind to move on.
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Digger.Are you going to stick with this stock or do I detect you are getting concerned?
I must confess that it is crossing my mind to move on.
We would all like every well to succeed. That's not going to happen. As we repeatedly state, exploration is a risky venture and each time we drill we are taking a carefully calculated risk, working with other companies and using the best information available.
NZOG has participated in the drilling of 12 exploration wells in offshore Taranaki in the past decade, at interest levels ranging from 10 to 40%. Two more wells will be drilled in the coming months. As stated since 2008, NZOG intends to spend an average of $20-25m per year on exploration, while also pursuing other investment opportunities.
Date Well
Feb 2000 Hochstetter
Feb 2003 Tui Commercial discovery
Apr 2004 Amokura Commercial discovery
May 2004 Pukeko
Aug 2004 Pateke Commercial discovery
Sep 2004 Kiwi
Dec 2006 Tieke
Aug 2007 Hector
Sep 2007 Taranui
Jul 2008 Momoho Sub-commercial discovery
Dec 2009 Albacore
April 2010 Hoki
May 2010 Tui SW ?
June 2010 Kahu ?
Notie, what benefit do you think is achieved by operating an exploration well? I can not see any reason why you do not let larger companies with specialist resources to do it.
NZO has only participated in 12 wells in a decade. That would be pretty expensive keeping the required resources on the NZO salary sheet.
I would also expect that the permit holder with the highest % of the permit would have the rights to be the operator. This would eliminate NZO from all the wells to date.
It's quite true that NZOG has not been the operator for any exploration drilling in the past decade - the company has been a minority partner in its joint ventures. You do not need to be the operator to be successful, as Tui shows.
[QUOTE=digger;301577]Digger this is an interesting comment especially coming from you. It was only 6-12 months ago that NZO was accused of sitting on its hands and not looking to grown the company. Exploration is absolutely a risk and reward game, the only way to grow the company is to drill wells. I think that NZO and David have proven that they are pretty balanced and do not take excessive risks but also are not risk adverse. The success rate of 3/13 is above the industry average.
The share price sucks but that is purely because NZO is on the NZ exchange. Remember Fletcher energy, Shell bought them out for approx a couple of dollars each. I have heard that the Pohikura permit alone is probably worth >$50 per share. I expect that NZO will probably be taken over in time.
Thanks Chris for reminding us of the reality of nzo share price,dividends and exploration .
However I am now a little confused as to the success chances of the Tui sw and Kahu .
I thought Tui sw was more an appraisal well and Kahu a riskier operation -is that correct ?
Is it possible that momoho might be commercial one day ?
If we accept Pateke and Amokura were appraisal wells, that implies we have drilled 10 wells with one success. That seems consistent with the often quoted odds. Perhaps we will get another discovery in the next 10 wells, but that is not certain. Of course we can hope it will be the first of the 10 not the last, and even better if we get 2 or 3 discoveries.
This is the business we choose to be in folks - plenty more dry wells to come!