AUT - Aurora Oil and Gas

[Mister Mark]

Hi Condog and thank you for your info as always i know i learn from it as im sure many others do. Couple of questions you may be able to help me with, some good anouncements fro my understanding with little or no SP movement, is this as an anouncement on acerage acquisitions is awaited by may, and when will we be cash flow positive, must be soon?
Thanks again

 

[condog]

Hopefully both are soon. I cant answer that .

Q4 was always going to be the cash flow quarter, but having said that, that was prior to both the 3 phase fracs, the highly restricted chokes and the delays in getting frac crews that are ever present now.

So hopefully both soon.

In relation to sp, Euroz apparently put out an update today. I havent seen it yet, but apparently it values AUt at 2.80 due to continued great results.

 

[Mister Mark]

Hopefully both are soon. I cant answer that .

Q4 was always going to be the cash flow quarter, but having said that, that was prior to both the 3 phase fracs, the highly restricted chokes and the delays in getting frac crews that are ever present now.

So hopefully both soon.

In relation to sp, Euroz apparently put out an update today. I havent seen it yet, but apparently it values AUt at 2.80 due to continued great results.

Thank you as all ways, good times ahead for all holders, see where we can get to by years end

 

[condog]

From the latest Euroz report , gives a good estimate of where well repayments are up to.

Key point is they believe we have repaid 73% off well costs with an average of 4.6 months production. Which equates to an average repayment time by my clacs of 6.1 months. This is staggeringly impresssive.

 

[Assasin]

Wow, nice rally.
A great combination of news brings us a new high.

Stand-by for bananas.

 

[Mister Mark]

Hopefully both are soon. I cant answer that .

Q4 was always going to be the cash flow quarter, but having said that, that was prior to both the 3 phase fracs, the highly restricted chokes and the delays in getting frac crews that are ever present now.

So hopefully both soon.

In relation to sp, Euroz apparently put out an update today. I havent seen it yet, but apparently it values AUt at 2.80 due to continued great results.

Hey you good condog, i ask you a question and look what happens, maybee i should ask about this weeks winning lotto numbers!

 

[rez_erection]

How does it generally work for this type of repayment strategy for O&G companies. On the table it shows some are over 100% paid back, should we be getting an income stream from them? With a big well program next year to be added, will this affect the repayment time?

Is it something to wait for the quarterly for or will they announce that AUT is now receiving cash?

 

[condog]

Its a pretty significant milestone, so it would warrant an announcment. It may run slightly late, due to frac crew delays and pipeline capacity issues, but it wont be much out.

It makes sense that it would be on a total basis rather then a per well. But to my knowledge there has not been an official announcment on that issue.

 

[Kremmen]

Key point is they believe we have repaid 73% off well costs with an average of 4.6 months production. Which equates to an average repayment time by my clacs of 6.1 months. This is staggeringly impresssive.

It's great. The thing that surprises me is that EKA has stalled, given that 5/8 of those are shared with EKA+AWE. EKA's profit/share on the Sugarloaf ones is about the same per share as AUT.

 

[nioka]

Its a pretty significant milestone, so it would warrant an announcment. It may run slightly late, due to frac crew delays and pipeline capacity issues, but it wont be much out.

It makes sense that it would be on a total basis rather then a per well. But to my knowledge there has not been an official announcment on that issue.

I think you would find in the original farmin announcement that it was the total cost of the original agreed wells that Hillcorp could recoup. That is why there is over 100% on some. Remember that there is still the problem elephant well that will have costs that are yet to be covered, Kowlik. However that should be covered now by the ones that have more than payed their way. We can expect a notice to that effect any time.That's how I see it.

 

[tonudiki]

From the latest Euroz report , gives a good estimate of where well repayments are up to. View attachment 39912

Key point is they believe we have repaid 73% off well costs with an average of 4.6 months production. Which equates to an average repayment time by my clacs of 6.1 months. This is staggeringly impresssive.

Agreed that the payback rate is impressive. Just a few points and queries on the Euroz table:-

a) The number of months of production and the volumes/revenue shown are only up to the end of September, as far as I can tell. This means that we already have a further 2 months of production & revenue to add on.

Even allowing for a 30% decline on the first 4.6 months average production figures, I reckon Hilcorp may by now have got their total costs back for the 8 farmout wells, assuming Euroz's estimate of costs and revenues is accurate.

Hilcorp have got quicker and quicker (and therefore cheaper) at drilling the wells, but then recently got slower and slower at fraccing them!! Presumably these 2 roughly balance out and the Euroz estimate of US$8m per well is o.k.

b) Not sure what Euroz's "running total -boe" represents in their table. Is this concentrate + gas to give a "barrels of oil equivalent"? If it includes the gas, what uplift (25%?) and conversion of gas to boe's did Euroz use? They have used a "spot" price per boe of US$82, which seems pretty high compared to average oil & gas prices in the last few months.

c) The table excludes the Kowalik well. Whilst I believe the partners are paying their respective share for the more recent attempt at Kowalik, I don't know who picked up the bill for the first attempt? If that was Hilcorp, then I guess they want those costs recovered too.

Anyway, it's all looking very good for AUT at the moment and I think we will continue to see very good progress in the SP. There is every chance of $1-90 + per share before the end of 2010.....

 

[condog]

Agreed that the payback rate is impressive. Just a few points and queries on the Euroz table:-

a) The number of months of production and the volumes/revenue shown are only up to the end of September, as far as I can tell. This means that we already have a further 2 months of production & revenue to add on.

Agree

Even allowing for a 30% decline on the first 4.6 months average production figures, I reckon Hilcorp may by now have got their total costs back for the 8 farmout wells, assuming Euroz's estimate of costs and revenues is accurate.

Agree

Hilcorp have got quicker and quicker (and therefore cheaper) at drilling the wells, but then recently got slower and slower at fraccing them!! Presumably these 2 roughly balance out and the Euroz estimate of US$8m per well is o.k.

Agree and shortage of frac crews would undoubtably be driving costs up abit + 3 phase fracs

b) Not sure what Euroz's "running total -boe" represents in their table. Is this concentrate + gas to give a "barrels of oil equivalent"? If it includes the gas, what uplift (25%?) and conversion of gas to boe's did Euroz use? They have used a "spot" price per boe of US$82, which seems pretty high compared to average oil & gas prices in the last few months.

They generally quote it on the document and its nearly always 12:1 or 6:1

c) The table excludes the Kowalik well. Whilst I believe the partners are paying their respective share for the more recent attempt at Kowalik, I don't know who picked up the bill for the first attempt? If that was Hilcorp, then I guess they want those costs recovered too.

Undoubtably all partners picked up the bill. Duster and successes are shared amongst the partners. Only negligence and a settlement would alter that.

Anyway, it's all looking very good for AUT at the moment and I think we will continue to see very good progress in the SP. There is every chance of $1-90 + per share before the end of 2010.....

True, those insto sellers will imo be replaced by fund purchasers now we are in the ASX 200. Lots of positve news over the past month has not been priced in imo. Right now imo we should be bouncing around $1.70 - $1.80.

 

[condog]

I think you would find in the original farmin announcement that it was the total cost of the original agreed wells that Hillcorp could recoup.

Thats my understanding , but i cant find it in print.

That is why there is over 100% on some. Remember that there is still the problem elephant well that will have costs that are yet to be covered, Kowlik. However that should be covered now by the ones that have more than payed their way. We can expect a notice to that effect any time.That's how I see it.

Agree and sure hope so, and whilst its a significant announcment that should be made on the day it happens, my bet is the temptation to deliver a nice quarterly report will see it in the Q activities report.

 

[condog]

It's great. The thing that surprises me is that EKA has stalled, given that 5/8 of those are shared with EKA+AWE. EKA's profit/share on the Sugarloaf ones is about the same per share as AUT.

EKA does look very cheap imo, but also having said that, they so far have not locked in a next stage growth plan, and thats worth money.

That extra acerage they purchased should have a growth plan locked in by now imo .

I watch EKA, but not incredibly closely, so i could be wrong on that. Nioka willl correct me if im wrong on that hopefully.

 

[condog]

Originally stated by MIR

that's the way i like to work things out nice & simple
NPV10 $15m x 130 net wells (10500 net acres at 80 acre spacings) = $1.95b

the well spacing in time will probably come down to 40 acre spacings
NPV10 $15m x 260 net wells (10500 net acres at 40 acre spacings) = $3.9b

imo we will probably end up with about 15000 net acres
NPV10 $15m x 375 net wells (15000 net acres at 40 acre spacings) = $5.625b

now divide those totals by 320m shares (doesn't matter which one you choose) then you can see the future potential of AUT.

I tend to think these need discounting, due to the fact some wells will have had significant declines, by the time the later wells come online.

But the point is as MIR stated "it shows the potential. Even with a 40% discount using his last scenario AUt has a potential value of $10 per share. Note this does not imply or infer that figure will come true. DYOR and seek expert advice.

 

[BrightGreenGlow]

Back into AUT today at 1.635, thought the asx200 news is massive for AUT. Kinda happy it made it to 1.70 finish. So big gain on day one... if only I didn't sell them at 1.24 haha. Glad to be back coming up to Christmas too.

 

[rez_erection]

Did some searching and found the farm out announcement, free carrier on 7 wells and 3 fracs, 10 wells total on production, 6 sugarloaf, 1 ipamema, 3 longhorn. So 8 mill on 7 wells + 3 fracs (no idea how much, 4 mill?) Total to pay 68mill. Total paid back (according to the table above) 46.4mill. Another few wells flowing to sales though now missing from the table. Another 2-3 months before cash flow? + reserves due reserve quarter (reading another forum).

http://www.asx.com.au/asxpdf/20090921/pdf/31ktkyl130qc7w.pdf

Love to be corrected if I am missing something, only new so very rough understanding, hoping to learn more! Thanks to all the posters on this thread!

 

[ParleVouFrancois]

RE: Rez, From memory it's about 8 million per well, but we pay differing percentages (as well as receiving the relative percentages from revenue) for each well depending on if it is located in the Sugarkane (10%) Ipanema (30%) or Longhorn (25%) tenements.

As each new well comes online (as you said a few more have come online) the other wells which have paid back their costs will contribute to the newer wells costs, enabling even quicker payback of these (short than 6-12 months). So imo due to the ongoing nature of capital costs of new wells being drilled, I'd think we'd be cashflow positive sometime Q1 2011, as this is the point at which the fully paid off completed wells will contribute sufficient revenue to pay off the newer wells as they are completed.

As condog has said before, cashflow positive is going to be massive news, but I think it's going to a bit longer than some people think due to the continued construction of new wells (brilliant in the long term, but "bad" in the short term regarding the cashflow positive moment).

 

[Sdajii]

Did some searching and found the farm out announcement, free carrier on 7 wells and 3 fracs, 10 wells total on production, 6 sugarloaf, 1 ipamema, 3 longhorn. So 8 mill on 7 wells + 3 fracs (no idea how much, 4 mill?) Total to pay 68mill. Total paid back (according to the table above) 46.4mill. Another few wells flowing to sales though now missing from the table. Another 2-3 months before cash flow? + reserves due reserve quarter (reading another forum).

http://www.asx.com.au/asxpdf/20090921/pdf/31ktkyl130qc7w.pdf

Love to be corrected if I am missing something, only new so very rough understanding, hoping to learn more! Thanks to all the posters on this thread!

Check the date on that announcement, it's months old and oil has been flowing since then

 

[BrightGreenGlow]

So... does that mean they will be cashflow positive very very soon? Mid February close?