AUT - Aurora Oil and Gas

[condog]

Theres been a bit of talk of AUT cap raising in 2011. What time of the year is this most likely to occur?

This is a highly contentious and debated issue. Management reckons they have enough capital and cash flow to see the program with minimal to no CR, possible use of a debt facility or other options.

However. IF Hilcorp advance the program they may need more capital if they want it to proceed. I wouldnt be objecting as it will ad value quicker then the 5-10c price jab we cop. But managment have a clear preference to avoid much dilutive CR.

At the moment id rather focus on the massive injection of new purchasers having multiple brokers will provide. Sadjii, while your philosophy about having a rip roaring buying opportunity under the radar carries water, I now own enough that i definitely want a rocket under the sp.

I think we will see a Rancho completion announcment on or before monday with the possibility of T1 next week also. Depending on markets these could be significant price catalysts.

 

[Sdajii]

Whether you want that rocket fired now or later depends on whether or not you're planning to buy any more. I want to buy more before the rocket is launched, so I want them to stay low until I have the capital, which will probably be in about 2-3 months. You have no reason to wait. If I had the capital available today I'd be accumulating ADI rather than AUT, but that situation seems to change almost daily lately.

 

[condog]

Whether you want that rocket fired now or later depends on whether or not you're planning to buy any more. I want to buy more before the rocket is launched, so I want them to stay low until I have the capital, which will probably be in about 2-3 months. You have no reason to wait. If I had the capital available today I'd be accumulating ADI rather than AUT, but that situation seems to change almost daily lately.

To pull off a day trade that would be wise but imo for even a ST investment youd be crazy. Watch this psace in teh next few weeks and you will see why.

Agent may recall telling me i was almost crazy for picking AUT over ADI due to leasing costs back in Dec January, but ti has proven an excellent decision, and in my honest opinion the next few weeks with Turnbull will probably make that decision many times better.

Watch this space.

 

[Agentm]

dont recall that myself condog..

but you right to mention those leasing costs, they are off the dial and the more acreages you have the less capital you will have available for wells and higher and higher those leases become to renew each time a well is opened up.. with aut the biggest concern is the ability to retain acreages and the ability to fund those wells should they need development.

a week ago you told me you had an email with an assurance of no cap raisings for aut.. and now your not as assured? you seem to be an advocate of it and now see some benefit of having one? thats a huge turn around

its curious timings out there isnt it? new broker and all this talk of a cap raising by john campbell?

i think any cap raising will be unpopular.. but i dont think any of the jvp partners can ignore the future either.

watching that space for sure...

 

[condog]

i do , but thats cool - all good, ive got you to thank for AUT being on my Radar. A lot has changed in 6 months , with acerages no being a valuable asset and sought after chigh priced commodity, even an advantage.

ive got the emails alright, but since then theres been a lot of chitter / chatter about hilcorp advancing the entire drilling program.

My conversations / emails had no relevance to an advanced program, just the current program.

So with an advanced program my guess is as good as yours. But with no change im very confident we wont see a CR, or if we do it would be tiny and a last priority method. I think an SPP or debt facility is clearly the preferrred method.

I generally hate CR's but imagine what $15M CR at say 60c could do = 25M shares thus an 11% dilution, but it would fund an equivelent 10 wells at 25% interest on longhorn. you tell me that aint gunna blow 10 c to kindom come and back. On that basis an advancement of the program is welcome with a cR thats well timed and well priced. But ONLY if its for an advancement of the program.

10 wells on Longhorn could easily increase the mcap by 100M. / 245M shares = 41c per share added value.

I would happily welcome a 60c insto CR this week , but i dont think we will see it.

I sent a copy of Euroz report to Jon, hopefully it might appear or a reference to it on the web site.

 

[AngusSmart]

Condog, you were speaking of a rocket up the share price before.

hows this for an oil company on the LSE

http://www.londonstockexchange.com/...y-chart.html?fourWayKey=GB00B0FVQX23GBGBXAMSM

I hope atleast when there is CR we get an option to buy! not some shmuck banker that presses b instead of m..

 

[condog]

Condog, you were speaking of a rocket up the share price before.

hows this for an oil company on the LSE

http://www.londonstockexchange.com/...y-chart.html?fourWayKey=GB00B0FVQX23GBGBXAMSM

I hope atleast when there is CR we get an option to buy! not some shmuck banker that presses b instead of m..

Read the two news announcments that go with it, that imo will retrace back down by half or more as its still speculative. AUT on the other hand is clinical, strategic, progressive and very much de-risked.

When you look at that co, it makes AUT look excellent.

 

[estseon]

The previous plan was to start the ramp up of Longhorn & Ipanema in 2011. AUT's cash looks fine for anything on S/L or ADI (which has the same WI) has got its figure wrong, which is unlikely. So a CR will be for drilling in the other 2 acreages. What's the problem? The BBs have got obsessed with dilution or potential dilution from new issues. If you want to hedge against a "moderate" CR to fund development of the other acreages, add now 20% to your holding and you should be well covered. With Rancho due soon, a possible rescue of Kowalik and Turnbull 1 also relatively soon, an early CR should be at a higher issue price anyway provided that calm is restored to the markets. So, then you can jeer at those who waited for their rights to hold their indirect interest in the acreages firm and, if there is a rights issue, you could trade it.

If you are not expecting the price to move higher with further S/L results, Turnbull 1 and restored calm to the markets, then perhaps you should consider cashing in.

I'm trying a different strategy. I switched my holding back into ADI with the hope of returning with a larger holding sometime soon. The ADI SP has been thrashed for some reason and so I'm taking risk on it regaining lost ground against AUT. Anyone can try that. I hope to 'make' double the potential dilution. So, don't worry about the potential/prospective CR, hedge against it.

 

[estseon]

Re Depletions:

Go to http://webapps.rrc.state.tx.us/PDQ/quickLeaseReportBuilderAction.do

Lease 245465 (gas well) district 02 for the period 1/1/09 to 1/1/10 Baker 1

The production is all over the shop but at Jan 09 was 10.3 MMCFG + 2,148 bbls and in Jan 10 was 25.6mmcfg + 1,867 bbls.

It was obviously shut in during part of Sep 09 for further works. Possibly Nov 09 also. COP won't stop tinkering with them. It's in the chalk. EME has an interest in this one.

March 09 was 47.2 mmcfg + 3,862 bbls - that was the peak.

So Jan 10 was 50% of the peak subject to the caveat that the operator is constantly tinkering with it. The 12 month comparison gives 250% gas and 85% of oil - no depletion if the two are taken together.

These are actual results in Live Oak, next door.

 

[condog]

I'm trying a different strategy. I switched my holding back into ADI with the hope of returning with a larger holding sometime soon. The ADI SP has been thrashed for some reason and so I'm taking risk on it regaining lost ground against AUT.

Esteon, this is the craziest thing you have ever said.

And by the way esteon is usually one you can totally trust to speak total sense.

I agree ADI is oversold and when the backlog of mates rates - oops i mena institutional investors clears, they will respond. But in that time which could take a week to 3 weeks depedning on volume, we are likely to see not only Rancho, but most likely Turnbull 1 , possibly turnbull 2 Ip's by then. If Turnbull 1 comes out brilliant, at a 25% interest, hence 250% revenue stream compared to AMI wells AUT could get a massive rerating, brokerage update, or sp boost.

Its a brave or stupid or brilliant move which only time will tell. But i dont think its hedging, i think its crazy, but i totally respect your right and opinion to do so. Fact is though chase the best growth opportunities you see available.

 

[mir]

condog
i have to agree, my major holding is AUT & never sold a share ,i did hold about 500000 EKA but down to 150000 now & buying AUT (on my first sale of EKA i got 1 AUT for 3 EKA , my next sale i got 1 AUT for 4 EKA) if i can get 1 AUT for 4 EKA on the result from rancho i will take it as i believe after rancho the news flow & activity for ADI & EKA will be slow for a few months & all eyes on AUT.

 

[condog]

condog
i have to agree, my major holding is AUT & never sold a share ,i did hold about 500000 EKA but down to 150000 now & buying AUT (on my first sale of EKA i got 1 AUT for 3 EKA , my next sale i got 1 AUT for 4 EKA) if i can get 1 AUT for 4 EKA on the result from rancho i will take it as i believe after rancho the news flow & activity for ADI & EKA will be slow for a few months & all eyes on AUT.

Yeh, not only that but as i said with the Turnbull wells they are 250% earnings accruive after cost recovery by hilcorp. Which is like having 2.5 wells on the AMI for AUT and none for EKA or ADI. So if by then end of the farmin on the AMI, there is Kennedy, Weston, Easly, Morgan and Rancho Flowing, then turnbull 1 and turnbull 2 flow prior to him getting back into AUT, then AUT would in my opinion get a 5 AMI wells equivelent IP jump in share price on ADI and EKA. ie they would have 5 wells at 10% = 50% net well, where as AUT would have 5 at 10%+ 2 at 25% = 100% of 1 net well.

The two turnbulls have the potential in my opinion if they are good to do to AUT what the 5 wells have done for it. In other words 4 wells took it from approx 27c to 71.5, Rancho it mught achieve 80c . which is an approx 53c jump around 200%. Technically two good turnbull wells could also give a 53c jump in sp to 1.33 or so? ITs only a guess, but by providing the numbers here it explains my thinking. Even if Rancho can only get AUT to 75c, then thats a 48c rise and the turnbulls 1 & 2 have the potential to take it another 48c or so to approx $1.13 in the next few weeks.

I agree ADI is under priced to billy o due to CR, but sellling AUT's now in my opinion is questionable at best. Esteon each player has his own tactics and go for it if you believ its the way to go, im not bagging you, but i think that strategy might come un stuck and i wouldnt like to see others pinning hopes on it. But who knows AUT might hit resistance while ADI rebounds and you might laugh all the way to the bank. But imo thats not as likey to happen as the scenario above, as ADI is likely imo to be littered with 22,000,000 sellers plus the traders jumping on deck likeyourself because its cheap who all will presumably off load for a few cents profit, holding the price down for up to a month or so imo. With a bit of luck for ADI holders som instos will exercise some restraint, but its likely they will see a quick profit and just jump out.

All opinion. these prices are just guesses, so DYOR and seek expert advice.

 

[estseon]

"Esteon, this is the craziest thing you have ever said."

You could be right, Condog. But ADI has heavier gearing to Rancho on a per share basis and Rancho must be soon. It is inevitable that price dislocations between the JVPs will appear from time to time and ADI is being trashed for some reason. Ultimately, I'd like to even up holdings in the two companies. But for now, ADI has some catching up to do. That's just my view, of course. If I'm wrong, I may lose some of the gain that I have earned on AUT but that is investing. If I had not, in February, acted on the view I had that AUT was badly undervalued as compared to ADI, I wouldn't have made that gain anyway.

As it so happens, I found it surprisingly difficult to buy the ADI shares. There was a bit of volatility and I can only use limit orders. But even so, I was a bit surprised.

It says nothing about my view on AUT as an investment - I'll be back at the right price ratio. I certainly want to be back in before the ramp-up - that is, the new programme for Longhorn and Ipanema. Actual prices are not of concern to me at the moment. They will be only relevant to me when I will be thinking of cashing in part or all. That won't be until Q1 2011 at the earliest unless something extraordinary happens or I need the cash. However, rumours of the new government's intentions for UK CGT might force me, if true, to deliberately trigger the gain before April 2011. Plenty of time to worry about it and I might do a 31 day switch to achieve it (there are anti Bed & Breakfasting rules) but stay invested. It might cost me money but not as much as the tax being rumoured - up to 50%.

So, you could be right, or I could be right. But, if there's a chance to add to my holding, I have to consider the balance of probabilities and that's how I read it at the moment.

 

[Slipperz]

Looks like the US is bringing in an emissions trading scheme.

If ratified this will have to be good news for the natural gas industry, especially with regards to power station construction.

The fact reserves are plentiful and plays like the eagle ford are coming onstream in the US may actually work in our favour in coming years.

http://www.smh.com.au/environment/australia-left-behind-by-us-emission-trading-bill-20100512-uy9m.html

 

[condog]

Yeh ive been mentioning this for a while. Lots of US energy users are making preperations so that when / if legislation arrives to smash their emmissions they can survive. Right now the logical move is to shift to gas at low prices and plentiful supply for the next 20-100 years.

Its a good hedge to have.

 

[condog]

Esteon has founder an article of very high interst that sparks a few amazing options for the JVP's and in my opinion and clearly esteons may be the reason for the CR from ADI so soon

Dont shoot the messenger

http://www.advfn.com/cmn/fbb/thread.php3?id=15569579&from=80490

If so, that might explain why ADI needed the capital.

Note, another positive comment re Kowalik.

F I V E rigs - find it difficult to believe - for the whole 6 months, that could translate into 25 - 30 new wells, if Hilcorp can continue current drilling rates, and the SP going into orbit.

Consider the implications if this is correct.

At some point in Q3 or Q4 the JVP,s will decied they have enough cash and are close enough to being earnings accruive to accellerate the program if thats the intention of Hilcorp.

At that point say they go to 3 rigs. thats say 120- 180 days before they see the cash flow from the first 3 they drill. In that 120 - 180 days the 3 rigs will presumably drill and frac 12-18 wells.

So "if" hilcorp can drill and frac in short windows of time, thus reducing drilled inventory costs to the JVP's, (ie dont leave drilled holes waiting for frac crews, because of the Capital shortage it creates) , then potentially this is very feasable. At say 10% interest the parties would need to be able to cover a capital expense of apporx $9-11 Million to get a 3 rig program off the ground.

another way of looking at ti is. If they start with a 1 rig program they need approx $3-$5M imo to cover the CAPEX. If they then want to accellerate the program, depending on flows and costs imo, they need an extra $3-5M per rig they want to add to the program.

So if we assume the current free carried wells become earnigns accruive to AUT in say Early October at a rate of conservatively $1.5m per month.
They will likely have enough cash to begin its own JVP/hilcorp drilling program with a one rig program in August. Or a 2 rig program in mid to late September.
They could then add a rig every 3 - 4 months imo.

I estimate they need minimum $9M to get a three rig program up and running when they are close to being earnings acruive form current program.

So i think this blokes top end of 5 rigs in h2, is overly ambitious, but certainly a 3 rig program is an outside possibility. Likely scenario imo is 2 rigs till early 2011, escalating by a rig every 3 -5 months or so.

 

[Slipperz]

US natural gas reserves at at an all time high yet the price continues to rise.

http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp

Either consumption needs to rise or the price is bound to take a hit at some point.

Was a good week for AUT holders again. Personally I took a bit of profit off my AUT for a speculative buy on AED which has had a nice run up this week also. If they do happen to hit an oil reservoir in Brunei the price rise will be spectacular.

General market conditions seem to be negative yet these two stocks have strong buy/sell ratios and are in a strong uptrend.

Looks like Monday will be a sea of red. I hope Rancho results don't get released on Monday like the last amazing result got trashed by a wave of panicked sellers.

 

[condog]

Looks like Monday will be a sea of red. I hope Rancho results don't get released on Monday like the last amazing result got trashed by a wave of panicked sellers.

One mans loss in anothers buying opportunity. Gives those who want more a great opportunity if it does get smacked around by the general market on or after a great result. Play smart

 

[condog]

Tree shakers in trying to make it look like the stocks going up and down

Reality, market will drag it down slightly imo this morning, buut like last time we where extremely resilient and we bounced almost first. So opportunities might be limited??

Enjoy the volitility this morning.

While we await the next two brilliant flows??

That big morgan sucker must have almost paid itself off by now and will soon be contributing toward rocketing the repayment of other wells. Got to love morgan.

 

[Speculator]

Tree shakers in trying to make it look like the stocks going up and down

Reality, market will drag it down slightly imo this morning, buut like last time we where extremely resilient and we bounced almost first. So opportunities might be limited??

Enjoy the volitility this morning.

While we await the next two brilliant flows??

That big morgan sucker must have almost paid itself off by now and will soon be contributing toward rocketing the repayment of other wells. Got to love morgan.

Nice to be wrong for once huh Condog

Adi take over offer (although despicably low) has finally given the play the attention it deserves, momentum really building and with a nice flow of news inc I have never been happier to hold a stock.