AUT - Aurora Oil and Gas

[condog]

Deals of the day -- mergers and acquisitionsFriday August 27, 2010

India's Reliance Industries Ltd is a likely partner for Chesapeake Energy Corp's Eagle Ford shale acreage, a U.S. brokerage firm said on Wednesday

http://www.forexyard.com/en/news/Deals-of-the-day-mergers-and-acquisitions-2010-08-25T200058Z


Capstone Turbine Corporation Receives Order for 18 C65s for Prominent Oil & Gas Developer in Eagle Ford Shale Play

The 18 low-emission C65 microturbines will provide prime power to central processing facilities and metering stations at remote well sites in the Eagle Ford shale play in South Texas.

Posted on 08/25/10
http://www.benzinga.com/pressreleas...n-receives-order-for-18-c65s-for-prominent-oi


Eagleford Energy Inc. (EFRDF) Signs Agreement to Purchase Private Oil and Gas Company


Eagleford Energy Inc. announced that the company has signed an agreement to purchase a private oil and gas company that owns properties that are prospective for the Eagle Ford Shale in Texas.

Eagleford Energy Inc. is purchasing Dyami Energy LLC for total consideration of $4.1 million.
........
The leases total approximately 5,300 gross acres in the Maverick Basin of Texas, and are prospective for the Eagle Ford Shale.

AWE Limited Reserve Statement

No reserves were attributed from the recently acquired Adelphi Energy Limited ("Adelphi") shale gas assets in the prospective Eagle Ford trend. The net share of the previously reported Adelphi reserves equate to approximately 6.3 million BOE. These incremental reserves are expected to be added to the AWE portfolio in the 2011 financial year.

A REVIEW OF SHALE GAS PLAYS IN NORTH AMERICA

A really nice article, particularly if your looking for other investments.

Eagle Ford Shale
The Eagle Ford shale formation is situated in South Texas runs from Laredo to Houston Texas. It is located directly below the Austin Chalk. The Eagle Ford produces both natural gas and oil, but it is the oil-producing and gas condensate areas that is active at this time. Average thickness is about 500 feet. The more active part of the region is mainly in McMullen, Maverick, Dimmit, La Salle, Karnes, Live Oak, and Atascosa counties. Apache Corp. and EOG Resources are two of the largest lease-holders. Other major players include Petrohawk, Swift Energy, ExxonMobil, ConocoPhillips, Murphy Oil, Chesapeake, Cabot Oil & Gas, and Pioneer Natural Resources.

http://www.glgroup.com/News/A-REVIEW-OF-SHALE-GAS-PLAYS-IN-NORTH-AMERICA-50172.html

Eagle Ford Oil & Gas Corp. Announces Acquisition of a Farm-in in Live Oak County

.....acquisition of a farm-in of a 1% working interest in 2,400 acres and the drilling of two wells in the Eagle Ford Shale formation located in Live Oak County in South Texas. The Dena Forehand #2H and the Kellam #2H have been drilled but not completed. The fracturing of these two wells has been scheduled to occur during the next 20 days. Eagle Ford Oil & Gas will continue to participate in the drilling of additional wells in this lease and anticipates a total of 14 wells will be drilled over the next 48 months.

http://www.prnewswire.com/news-rele...f-a-farm-in-in-live-oak-county-101415839.html

 

[condog]

Oil up after 5-day loss, eyes equities, heating oil

(Reuters) - U.S. crude oil futures on Wednesday rebounded from an 11-week low and five days of losses as the market shrugged off government data showing across-the-board rises in crude oil and product inventories last week.

Oil prices found their footing after five straight days of losses racked up amid worries that the economic recovery was stalling and with it keep oil demand sluggish.

U.S. crude for October delivery was up 64 cents at $72.28 a barrel at 1:58 p.m. EDT (1758 GMT), after earlier falling as low as $70.76, the lowest price since early June.

......
"Crude futures also appear short-term oversold and may be poised for a rebound," Ilczyszyn added.......

Analysts emphasized that, with the summer driving season winding down, the energy markets were looking to shift focus on heating oil futures ahead of the winter.

"It's that time of the year when traders begin selling gasoline and buying heating oil," said Ilcyszyn.

Data from the U.S. Energy Information Administration showed crude inventories rose 4.11 million barrels in the week to August 20, dwarfing a forecast for a build of 200,000 barrels.

However, crude oil inventories at the key Cushing, Oklahoma, delivery hub fell 779,000 barrels to 36.3 million barrels, about the only bullish feature in the weekly report.

http://www.reuters.com/article/idUSTRE67M3KQ20100825




OIL FUTURES: Crude Ends Higher Despite Weak Inventory Data

Market watchers said the rebound appeared to be a technical bounce after the steep fall from above $82 a barrel since early August. Seventy dollars has been a rough level of support for prices over the past several months, and the inventory report offered traders betting prices would fall a chance to lock in profits.

...."It's one of those things where we've been down for numerous days in a row, the market is oversold," said Tom Bentz, a broker and analyst at BNP Paribas in New York. ......

http://online.wsj.com/article/BT-CO-20100825-711697.html


China's Crude-Oil Demand Growth May Slow in Third Quarter as Economy Cools

China’s apparent crude demand growth may slow “noticeably” in the third quarter as the world’s fastest-growing major economy cools, said the China Petroleum & Chemical Industry Association.

The nation’s oil demand, including domestic output and net imports and excluding inventories, may rise 5.8 percent to 108 million metric tons, or 8.6 million barrels a day, the association said in its monthly report posted on its website today. That compares with the 15 percent gain in the second quarter and the 22 percent increase in the first, according to government data.

http://www.bloomberg.com/news/2010-...-growth-may-slow-to-5-8-association-says.html

India overtakes Japan in demand for oil

India overtook Japan in demand for oil among Asian nations in the second quarter of 2010, reflecting its rapid economic growth, according to Platts, a provider of information on energy and metals.

The country’s demand for oil in April-June stood at 3.1 million barrels per day (mbpd), marginally higher than Japan’s 3 mbpd. China, with a demand thrice the size of India’s, registered the highest demand for oil in Asia.

“The growth in India’s oil demand is an indication of an economy doing well,” said Vandana Hari, editorial director, Asia, Platts. “The Indian economy was not as badly hit by the slowdown in 2008 as it is not as dependent on exports as China or Japan, and staged a faster recovery than its Asian counterparts.”


http://www.livemint.com/2010/08/25210224/India-overtakes-Japan-in-deman.html?atype=tp

BP chief economist sees oil at $70-$75/b until mid-2011

The crude oil price is likely to remain largely in a $70-$75/barrel
corridor until at least mid-2011, BP group chief economist Christof Ruhl said
at the ONS 2010 conference in Stavanger, Norway Wednesday.

But around that time something would have to give, he said, as inventory
levels started to return to normal.

He said either OPEC would then have to move to increase production at
that point, or else prices would then rise.


........ The greatest area of uncertainty over the energy mix for the next 20
years was the interaction of gas and coal, especially in power generation, and
how big a market share they would take, Ruhl said.

Gas had climate change benefits, and if more countries had access to
local shale supplies in the future, might be as acceptable on security of
supply terms as local coal.

http://www.platts.com/RSSFeedDetailedNews.aspx?xmlpath=RSSFeed/HeadlineNews/Oil/8909059.xml

 

[condog]

It is also important to factor in market cap and the ability to finance any development with funds on hand until the companies are cash flow positive. The earlier wells on the joint venture will be cash flow positive before the later turnbull ones. Remember ther eis also a big difference in 4 to 1 and 5 to 1. there are 10 decimal points there and the value is probably somewhere in between.

My guess is about 4.2 to 1 with that possibly changing in favour of EKA when the value of their new lease areas are clearer.

Well Nokia so far youve been the undisputed king of trading the splits on these, so people would be very wise to listen to you on this one.

But im in slight disagreement, not with your rational, just your final figure. imo theres been too much Longhorn development, development planning, they have a partner and a brilliant partner secured and its all funded. We know the acerage is high liquids and economic.

A lot of that was up in the air 6 months ago when 4:1 was the ratio. So i guess its a question of , when will punters jump to AUT for the 2011 growth and security it offers over EKA in 2011 and what price will they pay to make the switch???

Its been a long and successful split ratio so it might take a while to snap, but imo im certain it has to. For me personally id rather take what imo is a much safer and fairly high return with AUT. But im sure others will go for the low mcap growth EKA offers.

 

[Kremmen]

Yep thats what im sayong. All other factors being equal. ie development pace, operator etc etc , AUT has 4 x the acerage hence 4:1 ratio.

But once you then consider the differing development stages etc etc explained above, AUt deserves a premium and a significnat one as 2011 approaches imo.

AUT has 4x the acreage, so it would be fair to use a starting point for market cap ratio of AUT:EKA as about 4:1.

However, AUT also has more than 1.5x the shares on issue. Therefore, the starting point for value per share is about 2.7:1.

 

[Kremmen]

For me personally id rather take what imo is a much safer and fairly high return with AUT.

This makes no sense to me. EKA looks to be the safer stock. It can just collect returns from the AMI, which has been producing for some time. For its premium over EKA, AUT is depending upon additional areas which haven't been drilled yet. They will probably, eventually, lead to greater returns, but that's longer term.

 

[condog]

This makes no sense to me. EKA looks to be the safer stock. It can just collect returns from the AMI, which has been producing for some time. For its premium over EKA, AUT is depending upon additional areas which haven't been drilled yet. They will probably, eventually, lead to greater returns, but that's longer term.

Kremmen i dont agree. Idont invest in companies that sit back, i regard them as poor investments. They have similar proportions of AMI income to AUT. Then AUt will be rapidly growing if oil price stays up on the back of its fraccing and drilling in Longhorn 2010.

I think you need to explain your perspective on where EKA income and growth is coming from thats comparably better in your opinion, becasue i think we have crossed wires. I cant see EKA having anything like the growth of AUT unless they sure up a deal on thier new acerage. If hilcorp manage to drill extra AMI acerage, AUT and EKA will benefit. So at present i can see no scenario where EKA offer remotely similar growth or relative safety (taking into account opportunity cost). Im puzzled where your coming from - As Pauline would say, please explain.

MCaps are $42M v $285M

Acerage is 4:1

So i sort of see where your coming from in that way. But take my point. With a long established ratio of 4:1, how do you propose EKA can sustain a relative value during 2011, when the vast majority of a 30 well program is proposed to be in Longhorn.

I take your point that 2010 offers EKA good prospects, but not 2011. Where now almost Sept, so at what point will that be reflected in the price.

 

[Kremmen]

If hilcorp manage to drill extra AMI acerage, AUT and EKA will benefit.

Yes. On an almost 1:1 basis per share. If EKA derives Xc/share in revenue from the AMI and AUT derives 1.05*Xc/share in revenue, who is better off? If X is anything vaguely worthwhile, the answer would appear to be EKA, unless the Longhorn and Ipanema results average better than Sugarloaf. (And, preferably, also time-travel back a year or so to make up for the advantage Sugarloaf already has.)

Im puzzled where your coming from - As Pauline would say, please explain.

I explained my calculations several pages ago. You are the one who refuses to back up your statements. Ironic to quote Pauline, as you seem like a preacher, just telling us to have faith because you have seen the light.

Your assumptions appear to be based on AUT racing ahead with Longhorn and Ipanema, while Sugarloaf, which already has a head start, is somehow left to do nothing. Do you suppose AWE really bought ADI to just do nothing with it? Is there any real reason to assume that Sugarloaf will suddenly be ignored, when all the JVPs have incentive to continue?

 

[mir]

Kremmen
1 who is going to be operator for the new acres?
2 how good are the new acres, they are 90 miles NE of AMI which is already in the NE part of the play?
3 where is the cash coming from to drill at $7 to $8m per well , better not be a duster?
4 old management knew exactly what was going on through AUT which have the association with hilcorp, does the new management have the same association ?
i still think EKA is good value but IMO AUT is better, i was a holder of EKA but now all in AUT.

condog AUT has about 7 times the net acres without EKA new acres (761acres).

 

[condog]

I explained my calculations several pages ago. You are the one who refuses to back up your statements. Ironic to quote Pauline, as you seem like a preacher, just telling us to have faith because you have seen the light.

wooooo back sunshine im not getting inot this garbage. Thats way out of left field , i was having a nice friendly discussion with you.

 

[condog]

Your assumptions appear to be based on AUT racing ahead with Longhorn and Ipanema, while Sugarloaf, which already has a head start, is somehow left to do nothing. Do you suppose AWE really bought ADI to just do nothing with it? Is there any real reason to assume that Sugarloaf will suddenly be ignored, when all the JVPs have incentive to continue?

According to both brokers who attended the US tour this is going to be the case. 2010 is going to focus on AMI and then the primary focus of 2011 is to be Longhorn. With from memory 2 Ipenema wells?

 

[condog]

From page 16 of the 9th June Presentation.

New drilling now focussed
on Aurora’s Longhorn
acreage then Ipanema
until completion of
farmin commitments.
 Additional drilling
planned in Sugarloaf and
Ipanema areas in 2010.

From Euroz Update - 18th June 2010
Similarly, the programme for CY11 has increased from 15 to 25 wells and will focus ostensibly upon the Longhorn AMI (AUT – 25%) with 17 wells planned, whilst 4 are to be drilled at Ipanema and Sugarloaf.
From June AUT Quarterly

The forward plan for the remaining calendar year is up to 8 wells within the Sugarloaf AMI, 3 wells within the Ipanema AMI in addition to the fracture stimulation of the third well at Longhorn.

and

In 2011, the expectation is that Hilcorp will be operating three rigs and a frac crew full time within the Sugarkane field. Although the final program is subject to operator variation, this translates to an expectation of approximately 30 wells within Aurora’s acreage during 2011, the majority of which are scheduled to be within the Longhorn AMI.

The current and scheduled drilling program has been determined based on a decision to ensure that all of the acreage in which Aurora participates is “held by production” within the period of existing leases. This plan obviates the need to competitively re-lease existing positions in the future.

 

[Agentm]

eka schedule for the next 3 quarters

Quarterly Activities and Cashflow Reports

ASX RELEASE
23 July 2010
QUARTERLY REPORT
Eureka Energy Limited (ASX:EKA, “Company” or “Eureka”)
QUARTER ENDING
30 June 2010


Hilcorp have advised that up to eight new wells, including the Kowalik-1R well, are currently planned to be drilled in the ensuing 3 quarters. The Sugarloaf Joint Venturers will contribute to costs and derive revenue on a post farm out basis i.e. for Eureka 6.25%. The well locations will be selected to optimise the amount of leasehold land held by production which is a key objective of the Sugarloaf AMI participants given the increased competition for land in the Eagleford trend.

 

[Kremmen]

i still think EKA is good value but IMO AUT is better, i was a holder of EKA but now all in AUT.

condog AUT has about 7 times the net acres without EKA new acres (761acres).

I still think AUT is good value too. I'm a holder of both EKA and AUT. I also held ADI until the takeover.

How about being consistent and either excluding or including new, undrilled areas in both cases? AUT has about 5.6x the net acres if you exclude both AUT and EKA's new areas (Ipanema and Fayette county, respectively) and 5.7x the net acres if you include both.

That gives a AUT:EKA ratio per share of around 3.7:1 in either case.

 

[mir]

Kremmen
so you are comparing Ipanema to Fayette which is 90 miles away, interesting .in Fayette have the majors drilled all around it like ipanema? Ipanema is on the border of AMI , i'm pretty sure they know what their going to get, can you say the same about Fayette?

 

[condog]

That gives a AUT:EKA ratio per share of around 3.7:1 in either case.

Yep so we pretty much accurately back to where we started. 4:!, but when and how much will 2011 be factored in.

In 2011 AUT will participate in a likely 30 wells

EKA will participate in a likely 8 wells minus Kowalick, minus any in 2010. So a likely 2-3 wells in 2011, as the remainder of 2010 focuses on the AMI.

Hence using todays figures

EKA will put on say 3 wells at 5% * $16M to an mcap of $42 m = 2.4M = 5.7%

AUT will put on 30 wells at average of 22% ish * $16M NPV = 105M = 37%

Taking that a step further if this was roughly right just using the NPV formula which is too conservative imo. But they are relative and its the easiest calculation. AUt would finish with a 37% increase on $1.50 Euroz target. EKa would finish 2011 with a 5.7% increase on 25% of. $1.50 = 37.5c

AUT finish 2011 on $2.05
EKA finish 2011 on approx $39.6c

Get my drift. Thats a 5:1 eventually, hence when will the ratio change from 4:1.

And imo its even better if you calculate it out using the forwad cash flow methods.

At what point will the swappers start factoring that growth diffence in.

 

[nioka]

Yep so we pretty much accurately back to where we started. 4:!, but when and how much will 2011 be factored in.

In 2011 AUT will participate in a likely 30 wells

EKA will participate in a likely 8 wells minus Kowalick, minus any in 2010. So a likely 2-3 wells in 2011, as the remainder of 2010 focuses on the AMI.

Hence using todays figures

EKA will put on say 3 wells at 5% * $16M to an mcap of $42 m = 2.4M = 5.7%
.

EKA is often quoted as having 5% nett but it actually has 6.25% nett. That point alone is worth ".2" on the ratio. Probably more. I have always given AUT some leeway for its extra area even before there was any interest in it. EKA deserves at least the value paid for the leases as an asset too. So I am sticking to my 4.2 to 1 ratio at this stage. The other factor is the likelyhood of a takeover. I'm not sure if that is a plus or a minus at this stage. Any offer for EKA would need to be at a premium and that could mean it could be for a short period run ahead of AUT.

Just my thoughts but anyone doing calculations must take percentage interest, market cap, cash on hand, directors history in looking after its shareholders, untested areas, takeover appeal and taxation into account.

 

[condog]

Very early in the session, but crude futures up nicely at this stage.



Oil Rebounds Over $73 on Dollar, Equities
LONDON (Reuters) - Oil rose for a second day on Thursday as investors bought back into the market after it hit 11-week lows, but analysts said the fundamental outlook was still bearish with ample stocks to cover any rebound in demand.

The rally was supported by a 0.5 percent fall in the value of the dollar against a basket of currencies and some technical signs that the market was oversold.

http://abcnews.go.com/Business/wireStory?id=11485180

 

[Kremmen]

Get my drift. Thats a 5:1 eventually, hence when will the ratio change from 4:1.

Eventually is the big point. To get to the result you're going on, EKA has to do almost nothing. A few wells. If one fails, try another. EKA is pretty close to guaranteed to have at least the value you put on it.

However, to get to your 5:1 ratio, AUT has to do 30 more wells without much more than a single failure or delay. There's no way you can honestly say that that's likely at this point, except by blind faith. Believe me, I'll be more than happy if it happens. But there's a lot of risk in there and nobody knows how it'll go.

At what point will the market start factoring in the difference? I reckon once we've seen a whole lot more holes in the ground. Longhorn is over 1/2 AUT's net acreage, so it's really the key ... another half dozen or so wells there will give us some idea what the future is like. Great wells in Longhorn could justify 6:1 over EKA. Some lousy ones could make it more like 2:1.

 

[condog]

Crudes looking like finishing up 90c, with most the futures up well over a $.

Take a look at the chart below, theres a pretty strong resistance point at $70 been formed. Partially i beleive because those Canadian tar sands are uneconomic below $70 imo, combined with the threat of OPEC cuts, seems to be enough to keep it hovering.

 

[condog]

Barclays Cuts 2011, 2010 Oil Price Forecasts

Barclays Capital, one of the most bullish banks on the oil market outlook in recent years, has cut its oil price forecasts for 2011 and this year, citing concern about the economy.

The bank cut its 2010 price forecast for benchmark U.S. crude by $4 a barrel to $78 and reduced its 2011 forecast by $7 to $85, it said in a report on Thursday.

"There is enough fundamental strength to support prices above the $70 which is increasingly looking like a minimum for the basic health of the industry, but there is also enough macroeconomic disquiet to make any breakout of prices to the upside difficult to sustain," the report said.

.......The bank said prices could prove to be firmer than expected should sentiment about the economy become more optimistic or if political tension over Iran and in Iraq—both major oil exporters—worsened.
http://www.cnbc.com/id/38868114

Oil settles above $73

Oil prices rose for a second day following six straight days of declines, as the dollar fell and the government reported that new requests for unemployment benefits fell sharply. Here's how energy prices traded.

On the New York Mercantile Exchange:

Crude rose 84 cents to settle at $71.36 per barrel.

http://www.cnbc.com/id/38869650

OIL FUTURES: Crude Prices Tick Higher After Recent Drops

NEW YORK (Dow Jones)--Crude oil futures ended higher Thursday, rebounding from recent lows after the Labor Department reported a surprisingly large drop in new jobless claims.

Light, sweet crude for October delivery settled up 84 cents, or 1.2%, at $73.36 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange settled $1.54, or 2.1%, higher at $75.02 a barrel.

Oil prices gained for the whole session, falling just short of $74 a barrel, as analysts said futures remained stuck between prices that made the commodity seem too cheap for investors to resist buying and data pointing to a rocky recovery in oil demand.

Thursday's gains began with the U.S. Labor Department's report of a 31,000 drop in initial jobless claims to 473,000 in the week ended Aug. 21. Economists surveyed by Dow Jones Newswires had predicted filings would decline by 10,000.
http://online.wsj.com/article/BT-CO-20100826-712185.html

MARKET WATCH: Crude oil price rebounds above $72/bbl

Analysts at Standard New York Securities Inc., part of the Standard Bank Group Ltd., reported crude prices “benefited” from bargain-hunting and the weaker dollar. “However, prices are likely to pull back on mounting evidence of a stalling global economic recovery,” they said. http://www.ogj.com/index/article-di...ics-markets/2010/08/market-watch__crude9.html