AED - AED Oil

[Icharus]

Hi Michael,
AED has recently annouced 100mmbls in reserves although this is not 2p, I believe that the company will reaffirm these reserves when the puffin NE field flows commercially.

So if their estimate for field size is correct then at 30,000bls/day on 334day/year run equals 10mmbls. Production is forecast to go to 60,000 /day mid next year so it is probably fair to say 5 to 7 years at best without new discoveries and good field recovery

I was interested in your figures for EPS. Where did you get them from?
AED is forecasting operating a second well by mid 08 so I would have thought that 08/09 EPS should have been higher than 07/08.

Should be an interesting ride if the wells perform as expected.
Tight registry, Mkt cap near 1500 million is comparable to PPX which is in the S&P 100 index could force insto's to have to hold them which will create additional demand.

cheers and DYOR

Icharus

 

[michael_selway]

Hi Michael,
AED has recently annouced 100mmbls in reserves although this is not 2p, I believe that the company will reaffirm these reserves when the puffin NE field flows commercially.

So if their estimate for field size is correct then at 30,000bls/day on 334day/year run equals 10mmbls. Production is forecast to go to 60,000 /day mid next year so it is probably fair to say 5 to 7 years at best without new discoveries and good field recovery

I was interested in your figures for EPS. Where did you get them from?
AED is forecasting operating a second well by mid 08 so I would have thought that 08/09 EPS should have been higher than 07/08.

Should be an interesting ride if the wells perform as expected.
Tight registry, Mkt cap near 1500 million is comparable to PPX which is in the S&P 100 index could force insto's to have to hold them which will create additional demand.

cheers and DYOR

Icharus

Oh ic, 5-7 years isnt too much actually. those figures are consensus forecasts from a few brokers (taken from COMSEC). I think the 08/09 EPS is lower because of the lower oil price forecast assumption for that year etc

thx

MS

 

[Icharus]

Hi All

The challenge in valuing AED is what type of discount do you place the earnings.

Typically I have used PE of 10 as a benchmark which would value AED at 19 to $20 sp but I suspect the market is going to have a lower valuation.

Zinifex has about 7 year mine life ect and is valued at around 6 to 8 times last time I looked so if we took a similar attitude maybe AED is worth 12 to 16 sp on the brokers consensus.

Those brokers forecast do seem a little light on. It is hard to imagine that the price of oil is going to fall in half which is what they are concluding if AED is going to double production next year and yet have no increase in earnings.

The other factor is when AED earns $300 million plus per year but doesn't give dividends that is a lot of cash to use for exploration you would expect there to be some success thereby increasing resource life as they go.

Cheers Icharus

 

[resourceboom]

"Oh ic, 5-7 years isnt too much actually. those figures are consensus forecasts from a few brokers (taken from COMSEC). I think the 08/09 EPS is lower because of the lower oil price forecast assumption for that year etc"

Turn it up
What is the revenue over 5-7 years or 100MB ?? hmm approx 6-7 Billion revenue, plus they have some very large exploration targets.

Those broker forecasts (taken from COMSEC) would most likely not include the new plan of concurrently producing from the N and S as of mid next year!!

 

[imajica]

puffin might only have 7 or 8 years of production potential but with the huge injection of cash - AED will be poised for exploration succcess - huge amounts of money = an enhanced ability to find more oil - have a look at woodside and other massive companies too see the truth in this theory - AED will be huge for many years to come - if the market is going to give AED a discount P/E and not factor in pretty much guaranteed exploration success in the future (and over price dodgy spec stocks) then there is something very wrong with the market

 

[imajica]

"Oh ic, 5-7 years isnt too much actually. those figures are consensus forecasts from a few brokers (taken from COMSEC). I think the 08/09 EPS is lower because of the lower oil price forecast assumption for that year etc"

Turn it up
What is the revenue over 5-7 years or 100MB ?? hmm approx 6-7 Billion revenue, plus they have some very large exploration targets.

Those broker forecasts (taken from COMSEC) would most likely not include the new plan of concurrently producing from the N and S as of mid next year!!

In terms of raw revenue (before tax and costs etc) - the 100 million barrels is above tapis grade - so more like 8-9 billion ausse dollars

 

[laurie]

I find it absolutely amazing that one day its up .95c then the next day its down approx .40c then again I never understood when to take profits

cheers laurie

 

[Icharus]

Why worry about the waves on the beach ( daily movements up and down)
It's the tide that makes the BIG PROFITS

AED's tide is coming in and it sure looks like a King Tide, all that's needed is to wait for the news of 30000bls being pumped and continued exploration results and we should see a doubling of sp.

PE 10 x EPS of $2.00 = $20.00

Bought more today just couldn't help myself

Cheers Icharus and please DYOR

 

[surfingman]

PE 10 x EPS of $2.00 = $20.00

Thats an interesting pricing model there similar to relative P/E but not quite.

It's not even close to accurate for pricing purposes. The P/E is not known yet and can only be estimated which is anyone's guess at this stage, generally you use a series of historic P/E's to get future P/E and incorporate the industry or the appropriate market.

 

[imajica]

its funny how people get fussy with P/E's over companies that are making a fortune (or about to) and are somehow oblivious to various industrials and tech stocks that are dogs on p/e's of 30 or 40

AED will be raking it in + this will fuel intensive exploration + further success and expansion - the market likes a growth story with solid fundamentals - IMO you would have to be insane to sell at this stage

 

[laurie]

IMO you would have to be insane to sell at this stage

Well there must be a few insane investors on the ASX then if oil is that close,the only reason you would sell is for profits or hoping for a retrace if all is not well then again I was never good at Russian Roulette

cheers laurie

 

[imajica]

some pretty pictures of the oil platform

http://seaproduction.oppdateringsfabrikken.no/media/Prep_for_Sail.pdf

 

[rederob]

Thats an interesting pricing model there similar to relative P/E but not quite.

It's not even close to accurate for pricing purposes. The P/E is not known yet and can only be estimated which is anyone's guess at this stage, generally you use a series of historic P/E's to get future P/E and incorporate the industry or the appropriate market.

Really surfer?
How do you get these historic pes for a company that has none?
Pray tell.
And in the absence of what you need, what model would you choose?

 

[Icharus]

your right surfingman in saying it is not accurate but whatever model you use at this stage will be inaccurate for the following

1 Oil price
2 real rate of pumping
3 cost of running FPSO
4 oil field natural decline/reserves
5 exploration costs and development

so why go to the effort of using say a NPV model when in the end someone will say rubbish in rubbish out!

Also if you did use an NPV model and used irr of 10% and a heavy fwd risk factor of 50% for argument sake it would end up giving a number very similar to that I quoted.

Would it help if instead of saying PE 10 I used the term forward earnings multiplier 10?

The other thing is how conservative do you want to be?
I believe that the numbers used are conservative and yet they show we are still below half true value. When AED gets within a dollar or two of the estimation then revalue higher on more certainty but whats the point of saying $40 ps does it change your thinking about it being a strong buy.

I would have bought it even if there was a 50% return. Try finding that kind of return in a bank. So if it is easily calculated at 100% plus or 400% plus it is really a moot point.

I like to buy on fundamentals and sell when it's gone beyond fundamental and has triggered a technical.

At this point all I can see is that it appears fundamentally undervalued and that is why I have bought them

If you have a more robust valuation I would love to see it

Cheers Icharus

 

[surfingman]

Really surfer?
How do you get these historic pes for a company that has none?
Pray tell.

My point exactly, its still just a guess until so many variables are revealed in time.

And in the absence of what you need, what model would you choose?

I would use net present value and calculate this on expected flows or more accurately the initial flow rates when production begins.

Would it help if instead of saying PE 10 I used the term forward earnings multiplier 10?

I don't mind if you call it P/E or forward earnings multiplier, How do you get 10 as a true figure?

Whatever model you use at this stage will be inaccurate for the following:
1 Oil price
2 real rate of pumping
3 cost of running FPSO
4 oil field natural decline/reserves
5 exploration costs and development

That is too true, but I personally believe NPV can factor in some of these above variables through discounting.

If you have a more robust valuation I would love to see it

So would the rest of the world, but unfortunately I dont

 

[bigdog]

Why worry about the waves on the beach ( daily movements up and down)

Cheers Icharus and please DYOR

The SP is on a wave today and looking better!

Current SP:
AED $9.62 +$0.11 +1.16% opened at $9.30 with high of $9.68 and low of $9.27 79,731 shares $751,473 @ 03-Oct 10:23:02

 

[greenfs]

THE AFR this morning in Street Talk (Page 18 I think) indicates that UBS is placing a fresh buy recommendation on this stock with the target price increased by about $3 to about $11.50.

Let the good times roll for all on board. For those not on board, it seems that it is still not too late.

 

[gfresh]

It is gapping around a bit, as there is not a steady cue of buyers and sellers at various price points. It's smoothing out a bit more now.

This was largely because of the talk of INP pushed AED a little quickly to $9.80 (about a 10% jump), with vary few sellers at the time. It seems to be now hovering around mid $9 mark as regular trading is being undertaken.

My concern is when is the first production ann due out? Should have been about a week ago accordingly to the last release due to having to replace a seal. I may guess something is delaying it, maybe minor but nevertheless. Should people be cautious right now?

 

[laurie]

Just sent AED an e-mail complaining why no announcement about first oil if there is a problem TELL US

cheers laurie

 

[imajica]

off shore oil platforms are a complex undertaking - a few minor delays merely separates the strong hands from the weak - good for getting rid of the lemmings - the oil hasn't gone anywhere and the tapis price just keeps rising -a little patience will be rewarded IMO