AUT - Aurora Oil and Gas

[estseon]

I've had a closer look at the Form 604 and note the following:
the notice covers the period 29/7/10 to 17/12/10
during that time 4 subsidiaries of JP Morgan have purchsed over 7.29m shares
for us Aussie holders the most significant purchase was JP Morgan Securities Australia Limited who on 17/12/10 purchased 2,210,346 shares at $A2.18.

I assume that this purchase was made in response to AUT entering the ASX 200.
I would expect more Form 604s to be lodged soon as all fund managers take a position in relation to AUT
Whether this proves to be good or bad only time will tell. IMHO fund managers who invest across the ASX 200 on behalf of clients are pretty conservative and are unlikely to pump and dump shares. Their stratergy is more likely is to hold and wait which probably suits given that as well as AUT they will be holding the big banks, the big miners and the big retailers.
I am a holder and enjoying the ride

Funds not invested might be nervous buying so close to the end of the year in case of falls in value in relatively thin trading. There might be renewed interest in January. On the other hand, the opposite might happen. The funds already invested might try to pump up the price with some buying on new year's eve. Impossible to predict. Holding seems to be the best strategy.https://www.aussiestockforums.com/forums/images/smilies/smile.gif

 

[condog]

Hi sharejon,

don't think that it will (depend upon level of CRs) if they continue to make 'accretive' acquisitions. The key is NAV per share. This is undoubtedly the best time for them to buy additional land as they can look forward to the re-categorisation of 3p reserves. Note that they were mindful to stress 'more of the same' - upping the % of what they have, addition of nearby (oilier? land) and same operator. Nice and easy to value.

Esteon as per usual you seem to make an absolutely brilliaant point here about opportunistic accreditive acquisitions. Right now whilst $24-$25K per acre isnt exactly cheap it is accreditive and it is rediculously cheap compared to if #P are converted to 2P or 1P . Also if NSAI do apply a 60, 50, or 40 acre well spacing the value of both AUT's NAV and the price per acre for any further acqusitions will go through the roof.

The unfortunate thing for us holders is all this future value has not yet been unlocked and thus any TO offer on AUT in the interum will also be opportunistic upon us.

I think we can safely assume $338 as the valuation for any TO and a 25-40% premium upon that would be the TO price. and whilst that may sound very attractive to some. Imo its rediculously cheap for what AUT will imo unlock int he coming 12-24 months.

Hence my opinion why as soon as this latest round of post CR selling dries up, we will imo see some very serious price rises in AUt towards the $3 mark.

 

[shanti]

Merry Christmas and Happy New Year to All holders and warmest thank you to All who contributed to this thread especially Condog, it's been priceless. I'm a holder since 37c.
Shanti

 

[estseon]

Esteon as per usual you seem to make an absolutely brilliaant point here about opportunistic accreditive acquisitions. Right now whilst $24-$25K per acre isnt exactly cheap it is accreditive and it is rediculously cheap compared to if #P are converted to 2P or 1P . Also if NSAI do apply a 60, 50, or 40 acre well spacing the value of both AUT's NAV and the price per acre for any further acqusitions will go through the roof.

The unfortunate thing for us holders is all this future value has not yet been unlocked and thus any TO offer on AUT in the interum will also be opportunistic upon us.

I think we can safely assume $338 as the valuation for any TO and a 25-40% premium upon that would be the TO price. and whilst that may sound very attractive to some. Imo its rediculously cheap for what AUT will imo unlock int he coming 12-24 months.

Hence my opinion why as soon as this latest round of post CR selling dries up, we will imo see some very serious price rises in AUt towards the $3 mark.

Hi Condog,

The volume doesn't appear to have been particularly high and fund managers such as JPM have been accumulating some. I think that we are safe for the moment. In the meantime, the Board has been working hard to improve the valuation by readying it for a TSX listing. It would not stop a determined bidder but we are still holding only minority interests in the acreages. That might rule out the really big wallets.

There is, of course, tranche 2 of the placing still to come - that cannot happen before 24 January 2011. That will take us close (hopefully) to the second listing and a reserves report. Then a revised broker's note and an upward adjustment on the target price. A predator might have to pay somewhere in excess of $1.5bn for the increased share capital, which will trim down the list of potential candidates.

I think that we may be left in peace for the while to accumulate value. The partners will be busy drilling to secure the leases for at least a year (mid 2012 was suggested in AUT's 15 December presentation) and I can't see them looking to sell on before then. Once they have, though, they will have something rather valuable, which they might not be able to enhance further. By then the 3p reserves should have been recategorised as 2p and they will have a far better idea and pool of data from which to base estimates of decline rates and commercial life of the wells. They might even experiment with some re-working as COP did on its first vertical in Live Oak.

Plenty to muse about over the Christmas beers.

Have a good one and good luck for 2011

 

[condog]

there is, of course, tranche 2 of the placing still to come - that cannot happen before 24 January 2011.

My magical CGT date is 20th January, so thats lovely imo.

Once they have, though, they will have something rather valuable, which they might not be able to enhance further.

Yes as we approach that milestone, managment will be actively looking for an acquisition or acerage to unlock new value and a CR would definitely be on the cards again. EKA at some point would be an obvious acquisition.

It does seem on past recent history most acquisitions by COONOC etc have been just over the billion mark. The billion mark is an obvious point as any company that makes it past that point is clearly on a winner, as such finance and CR's apply a bit of a derisked weighting once over the $1B mark. Ive heard it said that its far easier to borrow $1.2B then 800M for this exact reason.

By then the 3p reserves should have been recategorised as 2p and they will have a far better idea and pool of data from which to base estimates of decline rates and commercial life of the wells. They might even experiment with some re-working as COP did on its first vertical in Live Oak.

Hopefully they will then make a shift to prove 40 acre well spacing accross all four leases which would be a huge increase in EUR and NAV. Virtually a doubling if successful. There are still plenty of trump cards and anyone thinking (not aimed at you esteon, or anyone in particular)AUT is approaching slow growth may be very wrong.

Accellerated drill programs can also untap huge val;ue as they bring forward cash flows and they reduce the administrative costs : ROE ratio to make the company a far better performer. For example a company with $5M annual admin and remuneration costs with $25M annual revenue is worth significantly less then the same company with $40M or $50 M Revenue

 

[condog]

From Bloomberg.com

Aurora Oil to Seek Further Texas Shale Gas Acquisitions, May Raise Debt
By James Paton - Dec 24, 2010 2:55 PM GMT+1100


Aurora Oil & Gas Ltd., the best performer in Australia’s 200-member benchmark index this year, plans to raise as much as $100 million in debt next year as it hunts for further Texas shale acquisitions.

The company, which has $95 million in cash, intends to participate in drilling about 60 new wells in 2011, Jon Stewart, chairman of the Perth-based explorer, said by phone. Aurora is weighing more Eagle Ford Shale transactions after the completion today of a $120 million cash purchase of interests in the Sugarkane field.

“We have an ambitious outlook,” he said. “We think there are further opportunities for us and want to stay fairly close to home. We’re very interested in staying in the Eagle Ford Shale and in the part we understand and have experience in.”




http://www.bloomberg.com/news/2010-...drilling-debt-in-ambitious-2011-update1-.html

 

[condog]

From
Sydney Morning Herald

Mining minnows triumph Adam Courtenay
December 21, 2010

.......blah blah blah then

The top three are Aurora Oil & Gas, up 563 per cent; Intrepid Mines, up 548 per cent and Coalspur Mines up 415 per cent.

Then ignorant crap about how it cant continue......

 

[Mister Mark]

Merry christmas to all, have a happy healthy and wealthy new year, thank yo to all who post, the education and profit are of equal importance.

If we can get to $5 by next christmas we should all party together and put some faces to the typo.

Thank you all again

 

[easylikesunday]

If you look at the 12 month chart, everytime AUT hits a new high it re-traces 10-20c and then takes off again. Pretty consistant. Happened 7-8 times this year.

After a high of $2.24 (at close) we dropped back to $1.98 and we now we sit on $2.10 gaining slowly. I was going to top up if it dropped below $1.95 but I think I have missed the boat on that one.

Hope we all had a good Xmas and enjoy the day today. Boxing day would be the most relaxing day of the year I reckon..

 

[condog]

If you look at the 12 month chart, everytime AUT hits a new high it re-traces 10-20c and then takes off again. Pretty consistant. Happened 7-8 times this year.

After a high of $2.24 (at close) we dropped back to $1.98 and we now we sit on $2.10 gaining slowly. I was going to top up if it dropped below $1.95 but I think I have missed the boat on that one.

Hope we all had a good Xmas and enjoy the day today. Boxing day would be the most relaxing day of the year I reckon..

Theres a very good reason for that. Every time we have run hard managment have done a CR and pulled of some deal to either accelerate drilling or add NAV or EUR somehow.

Its a tighly held stock other then the smucks who get it heavily discounted every CR, but hey **** happens, so bad luck.

We are approaching tightly held territory again imo and will once again run hard.

Those articles above on Bloomberg seem to indicat after our next run Jon will once again do a CR and buy some opportunistic acerage or coy.

As you say its not rocket science, here we go again.

 

[condog]

On a totally different note.

Oils $90

Yet we have:
PIGS
US economic constipation
Soveriegn debt issues
China raising interest ratees

Now if i was a smart punter i would be asking myself. Why is oil so expensive when all this other worrying garbage is around. ??

hmmm it aint rocket science. Brace yourselves imo. And owning a few oil stock may just be a good strategy.

 

[philly]

From Bloomberg.com

Aurora Oil to Seek Further Texas Shale Gas Acquisitions, May Raise Debt
By James Paton - Dec 24, 2010 2:55 PM GMT+1100


Aurora Oil & Gas Ltd., the best performer in Australia’s 200-member benchmark index this year, plans to raise as much as $100 million in debt next year as it hunts for further Texas shale acquisitions.

The company, which has $95 million in cash, intends to participate in drilling about 60 new wells in 2011, Jon Stewart, chairman of the Perth-based explorer, said by phone. Aurora is weighing more Eagle Ford Shale transactions after the completion today of a $120 million cash purchase of interests in the Sugarkane field.

“We have an ambitious outlook,” he said. “We think there are further opportunities for us and want to stay fairly close to home. We’re very interested in staying in the Eagle Ford Shale and in the part we understand and have experience in.”

Reading this article it seems IMHO that AUT clearly has EKA in its sights. You couldn't get much closer to home. Any thoughts out there?

 

[estseon]

From Bloomberg.com

Aurora Oil to Seek Further Texas Shale Gas Acquisitions, May Raise Debt
By James Paton - Dec 24, 2010 2:55 PM GMT+1100


Aurora Oil & Gas Ltd., the best performer in Australia’s 200-member benchmark index this year, plans to raise as much as $100 million in debt next year as it hunts for further Texas shale acquisitions.

The company, which has $95 million in cash, intends to participate in drilling about 60 new wells in 2011, Jon Stewart, chairman of the Perth-based explorer, said by phone. Aurora is weighing more Eagle Ford Shale transactions after the completion today of a $120 million cash purchase of interests in the Sugarkane field.

“We have an ambitious outlook,” he said. “We think there are further opportunities for us and want to stay fairly close to home. We’re very interested in staying in the Eagle Ford Shale and in the part we understand and have experience in.”




http://www.bloomberg.com/news/2010-...drilling-debt-in-ambitious-2011-update1-.html

Good spot, condog.

I like Jon Stewart's focus "the part we understand and have experience in".

I don't know about EKA (corporate) but EKA's 6.25% and EME's 3% could be easily mopped up within that budget leaving quite a bit of cash for other things. That depends on price (AUT will not buy unless the deal results in immediate increased NAV/share assuming only the re-categorisation of 3p reserves into 2p - that's the message from the last deal). It also depends upon AUT's appetite for the S/L acreage as compared to further acquisitions in the oilier corridor.

Both EKA and EME have other projects to develop and the cash proceeds would facilitate that.

Pure speculation, of course. But another lesson from the deal just done is AUT's desire to stay with Hilcorp as operator of its acreages for the time being.

 

[BrightGreenGlow]

On a totally different note.

Oils $90

Yet we have:
PIGS
US economic constipation
Soveriegn debt issues
China raising interest ratees

Now if i was a smart punter i would be asking myself. Why is oil so expensive when all this other worrying garbage is around. ??

hmmm it aint rocket science. Brace yourselves imo. And owning a few oil stock may just be a good strategy.

Oil would be high partly due to the big freeze in Russia etc...

 

[condog]

Good spot, condog.

I like Jon Stewart's focus "the part we understand and have experience in".

I don't know about EKA (corporate) but EKA's 6.25% and EME's 3% could be easily mopped up within that budget leaving quite a bit of cash for other things. .......Both EKA and EME have other projects to develop and the cash proceeds would facilitate that.

Pure speculation, of course. But another lesson from the deal just done is AUT's desire to stay with Hilcorp as operator of its acreages for the time being.

Yes i wrote to Jon Stewart suggesting such an acqusition a few months ago. I deliberately asked him not to reply as it may breach ASX rules.

In particular i see EKA as an immediately accreditive acqusition , up to about 40c ish.

EME, i havent done the sums on.

 

[condog]

Oil would be high partly due to the big freeze in Russia etc...

The big freeze has probably added $2-$3 max imo. But think about it. If oils $90 right now with all the peripheral growth/debt worries that exist. Imagine what it will be if the US recovers significantly, or china and india cant curb thier growth.

$90 oil right now is rediculous. Imo the primary reason is the $USD has been devalued by the relentless printing press, hence the world is awash with USD, making all scarce commodities far more expensive.

Secondly the world is just starting imo to factor in scarity of oil. We have high inventories, yet oil is high. thats un recdedented imo. Its also unprecendented to have such high oil prices when economically the world is only just ticking along after the GFC.

The reason is the smart players know that oil demand is with in a pufteenth of exceeding supply , and once it does someone is going to miss out on the oil they want, creating significantly higher oil as the bid it higher to attain what they need.

If the US continues to add jobs, EU manages to bailout the PIGS, and China manges to curb inflation without derailing its economic growth super cycle too much, then imo we are heading toward $150+ oil within 6-12 months. This is an opinion only so do not make decisions based on this opinion.

 

[condog]

Courtesy of Luvsfootie in the SSN thread
the entire post from this point on is quote


December 26, 2010 at 7:45 am

Several OPEC ministers said they believe $100 a barrel oil prices would represent a proper balance between supply and demand.

OPEC will do nothing to increase production before mid-year 2011, and it may not act then. Saudi Oil Minister Ali al-Naimi reiterated Friday that the Organization of the Petroleum Exporting Countries doesn?t need to meet again before June, Dow Jones reports

The global economy can withstand an oil price of $100 a barrel, Kuwait?s oil minister said on Saturday, as other exporters indicated OPEC may decide against increasing output through 2011 as the market was well supplied, Reuters writes

Except for a brief period last week, crude oil prices have been rising steadily from around $88.50/barrel to nearly $91/barrel on the NYMEX. That?s a rise of more than 2.8% in less than a week. The rise appears to be based on an expectation that demand for crude is picking up.


If that is accurate, then a report from the US Energy Information Administration should continue to push crude prices up. The EIA reports that crude imports rose an average of 1.1 million barrels/day last week and commercial inventories fell by 5.3 million barrels from the previous week. The DOE data showed a draw to crude stockpiles.


Gasoline inventories increased by 2.4 million barrels last week, and total petroleum products supplied averaged 19.7 million barrels/day, up 4.1% from the same period a year ago. Demand for gasoline averaged 9.2 million barrels/day, up 1.8% from a year ago.


Platts reported recently that analysts were expecting a drawdown of 2.4 million barrels in crude oil stocks, less than half the actual number.


Better expectations for the US economy combined with colder temperatures are the likeliest candidates for the drawdown in crude stocks and rising prices prices for crude in the US.


Chinese officials have raised the price of refined products there by 4%. Platts estimates that Chinese demand in November averaged 9.3 million barrels/day. Demand is expected to continue growing in China, and the government is raising prices now in an effort to curb the growth in demand.



If most of these factors come together with any unexpected reduction in supply, crude could be at $100 before the end of January which would be a huge threat to the global economic recovery.

http://247wallst.com/2010/12/26/opec-oil-ministers-bless-100-oil/

 

[condog]

Imo it doesnt post a threat to global recovery to about $140-$150 per boe.

And from an AUT investor perspective, if you have enough oil stocks you will be so far ahead you wont care about a global recovery.

Theres also the theory that its a self correcting prophecy and oil will retreat the moment global demand is affected in the slightest.

 

[shanti]

I just received Aut General Meeting paperwork with Proxy Form. I'm only a newbie so forgive my ignorance but I can not understand why managment decided on such excessively discounted price ($1.60) when the price at the time this was decided was already close to $2.20.
Why would shareholders vote further in support of such excessive discount to parties that will make unreasonable profits by immediately dumping without having shouldered any risk whatsoever.
I for one do not feel inclined to support this.
If shareholders don't support would managment come up with more appropriate pricing?
Any thoughts?

 

[condog]

If shareholders don't support would managment come up with more appropriate pricing?
Any thoughts?

The VWAP at the time was only just over $1.60, as it raced up to $2.20 on light volume immediately after the Halt, compared to the previous few days, according to Jon Stewart. It as trading at around $1.60 - $1.70 just prior to the halt.

You make a very valid point, and yes shareholders should consider voting no. It wont get up, but it will send a clear message that we want more appropriately priced CR's.

Managment needs to take into account sp growth after the announcment .