AUT - Aurora Oil and Gas

[mir]

jancha
"Be interesting to see how many i recieve & if there's any sell down on the 27th with profit takers.
I was half expecting that today."

i would think most shareholders that applied for the SPP that were going to take profit would have sold by now.

 

[5haretrader]

Late night boredom got the better of me so I had a go at charting AUT. Very much a rookie at this but I'm very bullish on this one after having drawn lines all over the place .

Heres a few points:

• strong support at 66.5
• June 30 candle was bullish reversal hammer (support at 74)
• green pennant (higher lows, same highs) -> could breakout
• blue bull flag shows converging of trading range
• very dominant upwards trend
• Bollinger bands are tightening in upwards movement(sorry didn't include in chart)

 

[nulla nulla]

View attachment 38021

Nulla

are we seeing another bull flag . Its not a perfect flac pole, but then they dont have to be either. But the flag formation is showing a lot of resistance to falling. In a justified over supply position.

Today oil up sharply, DJIA up 202

Could be a break out day ???

Are we seeing another bull flag? No I don't see it. If anything the resistance level appears to be getting lower. I have attached two chart with this post. The first is a chart at close of business 23-07-2010:



and the second is a three year chart (is this from their start?).



The turnover of volumes in this share has only increased in recent months. In my opinion, the timing of the capital raising appears opportunistic with volume weighted averages to determine the issue price based on recent prices.
I am surprised that the takeup of rights was oversubscribed and I would not be surprised to see profit taking in the next few weeks/months.

I don't see the FA/TA in aut that would explain the price rise. In my opinion, the abscence of dividends, profit forecasts (and no basis for a price earning multiple to set a target price) make it hard to justify any long term investment. Given the current cost of money and the present global uncertainty, aut is not a share I would invest long term in.

From a trading point of view, aut appears to be encountering strong resistance at the current level and (in my opinion) it would be a high risk to enter at this point for a trade. Based on the historical information I would not plan an entry above the Capital Raising price of $0.75. I would be more inclined to wait and see if it did not drop back to the low $0.60's (or lower, $0.40?).

 

[condog]

5haretrader i tend to agree with your analysis.

Nulla - they have drilled simultaneous wells since Feb 2010 and have fantastic flows to sales which are currently repaying hilcopr. Each Well is around $16-$18M NPV been added. Which fully explains the rise in sp since early 2010.

What i cant understand is why anyone paid the prices they did for AUT back in 2007 2008. Right now its worth every cent, as explained in detail by both Hartlleys and euroz reports valuing it at 1.23 and 1.32.

 

[5haretrader]

Nulla, AUT certainly has the fundamentals to wave good bye to any share price under a dollar by years end.

The technical target to stay bullish with this would be for the share price to be at the upper green line once the shares get placed so any sell off stays within that pennant. If this stays true then I reckon we will breakout into the 90cent range.

If a selloff kicks the shareprice out of the green pennant then that blue flag I drew could turn out to be a reversal trend because the short term highs are decreasing. I think we would then be looking at hitting the 74cent support once the candles get to the pointy end of that blue flag. We don't want that do we?

So either we kick on out of this pennant into the 90s (I'm confident this is what will happen, hence my bullishness) or we retrace back down to retest 74.

 

[5haretrader]

Note that a retrace to 74 would test the bottom line of the trend channel that I drew, so hopefully it holds or we could be looking at new trends. Hmm...

 

[WRONG'UN]

I agree with Condog and Sharetrader.
I like the "flag", particularly as it's on declining volume.
Can I add that the current setup is similar to the last pause (Mar - April) - Bollinger Band "squeeze", touch of the bottom band, resumption above the mid range line.
The jury is still out on the MACD, but we could be at a cyclical low in that indicator - there is a rough timing symmetry.

Another way of looking at this is to look at the "expectancy". If we were to buy at the current sp of 0.84, with a profit target of 1.20, a stop loss level of say 0.73, and 50/50 odds, the expectancy of the trade would be
(1.2/0.84) x 0.5 + (0.73/0.84) x 0.5 = 1.15, which is quite OK.
What are the actual odds? - I don't know, they could well be higher - I'm sure Condog would say they are!

The following link may be of interest - the general environment may have contributed to the quiet performance of AUT recently.

http://www.321energy.com/editorials/hamilton/hamilton072510.html

 

[Slipperz]

Next week is going to see a big volume kick up in AUT inho.

A few profit takers from the SPP will be offloading to bargain buyers.

Overall sentiment in the US on the back of reporting season is bullish to date.

Oil and gas prices on the rise.

Once the dust from the SPP has settled I think a breakout towards the dollar is likely.

Looking forward to another weeks trading with interest.

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

 

[nioka]

Forget the charts. The fundamentals rule. The fundamentals say:

1.A new program, fully funded for multiple drilling.
2.Production will soon make a financial contribution as Hillcorp recover costs and surplus will be distributed to the partners.
3.Continuous flow of results expected from current wells with results of new drilling released on a regular basis.
4. Further upgrades from investment institutions expected on a regular basis.

The chartists that are predicting a rise will say "I told you so". Those predicting a fall will say that one is still coming.

 

[condog]

Forget the charts. The fundamentals rule. The fundamentals say:

1.A new program, fully funded for multiple drilling.
2.Production will soon make a financial contribution as Hillcorp recover costs and surplus will be distributed to the partners.
3.Continuous flow of results expected from current wells with results of new drilling released on a regular basis.
4. Further upgrades from investment institutions expected on a regular basis.

The chartists that are predicting a rise will say "I told you so". Those predicting a fall will say that one is still coming.

I wholeheartedly agree on this, theres enough fundamentals to throw the TA out the window altogether. However, some TA folks need charts as they for some wierd reason dont use FA as well and even the TA imo says BULLISH. I was using it to prove my point.

Fundamentals on thsi baby imo will drive sp for some time to come , assuming oil price holds and global outlook remains relatively similar.

 

[mir]

nioka
& 5. reserves upgrade, should be next week.
I'm with you 100% these chartists are doing my head in especially the negative ones lol.

Slipperz
"A few profit takers from the SPP will be offloading to bargain buyers."
why would they wait till next week to take profit?

 

[Slipperz]

nioka
& 5. reserves upgrade, should be next week.
I'm with you 100% these chartists are doing my head in especially the negative ones lol.

Slipperz
"A few profit takers from the SPP will be offloading to bargain buyers."
why would they wait till next week to take profit?

Uncertaintity?

Once the allocations are made and showup in the portfolio then people will make their trading decisions. Some may have a need for a quick 15% profit.

Those sophisticated types will have big holdings and there is going to be extra liquidity coming on market.

A few hundred thousand into the market will have an effect given recent volumes.

 

[mir]

Slipperz
the point I'm trying to make is, if there is a need for a quick 15% profit they would of sold their existing holding & have it replaced with the SPP.
"Those sophisticated types will have big holdings " so the $10000 or so they will get will be insignificant but I'm not sure if that is what you were referring too.

 

[condog]

kkr? can you confirm where your getting all that info on its "big profits in short spaces of time" aspect please?

KKR deal with hilcorp give a sniff of what the equity funds think of the Eaglefords ability to generate huge profits.

Last year KKR paid about $350 million for a minority stake of East Resources, earning a quick profit of more than $1 billion when Royal Dutch Shell (RDSA) bought most of the company's assets 11 months later. In June, KKR signed a deal with Hilcorp Energy, a closely held exploration and production company based in Houston, to develop the Eagle Ford formation southeast of San Antonio.
http://www.businessweek.com/magazine/content/10_29/b4187046879234.htm

 

[Sean K]

KKR deal with hilcorp give a sniff of what the equity funds think of the Eaglefords ability to generate huge profits.

Last year KKR paid about $350 million for a minority stake of East Resources, earning a quick profit of more than $1 billion when Royal Dutch Shell (RDSA) bought most of the company's assets 11 months later.

Interesting article. Nice work from KKR, they've made some good moves over time. Obviously..

Also part of the article:

Environmentalists have raised concerns about the impact of drilling for shale gas. And KKR's move into the field is an unconventional bet for a private equity firm that traditionally targets mature businesses with steady cash flows to use to finance takeovers. "Only time will tell whether these deals are good values," says Ellen K. Hannan, an analyst at brokerage Weeden & Co. "It is impossible to know until the fields are developed and the price of natural gas rises. If it doesn't, the companies better drill a lot of wells."

 

[condog]

Forward Cash Flow Model based on 21 wells by end of 2010

Note DYOR and seek advice as calculations may contain errors and do not guarauntee or imply future share price. They are merely my calculations.

I feel the 150 day projections are more realistic. Note oil price and gas price are lower then actual prices to allow for cash costs and production costs.

Also 21 wells should be achieved by end of 2010 but revenue for those will lag slightly. However having said that no future value is built in for untapped wells or reserves.

I personally would discount the 150 day sp by 25% which gives a valuation in my amatuer opinion of around $1.45 ish. Based solely on forward cash flow projections.

Click on image then maximise new window to make readable.

Allow discounts for tax and royalties etc

 

[condog]

Updated to allow for tax n royalties

plus 10% of following years cash flow revenues

happy to make mods, its just a ballpark projection.



Using the same methodology end of 2011 comes out at $3.87 minus say 10% dilutionary effect of CR, SPP or debt = $3.48 imo That needs discounting somewhaqt as 150 day flows wont be sustained. Allow 25% = approx which may be too harsh as ive applied it to the entire valuation and comes out at $2.61. Imo valuation will be above this figure by end of 2011. But thats only my opinion.

Always do your own research and seek expert advice. These may contain errors and are not to be relied upon in any way.

 

[BrightGreenGlow]

Those charts are all very nice and pretty but when a company posts good results don't the charts mean JACK? Surely only charts work when there are so many technical traders out there to make an impact?

 

[condog]

Condog was right and guess what hes thinking again?



Right now after good consolidation, a successfull CR and SPP, both massively over subscribed at 75c. 60+ days of consolidation establishing a massive round of new buyers entering betweeen 78c and 84c.

All the while hilcorp have continued to drill and frac some of the best acerage and wells in the entire Eagleford. All around us our neighbours and even our partners have attracted M & A attention on a truly global scale.

Oil prices have risen over 10% during this 60days, and oil futures look good at present. Hilcorp have announced an accellerated program with a 3rd rig due to arrive in 2011 and a full time frac crew.

Hartleys have valued it at $1.23
Euroz have valued it at $1.32

We have a reserve upgrade due out late this week or early the following week, which Hartleys mentioned might be upto the order or 300% upgrade.

Once again I think its a red hot buy. But DYOR and seek expert advice as I have been wrong before.

to me this is not just some garbage stock being pumped and dumped, its value increase has been supported by significant and real creation of underlying asset growth, through the drilling and fraccing of wells at $16.5M NPV per well. Like wise the discount applied to future reserves and futre wells is still painint a picture of very high risk and very low success. Clearly anyone thats watched the story unfold, knows theres risk, but also knows they now have the technology and procedures pretty well adapted to minimise that risk.

To me and Hartleys there seems to be far too much risk still built into the sp and valuations.

 

[condog]

lol kennas, somehow i think its slipping by the keeper here..

nulla i am thinking about the .40 bounce also, will it happen?


what else are they wrong on??

whats strange with the gas prices in the US slipperz.. is the massive expansions into the shales are producing so much gas, that imports are reducing, and gas prices look to be suppressed for a long long time.. and oil imho can not be looking at a run up unless something happens globally to drive it.. i see NIL there driving the US economy up. all indicators i look at are bleak..

for me, i see oil pipeline companies not really driving hard into the region for a long time, so where is all the gas going to go?

pipelines are at capacity in the region.. and you cant just flare the gas off

my view on gas is that its looking at a downward leg.. long term, and gas is at capacity in the region..

my oil outlook is undecided..

what do you see on the oil going slipperz yourself?

Perhaps anyone questioning the legitimate development by pipeline developers might be well advised to do some research.

http://www.marketwatch.com/story/en...tion-projects-2010-06-29?reflink=MW_news_stmp

From Article
In addition, the partnership recently completed several key, previously announced projects, including the initial 34-mile segment of the east-west rich gas Eagle Ford mainline and the final leg of the 62-mile White Kitchen Lateral. As a result, Enterprise soon will be able to fill the existing 1.5 billion cubic feet per day (Bcf/d) of capacity at its seven South Texas natural gas processing facilities.


Current production from the play is estimated at approximately 250 MMcf/d of natural gas and 15,000 BPD of crude oil and condensate.

Along with the natural gas and NGL projects, Enterprise continues to move forward on the expansion of its crude oil pipeline system into the Eagle Ford Shale play. The 140-mile pipeline, which originates in Karnes County, Texas and extends to Austin County, Texas, is supported by a long-term transportation agreement and progress is being made with other producers to provide crude oil transportation services through additional connections to the pipeline. The expansion is expected to be completed in the fourth quarter of 2011.

The above article states current Eagleford gas production is at approx 250MMcfgpd with current pipeline capacity about to be at 1.5Billion cfgpd.

Not sure where your getting your figures from Agent, but a 5min research reveals a very different factual story to that your purporting of late.