AED - AED Oil

[oldblue]

Yes, a trading halt can only last for 2 days so the suspension only means that it is taking longer to get all the ducks in line.
As a small NWE holder, I'm thinking (hoping?) that the news will be good when eventually released. Besides, you wouldn't want to announce good news on a day like this!

 

[Justthinkin]

So this afternoons announcement says "... This proposal is from a
significant Company which has received all internal approvals and is for a majority interest in the Company’s assets...". As AED has circa $300M market cap and internal approval has already been obtained, that would confirm they are a large player or it's a really cheap price.

I'm curious though what represents a majority interest in the Company's assets. The transaction must be of the order $200M if they are to pay debt and creditors. Hmmmm!!

I think the next announcement will be interesting. If AED has its foot on the reserves touted and it's plight is not otherwise hopeless, difficult to understand against a background of $100 / bbl why it wouldn't take the parcel to market. Hmmmmmm!

 

[Weihuawang]

3:00 PM 03/03/2008

AED Oil Ltd has commenced negotiations with a "significant" company that has proposed to buy a majority interest in the troubled oil producer.

The negotiations started after AED assessed "a number" of proposals.

AED shares are currently in a trading halt. They last traded at $1.85 after reaching a peak close of $11.40 on October 17.

"The proposal is from a significant company which has received all internal approvals and is for a majority interest in the company's assets," AED said in a statement.

AED said it would be able to extinguish its bank debt and repay creditors if an agreement with the party was reached.

It would also end up with extra cash to spend on development and exploration opportunities.

The Melbourne-based group said in January that it had initiated a strategic review and confirmed it had received approaches from a number of parties after suffering problems with its Puffin project in the Timor Sea.

The company appointed Macquarie Group Ltd to undertake the strategic review after admitting the it required "additional funding" to pursue its opportunities.

Earlier this month, Norwegian firm AGR Group said AED was overdue in paying a $41.5 million bill. AED said it was confident of achieving a satisfactory resolution to the matter.

 

[prawn_86]

The way i read it is they are going backwards from producer to explorer stage if this goes through.

Not that they really have any choice, but theoretically the will be the same as any other O&G explorer. Not good for long term holders imho

 

[jet328]

The way i read it is they are going backwards from producer to explorer stage if this goes through.

You read wrong. AED's problem is that it doesn't have the cash to further develop the field & pay its debts. This farmin will allow them to retire the debt & have to cash to spend on further joint development. It doesn't say that they will stop producing anywhere. If you read previous announcements GCA & Schlumberger have outlined plans for remedial action on the current producing well.

Not good for long term holders imho

Not sure how you came up with this, but how were AED going to get rid of some debt & increase production (most important factor) without farming someone in?

Don't hold AED, but have an interest in NWE which has an ORR over the permit. Only good news for NWE which pays zero in costs & yet is exposed to the upside that further drilling will hopefully bring.

 

[prawn_86]

Because AED are in such a precarious position at the moment with regards to their debt, profits (or lack thereof), and field complications, I'm fairly certain anyone buying any form of stake from them will be able to screw them to the wall.

That is where the problem stems from. Even if AED do still hold part of the field, when (and if) production does increase, their stake will b a lot lower so the profits will not be as high.

They are in a ****e position and do not really have much room to move, hence why I think it is not good for holders.

 

[oldblue]

That's true. But better to have a smaller share of something that can be produced than 100% of an impossible "dream".

Mind you, as an NWE holder, it suits me fine, so long as someone pays the ORR on the Puffin field.

 

[impala_group]

True!!!

Either way, i think they'll get that oil pumped to the surface with a partner injected $$ (which will understandably take a lot of time negotiating a good deal for both parties) or asset sale (a shortterm fix to their cashflow problems).

 

[laurie]

Well at least hopefully there is no share dilution so the currency being used here is OIL and it being well over $100 a barrel who ever is the JV partner must have use for this oil interesting to see the sp on open

cheers laurie

 

[michael_selway]

Because AED are in such a precarious position at the moment with regards to their debt, profits (or lack thereof), and field complications, I'm fairly certain anyone buying any form of stake from them will be able to screw them to the wall.

That is where the problem stems from. Even if AED do still hold part of the field, when (and if) production does increase, their stake will b a lot lower so the profits will not be as high.

They are in a ****e position and do not really have much room to move, hence why I think it is not good for holders.

Hi do you know when theyare coming out of the halt?

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -18.2 9.7 60.6 133.2
DPS 0.0 0.0 0.0 0.0

Thanks

MS

 

[Justthinkin]

It would be fair to say that I've stared at this for sometime. If Macquarie were not involved I'd have a fair chance of solving the riddle but...

It seems to me that the Puffin NE reserves potential is not under question but the rate at which it can be extracted is. Actuals look like 10,000 bopd compared to touted 25,000~30,000 bopd. So if you were a believer in recent announcement whereby improvements to Puffin 7 could result in 2~3 times increased output, faith would be restored... somewhat.

Regretably, I'm no petrochemical engineer so I don't have any concept of how much rigs and undersea infrastructure might cost. If I follow the announcement trail it looks like AED acquitted anywhere up to $170M approx representing a share of jv assets plus money spent exploring Puffin SW. The unknown for me is (a) how much of the $170M is directly related to the NE infrastructure JV; (b) how much have the cost blown out; and (c) what % contribution this represents.

If you excuse my ignorance, I could easily conclude that the $170M represents 70% of expenditure associated with infrastructure which is the subject of a JV with a Singapore company (and Frontline Limited (A Bermuda listed coy...hmmmmm, Macquarie).Follow this logic and someone is into AED for $70M and will if solvent enjoy shipping of oils for sometime to come.

Best conclusion... a Singaporean or Japanese company will take a position but (wishful thinking maybe) not at extreme duress prices. There interest is to (a) preserve cuirrent investment and (b) enjoy 12% returns on infrastructure. Certainly the company has structured it's investment to offload as an infrastructure play.

My ignorant call...if AED can secure a reasonable tolling fee then it will sacrifice some value of a now heightened oil price for longevity and not lose to much on the way through. Not dead but certainly in need of some attention.

For those also long, I feel your pain!!!

 

[jimski]

I am a takeover/JV virgin....Can someone please explain what happens to exisiting shares in this situation?

 

[prawn_86]

Shares on issue will stay the same.

All that is happening is that someone is buying a stake in one of the companys assets.

So theoretically the SP should drop by as much as the asset % that they now no longer own, although surplus cash would also have to be taken into consideration.

So in other words nothing is affected apart from the price

 

[jimski]

Shares on issue will stay the same.

All that is happening is that someone is buying a stake in one of the companys assets.

So theoretically the SP should drop by as much as the asset % that they now no longer own, although surplus cash would also have to be taken into consideration.

So in other words nothing is affected apart from the price

Thanks for that. So, SP drop to reflect asset sale but presumably this can be positive for the SP in the long term if JV partner helps to solve production and other problems making the company more profitable?

 

[laurie]

Lets just wait and see what happens all of this speculation can lead to someone making the wrong investment decision no matter what we say here the market is always right

cheers laurie

 

[oldblue]

Whatever happens now will be positive for AED. Without a partner, AED didn't have the capacity to produce profitably from Puffin and would have faced a bleak future.
I see The Australian is speculating that North American oilers either Talisman Energy or Apache may be the JV partner.

 

[laurie]

News just out now.

60% Sinopec

40% AED

Sinopec Operator

full story at http://www.asx.com.au

excellent news for AED to have 40% of 100% rather than 100% of 0

cheers laurie

 

[laurie]

AED Oil is pleased to announce that Sinopec International Petroleum Exploration and
Production Corporation (SIPC), a wholly owned subsidiary of China Petrochemical
Corporation (Sinopec) and AED propose to enter into and consummate a transaction
in respect of the acquisition by SIPC of a 60% joint venture interest in the assets held
under AC/P22, AC/L6 and AC/RL1 (which include the Puffin and Talbot fields) (the Assets).
It is the intention of the parties to seek to finalise and execute documentation as
soon as practicable, which is expected to be within two weeks.
Key highlights of the transaction will include:
The joint venture proportions will be 60% SIPC, 40% AED.
SIPC will be the operator of the joint venture.
The transaction values the Assets at approximately A$1 billion.
The effective date, for economic purposes, of commencement of the Joint
Venture will be 31 March 2008.
The transaction is subject to third party consents including Government of the
People�s Republic of China, FIRB and NT Government. SIPC has already lodged its
application for FIRB approval.
The parties also have a mutual desire to expand their respective interests in the
energy market and plan to work together in a broader association to seek other
project opportunities in the region.
AED will utilize the funds received from the transaction to retire debt, settle its
creditors and fund its joint venture interest and development opportunities.
AED�s Board believes this transaction to be in the best interests of its shareholders
with a view to maximizing future value from its Assets.
Mr Dix, Chairman of AED, stated that he is delighted to have the opportunity to work
with SIPC in the development of the Assets. Having a partner with the extensive
experience and financial resources of SIPC will achieve the strategic objectives of AED
in seeking a partner outlined in our earlier announcements.

 

[Justthinkin]

After what could be loosely described as a hideous day in the market, AED goes and does this. This is not just news , it's GREAT NEWS!!!

It seems to me that if the deal is valuing the assets at $1B which is about 100% greater than our dear old asx (pre debt mkt cap say $0.5B) then I see nothing but blue sky!!! I think a "yippeee" would be about right.

Debt free. 40% interest in a good lease. AED not the operator. Does it get any better?

But wait there's more... I suspect a second player may express interest early in the week. Hmmmmmmmm!

Not advice... as they say do you own research!

 

[impala_group]

News just out now.

60% Sinopec

40% AED

Sinopec Operator

full story at http://www.asx.com.au

This looks good in comparison to where we were before. I hold afew with aed...i think this is good for SP..

-reduced debt on aed side...concentrate in more exploration & projects etc,
-the expertise that sinopac bring into the JV.

the point of concern though is the fact that the deal is yet to be approved by both governments. Its a tiny concern though...China would say no to oil especially from an economic point of view - good income earner to Aussie...