1 00:00:00,280 --> 00:00:01,960 Speaker 1: So we may have a little bit of good news 2 00:00:02,080 --> 00:00:04,480 Speaker 1: out of our beliegue at oil and Gas sector. Resources 3 00:00:04,480 --> 00:00:07,680 Speaker 1: Minister Shane Jones yesterday claimed in Parliament that OMV, one 4 00:00:07,680 --> 00:00:10,480 Speaker 1: of the country's largest gas suppliers, has announced it's not 5 00:00:10,520 --> 00:00:13,119 Speaker 1: going to leave New Zealand after all. Director and head 6 00:00:13,119 --> 00:00:15,640 Speaker 1: of research it in an analysticate, John Kidd is with 7 00:00:15,720 --> 00:00:16,920 Speaker 1: us Now morning. 8 00:00:16,680 --> 00:00:18,759 Speaker 2: John, Good morning Heather. 9 00:00:19,200 --> 00:00:22,560 Speaker 1: Now are you seeing some potential here like is this 10 00:00:22,680 --> 00:00:24,880 Speaker 1: them saying we want to stay in New Zealand or 11 00:00:24,920 --> 00:00:26,480 Speaker 1: is it more of a case that they're trying to 12 00:00:26,480 --> 00:00:28,200 Speaker 1: sell their stuff. They can't sell this stuff so they 13 00:00:28,240 --> 00:00:28,880 Speaker 1: have to stay put. 14 00:00:30,480 --> 00:00:32,600 Speaker 2: I think it's more the latter of the two, owing 15 00:00:32,720 --> 00:00:34,800 Speaker 2: the has been known for the last couple of years 16 00:00:34,800 --> 00:00:38,600 Speaker 2: as having signaled to the market, it's been keen to 17 00:00:38,760 --> 00:00:40,880 Speaker 2: just to look at options to so New Zealand assets. 18 00:00:40,880 --> 00:00:44,320 Speaker 2: They tried just almost two years ago as part of 19 00:00:44,320 --> 00:00:47,519 Speaker 2: the bundled assets for the Asia pac business and they 20 00:00:47,520 --> 00:00:49,839 Speaker 2: weren't able to include New Zealand in that SSL, but 21 00:00:49,920 --> 00:00:51,800 Speaker 2: it didn't include everything else. And about a year ago 22 00:00:52,720 --> 00:00:54,760 Speaker 2: they announced that they were still keen to look at 23 00:00:54,760 --> 00:00:57,120 Speaker 2: options to sell their New Zealand business and of course, 24 00:00:57,200 --> 00:00:59,640 Speaker 2: the announcement last day or two is that that hasn't happened. 25 00:00:59,680 --> 00:01:02,320 Speaker 2: So I think it's more a case of having tried 26 00:01:02,360 --> 00:01:05,119 Speaker 2: to sell the business and having been able to in. 27 00:01:05,040 --> 00:01:07,040 Speaker 1: Which case it's not actually a good news story at 28 00:01:07,040 --> 00:01:09,160 Speaker 1: all because it means they don't wanted nobody else wants 29 00:01:09,160 --> 00:01:09,520 Speaker 1: to know either. 30 00:01:11,000 --> 00:01:14,200 Speaker 2: I think there's something to that. Yeah, yeah, it's you know, 31 00:01:14,520 --> 00:01:16,800 Speaker 2: it is what it is. They tried the market and 32 00:01:16,840 --> 00:01:19,480 Speaker 2: they settled on an outcome that is really just a 33 00:01:19,520 --> 00:01:22,760 Speaker 2: status quo. So it's in many respects it's just a 34 00:01:22,800 --> 00:01:25,600 Speaker 2: continuation of where we were and that will continue into 35 00:01:25,640 --> 00:01:28,080 Speaker 2: the future. The real question for the sector is, you know, 36 00:01:28,120 --> 00:01:30,360 Speaker 2: what does that mean? Because the sector is for each 37 00:01:30,440 --> 00:01:34,560 Speaker 2: fourth gas and it needs continual reinvestment into the sector 38 00:01:34,600 --> 00:01:37,080 Speaker 2: to be able to bring new guests to market. And 39 00:01:37,080 --> 00:01:38,720 Speaker 2: the question now for OMV and the rest of the 40 00:01:38,760 --> 00:01:41,319 Speaker 2: sector as well, is I only be able to do 41 00:01:41,360 --> 00:01:43,840 Speaker 2: that given that they had signal previously that they were 42 00:01:43,880 --> 00:01:45,360 Speaker 2: more keen to sell the business. 43 00:01:45,720 --> 00:01:47,960 Speaker 1: Well, I would say then, based on this that Shane 44 00:01:48,040 --> 00:01:50,600 Speaker 1: Jones is probably getting nowhere is he convincing investors to 45 00:01:50,640 --> 00:01:51,080 Speaker 1: come back. 46 00:01:53,680 --> 00:01:55,760 Speaker 2: Yeah, it's a really tough sell new Zealand, you know 47 00:01:55,800 --> 00:01:58,120 Speaker 2: the last five or six years. I mean, you've got 48 00:01:58,120 --> 00:01:59,560 Speaker 2: to think about OEMV and where they came in. They 49 00:01:59,600 --> 00:02:03,760 Speaker 2: actually the business from Shell in twenty and eighteen, literally 50 00:02:04,040 --> 00:02:06,000 Speaker 2: very very close to when the offshore oil and Gas 51 00:02:06,000 --> 00:02:08,720 Speaker 2: band was announced, and it hasn't many good news stories 52 00:02:08,720 --> 00:02:11,640 Speaker 2: since then. They have They have been a major investor 53 00:02:11,680 --> 00:02:13,520 Speaker 2: into the sector in the last four or five years 54 00:02:13,560 --> 00:02:16,480 Speaker 2: after having bought business that hasn't gone well. Gas is 55 00:02:16,480 --> 00:02:18,959 Speaker 2: where it is, and you know, the next chapter is 56 00:02:19,000 --> 00:02:21,040 Speaker 2: now upon us as to what happens. And as you say, 57 00:02:21,080 --> 00:02:22,799 Speaker 2: i ownv's now signal that they're going to be part 58 00:02:22,800 --> 00:02:24,760 Speaker 2: of a chapter going forward. The real question is are 59 00:02:24,760 --> 00:02:29,040 Speaker 2: they able to keep on reinvesting given the wouldn't say 60 00:02:29,040 --> 00:02:30,880 Speaker 2: they're a reluctant owner of the assets, but they tried 61 00:02:31,000 --> 00:02:32,600 Speaker 2: not to be the owner of those assets. So what 62 00:02:32,600 --> 00:02:33,239 Speaker 2: does that mean? Now? 63 00:02:33,680 --> 00:02:36,600 Speaker 1: Hey, I see Graymouth Petroleum announced last week it's getting 64 00:02:36,600 --> 00:02:38,240 Speaker 1: pretty good gas flows out of that. Well, they just 65 00:02:38,240 --> 00:02:41,000 Speaker 1: sputtered near Stratford. Do you think that this is material? 66 00:02:43,040 --> 00:02:46,000 Speaker 2: Well, any new gas is material. We've actually had a 67 00:02:46,040 --> 00:02:48,440 Speaker 2: reasonable flurry of half decent news out of the sector 68 00:02:48,480 --> 00:02:51,200 Speaker 2: in the last month or two OMV is actually drilling 69 00:02:51,480 --> 00:02:54,320 Speaker 2: a new well now, which is a bit of a 70 00:02:54,360 --> 00:02:57,160 Speaker 2: long burn. It'll come to mak probably in March next year, 71 00:02:57,320 --> 00:03:00,400 Speaker 2: which is going to bring this is the new part well, 72 00:03:01,440 --> 00:03:04,000 Speaker 2: very long well and will take quite some time to 73 00:03:04,000 --> 00:03:06,600 Speaker 2: make happen, and we've been waiting, frankly for years for it. 74 00:03:06,639 --> 00:03:09,320 Speaker 2: But that is now drilling. That should increase production by 75 00:03:09,639 --> 00:03:11,520 Speaker 2: maybe as much as ten percent just on that single 76 00:03:11,520 --> 00:03:14,120 Speaker 2: well across the entire sequel. So graham Mouth has had 77 00:03:14,120 --> 00:03:16,800 Speaker 2: some good news the scenes as well. There is now 78 00:03:16,840 --> 00:03:18,760 Speaker 2: some memourings out of the rest of the sector. If 79 00:03:18,800 --> 00:03:21,560 Speaker 2: there's another playings NJR Corporation a smaller player that had 80 00:03:21,600 --> 00:03:23,640 Speaker 2: some good news out of a well called Tariki about 81 00:03:23,800 --> 00:03:26,280 Speaker 2: two or three weeks ago. So you know, we're really 82 00:03:26,280 --> 00:03:28,600 Speaker 2: hoping that we're turning a corner really with Gaess Supply 83 00:03:28,760 --> 00:03:31,080 Speaker 2: we didn't into twenty five a bit of place what 84 00:03:31,120 --> 00:03:31,400 Speaker 2: we were. 85 00:03:31,440 --> 00:03:33,520 Speaker 1: Yeah, John, can we say then, based on this that 86 00:03:33,560 --> 00:03:35,560 Speaker 1: all of those predictions that we have normal gas left 87 00:03:35,760 --> 00:03:36,640 Speaker 1: is actually not true? 88 00:03:38,320 --> 00:03:40,640 Speaker 2: Well, it's never the case there's normal gas left. There 89 00:03:40,680 --> 00:03:42,800 Speaker 2: is always plenty of guests around. It's a matter of 90 00:03:42,800 --> 00:03:46,160 Speaker 2: being able to bring it to market. So what is 91 00:03:46,160 --> 00:03:47,840 Speaker 2: true is that you know, four or five years ago, 92 00:03:47,840 --> 00:03:50,120 Speaker 2: we had a market there was literally five hundred chero 93 00:03:50,160 --> 00:03:52,080 Speaker 2: drills a day. Today it's more like three hundred tera 94 00:03:52,160 --> 00:03:54,960 Speaker 2: duels a day. And when crunch time comes and low 95 00:03:55,040 --> 00:03:57,120 Speaker 2: hydro comes into the system, you need to fill it 96 00:03:57,120 --> 00:03:58,960 Speaker 2: with something else for that that gas just isn't there 97 00:03:58,960 --> 00:04:02,640 Speaker 2: anymore where in the guess, missiness, you're a constant in 98 00:04:02,640 --> 00:04:04,560 Speaker 2: the depletion business. You're winding down and you need to 99 00:04:04,600 --> 00:04:08,040 Speaker 2: keep you reinvesting to stand still. And we know that's 100 00:04:08,080 --> 00:04:09,440 Speaker 2: I guess the question out of the back of the 101 00:04:09,480 --> 00:04:12,040 Speaker 2: O m B. And now it is that investment that's required, 102 00:04:12,040 --> 00:04:14,360 Speaker 2: which is literally one hundreds of millions, probably into the 103 00:04:14,400 --> 00:04:17,560 Speaker 2: billions of dollars. Will that come now that the status 104 00:04:17,640 --> 00:04:19,880 Speaker 2: quo prevails and I m V is still in the sector. 105 00:04:20,120 --> 00:04:22,560 Speaker 1: Brilliant John, Thanks for talking us through it. I'm very 106 00:04:22,560 --> 00:04:24,920 Speaker 1: hopeful with that good news. That's John kid, the director 107 00:04:24,920 --> 00:04:26,160 Speaker 1: in the head of research at Analystic. 108 00:04:26,760 --> 00:04:29,640 Speaker 2: For more from the Mic Asking Breakfast, listen live to 109 00:04:29,760 --> 00:04:32,799 Speaker 2: news talks. It'd be from six am weekdays, or follow 110 00:04:32,880 --> 00:04:34,440 Speaker 2: the podcast on iHeartRadio.