GNE - Genesis Energy

[xafalcon]

Didn't think this would get this low, the other generators have held up alright. Anyone got any theories or is this just random price wander?

It's all about the gas IMO. If you follow Transpower website you will see that GNE isn't running unit 5 (CCGT) very hard, and is using the Rankines. This doesn't make sense commercially

Either unit 5 isn't working properly after the repair, which I think is unlikely. Or Kupe gas output is not meeting expectations, which is more likely

Continuous disclosure rules require substantive information to be released to shareholders. I think there is an element of concern there may be a negative update around the corner,  which is weighing on SP

But there is plenty to be optimistic about - a large solar farm coming on-line Q1 2025 = very low cost electricity generation, and battery storage at Huntly providing daily arbitrage opportunities

[Toddy]

Lets see what NZO has to say about Kupe in their quarterly report update due out tomorrow.

[winner (n)]

May as well post here as well

GNE current yield after tax 5.66% v 10 year Govt at 3.35% .....difference of 2.31% points

Since listing that difference has been 3.9% points but there is a case to say last few years is more relevant and difference is say 3.0% points

So to maintain that 3.0% points difference GNE would be a post tax yield of 6.35% ....implying a share price ofvabout $2.00

Here's the updated chart of the difference between Govt 10 and GNE divie yield

Some would say that the difference is a reflection of 'risk'. Seems punters see GNE less 'risky' than in the past and are prepared to accept what's on offer. (My view is that GNE is still relatively 'risky')

Some will say this 'analysis' is a load of codswallop ..sobeit but it has served me well over the last couple of years iand avoiding the temptation to take a punt on GNE and avoided capital losses.

You cannot view this attachment.

[Basil]

Headliner investment newsletter reported that the freshly drilled well had not restored production as expected. $75m I think that drill program cost. Kupe in steep decline and running out quicker than expected.
I think the next field reserve review will come as a major disappointment.

Unit 5 being throttled back for a very good reason.

Very high 10 year Govt stock rate also a factor and I think there are very
serious questions as to whether the much lower dividend is really sustainable.
GNE's best days are behind it is how I see it.

[winner (n)]

GNE always talk about growth

Talk not reflected in the chart showing EBITDAF   

Wouldn't surprise me if divie was reduced again

[Plata]

The cost of coal generation with rankines at the cost of replacement at the moment is consistent with that of gas in unit 5. I wouldn't read too much into unit 5 vs rankine usage given this. The gas field issue is a concern in terms of kupe funding all the capex projects. Reducing the coal stockpile will also improve cashflow in the short term, makes no sense keeping so much coal on standby if none of the other market players are paying for it.

[Basil]

At Kupe, the KS-9 well was brought online in the quarter and
its performance is under investigation.

That's all it seems NZO said about the new well in their latest quarterly update here http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZO/430280/417543.pdf

[xafalcon]

It's all about the gas IMO. If you follow Transpower website you will see that GNE isn't running unit 5 (CCGT) very hard, and is using the Rankines. This doesn't make sense commercially

Either unit 5 isn't working properly after the repair, which I think is unlikely. Or Kupe gas output is not meeting expectations, which is more likely

Continuous disclosure rules require substantive information to be released to shareholders. I think there is an element of concern there may be a negative update around the corner,  which is weighing on SP

But there is plenty to be optimistic about - a large solar farm coming on-line Q1 2025 = very low cost electricity generation, and battery storage at Huntly providing daily arbitrage opportunities

Latest update is that gas supply is too tight and GNE will be importing more coal. Also, government is in discussions with generators, resources minister giving credit to GNE and Huntly, and stating this is a whole of power industry problem

It seems that GNE is getting some traction to get their role as generator of last resort recognised. Next step is to get it (the coal stockpile and potentially Huntly thermal assets) funded by all generators

[Davexl]

Latest update is that gas supply is too tight and GNE will be importing more coal. Also, government is in discussions with generators, resources minister giving credit to GNE and Huntly, and stating this is a whole of power industry problem

It seems that GNE is getting some traction to get their role as generator of last resort recognised. Next step is to get it (the coal stockpile and potentially Huntly thermal assets) funded by all generators

Long overdue IMO - esp since long-term dry-year risk unsolved by Onslow, still prob waiting on final Tiwai decision also.

[Basil]

Latest update is that gas supply is too tight and GNE will be importing more coal. Also, government is in discussions with generators, resources minister giving credit to GNE and Huntly, and stating this is a whole of power industry problem

It seems that GNE is getting some traction to get their role as generator of last resort recognised. Next step is to get it (the coal stockpile and potentially Huntly thermal assets) funded by all generators

Behind the paywall article in the Herald yesterday said gas was running out 30% quicker than they expected.  I drew the conclusion the ~ $75m they spent on the expansion well @ Kupe gave very disappointing results.  A really big negative for GNE is how I see that.
https://www.1news.co.nz/2024/05/08/genesis-energy-to-fire-up-coal-imports-amid-dwindling-gas-supply/
Indonesian coal to charge up EV's...when there used to be a coal mine in Huntly just down the road...oh the irony...you'd struggle to make this sort of thing up unless you were the script writer for Fawlty Towers.

[winner (n)]

GNE share price slowly but steadily creeping down to $2

NZ 10 year sill quite high

[Waltzing]

and just to top it all off no one is allowed to cook breafest tomorrow beteen 7 and 9 ...

no sneaking out to your local cafe for coffe and cooked scrambled eggs bacon and toast ...


https://www.nzherald.co.nz/nz/weather-power-cuts-possible-on-one-of-coldest-mornings-of-2024-auckland-in-for-frosts-subzero-temperatures-around-nz/LGNYJYUSLZA7VD7BOFRXICDRMU/

[Crackity]

A future made in Australia will need Australian gas. We will need affordable gas to support energy reliability for households and businesses as we move to a more renewable grid. We need gas to support Australian manufacturing and Australian industry, and tens of thousands of Australian jobs in the manufacturing sector.
Our region needs our gas to warm their homes and cook their meals. And to power the great cities of Asia. We need gas.....


Madeline King today

Jeez - the Ozzie's get it - money talks and ......

[Waltzing]

Oh my gosh ... Gas ... yup and europe is even powered by it...

now dont boil your jug this morning between ....

[Basil]

https://www.nzherald.co.nz/business/editorial-genesis-coal-gas-call-nz-needs-sensible-energy-power-supply-approach/ZY5PG4IBA5B6PKADDAIXPFCVK4/?lid=gf6zk70pmrrx  Paywalled

Excerpt: But we aren't able to guarantee a winter without potential blackouts yet. Gas has been a solution to fill the gap but supplies are falling. Genesis chief executive Malcolm Johns says gas production has dropped about 30 per cent faster than expected.

Glad my heat pump is working between 7 - 9 a.m. today but the system is starting to look like it's under considerable strain now.  Just as well we can rely on those Rankins burning coal to keep the heaters on.