End of quarter results at end of this month
Full year results probably end Aug/early Sept
cheers Hoop
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have the financials ever looked as good as they do ? with tapis over $150 us wat sort of figure are we thinking reveue and profit ?
Thanks for the replies. It seems that this set of results should give the sp a nudge in the right direction.
I have only two real concerns about the directors of NZO and PPP.Hedging is a great winner for the hedging company but it was always going to be a failure for a start up oil producer.PPP has lost approx 40 million for this hedging for nil benfit because they forced to sell 750000 at 60NZdollars less than what it's market worth.In fact it is this failure to see through this stupity of hedging that makes me so anti-acquistion that both companies are now talking about.The banks obviously saw a big cut for themselves[indirectly of coa-rse] and were able to force both companies into a hedge.If either of these companies now go off on some spend up the tide could quickly turn and the companies are back into the hands of the banks.From my own experience i have been both under and free of the bank grip,and progress was easily greatest when not under their yoke.Just recently taken up a morgage with the bank but have told them if they get pushy i will sell stock and pay them off. Both NZO and PPP are now free of banks but my greatest concern is do the directors have the wits to maintain that status,and the importance of maintaining it. I note how quickly hedging companies sweet talk about forward selling as it was intelligent and responsible.
I don't think your figures are at all correct Digger. This is based on an earlier quote "In the 2007 Annual Report PPP state that they hedged by way of put options approx.719,000 barrels, being 50% of the FIRST THREE YEARS budgeted production and 22% of its total share of reserves (estimated at only 32 mill barrels for total project, at Report date). Hedging was to ensure that PPP would receive a minimum US$50 per barrel for up to 719,000 barrels, "even if the oil price dropped below that level ON THE RELEVANT DATES. The cost of these put options was partly offset by selling call options, which might require the company to deliver no more than 187,600 barrels at US$92 if oil rose above that price."
There are two types of hedging, based on put and call options. Put options are always good, as they give you the option to get a set price if the market falls under that price. Call options are the bad ones as they allow someone to buy at a set price even if the market goes above that.
If the above quote is correct then you guys are way off the mark. Only 187,600 barrels were subject to calls (at $92), and some of those calls would have expired while the price was under $92 and others will have been called while the price was somewhat less than $150. Not nearly as much loss as you are making it out to be.
Some of the 719,000 barrel puts will still be in place, although reduced as time has gone by and some expired. But those puts are good - it just means PPP is guaranteed at least $50 - in the event the price of oil tumbles. The put options obviously cost something to buy, but that was simply a cost of getting the capital required to develop Tui. Selling the call options would have helped minimise that cost. A necessary evil in this case.
Thanks, Unicorn. A good, clear explanation.
It could be argued that PPP have done very well with its hedging. Sold enough call options to obtain funding - and as an aside, I'm pretty sure I wouldn't have been prepared to lend to a small oil company without some such security - and offset them with a number of put options at a better price.
As far as the theoretical effect on the bottom line is concerned I don't see any point in trying to guess that. There wouldn't have been any production, at least for PPP, without the development funding.
;)