Esteon, thats the way i was thinking when i read it 900boepd is an amazing result and look at all thos wells successfully drilled, with no problems, in good time. As they begin fraccing and results start rolling in at 900boepd etc with good declines and these high prices, i think its going to reignite the share price.
AUT - Aurora Oil and Gas
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Estseon you are too right when you say fraccing is becoming jammed up. New wells are being drilled at incredibly rapid times, and the fraccing is falling well behind.
It's not surprising though, the fraccing crews and equipment seem to be in far less supply than drilling crews/equipment.
It's not surprising though, the fraccing crews and equipment seem to be in far less supply than drilling crews/equipment.
Incredibly more complicated and skilled is the issue. They just cant ramp the number of crews up, because the cost of failure is too high. I cant see more then a few frac crews each year being added, so think hilcorp so far has done an amazing job with the progress of fracs so far. With 4 rigs now they are going to need to secure a second full time crew. Especially given, im lead to believe Hilcorp still use our ft crew occasionally on thier KKR JV EFS acerage.
Its a bit quicker now with the three phase fraccing has been canned. Im interested to see if we will hear an announcment with the pulsated fraccing, being used successfully.
Jon is off to the US again this weekend. Hopefully to acquire some more prime acerage. Will we see a new acquisition in the pipeline. lets hope so.
Go and do a Google news search on "US Debt Limit"
You will find the US is bumping on its 74 times altered debt limit , sitting presently at $14.92Trillion of an allowed $15 Trillion in debt. Most articles are suggesting $2Trillion will be required for Obama to see out this term.
They have 3 choices as i see it.
1. Increase the limit
2. Default on debt payments - and cause a global economic tsunami
3. Cease all govt spending, raise taxes immediately until such time as they have cash flow to resume govt operations.
Guess which one they will choose. Yep if i where betting on this ide choose number 1. Why not - let your successors do the tough yards as every other of the 74 previous increases have done since 1917.
So whats it mean for us as AUT investors. Well if no 2 or 3 is chosen all our investments and Barrack Obama will be up in smoke. So given im betting they will simply increase the limit possibly by either $2Trillion or several times by many hundreds of billions, im seeing an inflationary boom.
Oil up, food up, all commodities up. Couple this added money supply with China India Vietnam etc etc Brazil etc emerging economies increasing thier demand and yep brace yourself for dearer everything. Good news for AUT and other oilers if im right. Bad if im wrong. Either way keep your eye on the US congresses decision.
The only thing that will be getting cheaper will be trips to the US as theyre currency gets pummeled some more.
The US has around 140M individual tax payers, its corporations basically pay little tax , as they pay the govt election campaigns (br_b_), sounds like tribe..... divide that debt by 140M and then consider the consequences of the baby boomers about to retire if they can, and the picture for future american taxpayers looks very bleak.
But at least we will be able to sell them cheap gas.
You will find the US is bumping on its 74 times altered debt limit , sitting presently at $14.92Trillion of an allowed $15 Trillion in debt. Most articles are suggesting $2Trillion will be required for Obama to see out this term.
They have 3 choices as i see it.
1. Increase the limit
2. Default on debt payments - and cause a global economic tsunami
3. Cease all govt spending, raise taxes immediately until such time as they have cash flow to resume govt operations.
Guess which one they will choose. Yep if i where betting on this ide choose number 1. Why not - let your successors do the tough yards as every other of the 74 previous increases have done since 1917.
So whats it mean for us as AUT investors. Well if no 2 or 3 is chosen all our investments and Barrack Obama will be up in smoke. So given im betting they will simply increase the limit possibly by either $2Trillion or several times by many hundreds of billions, im seeing an inflationary boom.
Oil up, food up, all commodities up. Couple this added money supply with China India Vietnam etc etc Brazil etc emerging economies increasing thier demand and yep brace yourself for dearer everything. Good news for AUT and other oilers if im right. Bad if im wrong. Either way keep your eye on the US congresses decision.
The only thing that will be getting cheaper will be trips to the US as theyre currency gets pummeled some more.
The US has around 140M individual tax payers, its corporations basically pay little tax , as they pay the govt election campaigns (br_b_), sounds like tribe..... divide that debt by 140M and then consider the consequences of the baby boomers about to retire if they can, and the picture for future american taxpayers looks very bleak.
But at least we will be able to sell them cheap gas.
this was also in the euroz report about frac crews
A second frac crew in the field area should facilitate bringing on-line the 10 or so wells currently awaiting frac over the next 2 months: this will have a huge impact on revenue generation in the Jun and Sep Qs.
This should be favourably augmented by the new wet-gas pipeline currently being commissioned in the field, enabling more relaxed choke settings for greater early-stage production.
A second frac crew in the field area should facilitate bringing on-line the 10 or so wells currently awaiting frac over the next 2 months: this will have a huge impact on revenue generation in the Jun and Sep Qs.
This should be favourably augmented by the new wet-gas pipeline currently being commissioned in the field, enabling more relaxed choke settings for greater early-stage production.
Thanks for those quotes Mir, they're short but very important. I was just thinking earlier on about this issue. The September Quarter in particular should be a huge one. Whilst the June quarter will definitely experience flow-rates from alot these 10 wells, alot of them would only be flowing for half the june quarter.
What should be a huge kick-along in the June Quarterly will be the production rate at the end of the quarter.
I also read somewhere that AUT is planning to have 5,000 boep/d after royalties by the end of the year, and for the 2011 Calender year to have an average production rate of 3,400 boep/d after royalties.
We all knew of these 5,000 or 5,500 boep/d figures, but I'm not sure if the company mentioned that they were 'post royalty' targets. It makes that 5,500 figure make more sense now, however it still could be conservative (as a post royalty production figure)
I forget whether 'post royalty rates' were mentioned when we discussed how conservative the 5,500 boep/d figure in company presentations seemed to be a few months ago.
What should be a huge kick-along in the June Quarterly will be the production rate at the end of the quarter.
I also read somewhere that AUT is planning to have 5,000 boep/d after royalties by the end of the year, and for the 2011 Calender year to have an average production rate of 3,400 boep/d after royalties.
We all knew of these 5,000 or 5,500 boep/d figures, but I'm not sure if the company mentioned that they were 'post royalty' targets. It makes that 5,500 figure make more sense now, however it still could be conservative (as a post royalty production figure)
I forget whether 'post royalty rates' were mentioned when we discussed how conservative the 5,500 boep/d figure in company presentations seemed to be a few months ago.
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I might have misread but they talked about the Foster we in Ipanema having a record flow pressure. Waiting for the 30 day production means a month from now I guess once recorded. This might be of some interest? Also generally speaking how long does the average well take to frac if successful? Seems to be the weak link in the process to production. With 4 rings drilling a well a month. You'd hope fracing would only take a week but that obviously isnt the case?
Price Target: $4.50/sh
Reason For Update: Operations Update
What We Know: 60-day production results from the Sienkiewicz-1H well (AUT 25%) saw gross cumulative production of 120.6mmscf and 39,352bbls.
This equates to an average of 957boepd over the 60 days; the wells remain on highly restricted choke settings.
Drilling continues to point to a trend of increasing formation pressure towards the east extents of AUT’s acreage.
A bank of wells are awaiting fracture stimulation across AUT’s acreage.
Combining the Q’ly results with the recently released and most up to date 30 and 60 day numbers we present total gross production in the table below:
What We Think:AUT’s latest results continue to demonstrate consistency, particularly since application of restricted choke settings on new wells post the Morgan well.
From the data compiled above, we can see average production rates over 60 days are consistently around the 800-1000boepd – the latest Sienkiewicz data is no exception.
And it is this consistency in terms of production – with respect to both average rate (ie 900boe/d over the first 120 days) as well as rates of decline (negligible over the corresponding period) – that underpins the project economics.
What is glaringly apparent from the data compiled above, is how the return on capital is strongly leveraged to commodity price strength.
Revenue generation is strong from the first 2mnths of production with av. 40% of the US$8.5m tied-in well costs being recovered from Net Revenue Interest production in that period.
On this basis, an average payback of 6mnths, with average production rates still well above 500boepd on payback makes for attractive economics.
A second frac crew in the field area should facilitate bringing on-line the 10 or so wells currently awaiting frac over the next 2 months: this will have a huge impact on revenue generation in the Jun and Sep Qs.
This should be favourably augmented by the new wet-gas pipeline currently being commissioned in the field, enabling more relaxed choke settings for greater early-stage production.
We view that demonstration of revenue generation is the next important milestone for the Company.
This will encourage valuations based cash flow and IRR rather than the somewhat limited $/acre peer metrics currently deemed relevant in the shale space.
We expect circa US$5m to have been generated in the Mar Q for AUT’s interest and that this should grow 8-fold over the remainder of CY’11.
This augers well for AUT to achieve net share production of +2.5kboe/d by mid-CY’11 and exit the CY at 5kboe/d.
Investment Case:
On-going operational results continue to build on the quality argument for AUT’s Sugarkane Field interests. Sub-10% month-on-month decline rates are exceptional and deliverability from these wells is underpinning best-in-play pay-backs. Consistency in results gives us a high degree of confidence for the economics of full-field development as well as growth to all reserves categories. We set a price target of $4.50/sh as we believe our assumptions remain conservative given the out-performance of AUT’s wells to date.
Furthermore, we expect as AUT’s acreage demonstrates profitability within the next 18mnths, AUT will earn a premium noting that its growth to reserves, production and cash flow is not compromised by geological risk and that field production decline is some 10yrs away.
Reason For Update: Operations Update
What We Know: 60-day production results from the Sienkiewicz-1H well (AUT 25%) saw gross cumulative production of 120.6mmscf and 39,352bbls.
This equates to an average of 957boepd over the 60 days; the wells remain on highly restricted choke settings.
Drilling continues to point to a trend of increasing formation pressure towards the east extents of AUT’s acreage.
A bank of wells are awaiting fracture stimulation across AUT’s acreage.
Combining the Q’ly results with the recently released and most up to date 30 and 60 day numbers we present total gross production in the table below:
What We Think:AUT’s latest results continue to demonstrate consistency, particularly since application of restricted choke settings on new wells post the Morgan well.
From the data compiled above, we can see average production rates over 60 days are consistently around the 800-1000boepd – the latest Sienkiewicz data is no exception.
And it is this consistency in terms of production – with respect to both average rate (ie 900boe/d over the first 120 days) as well as rates of decline (negligible over the corresponding period) – that underpins the project economics.
What is glaringly apparent from the data compiled above, is how the return on capital is strongly leveraged to commodity price strength.
Revenue generation is strong from the first 2mnths of production with av. 40% of the US$8.5m tied-in well costs being recovered from Net Revenue Interest production in that period.
On this basis, an average payback of 6mnths, with average production rates still well above 500boepd on payback makes for attractive economics.
A second frac crew in the field area should facilitate bringing on-line the 10 or so wells currently awaiting frac over the next 2 months: this will have a huge impact on revenue generation in the Jun and Sep Qs.
This should be favourably augmented by the new wet-gas pipeline currently being commissioned in the field, enabling more relaxed choke settings for greater early-stage production.
We view that demonstration of revenue generation is the next important milestone for the Company.
This will encourage valuations based cash flow and IRR rather than the somewhat limited $/acre peer metrics currently deemed relevant in the shale space.
We expect circa US$5m to have been generated in the Mar Q for AUT’s interest and that this should grow 8-fold over the remainder of CY’11.
This augers well for AUT to achieve net share production of +2.5kboe/d by mid-CY’11 and exit the CY at 5kboe/d.
Investment Case:
On-going operational results continue to build on the quality argument for AUT’s Sugarkane Field interests. Sub-10% month-on-month decline rates are exceptional and deliverability from these wells is underpinning best-in-play pay-backs. Consistency in results gives us a high degree of confidence for the economics of full-field development as well as growth to all reserves categories. We set a price target of $4.50/sh as we believe our assumptions remain conservative given the out-performance of AUT’s wells to date.
Furthermore, we expect as AUT’s acreage demonstrates profitability within the next 18mnths, AUT will earn a premium noting that its growth to reserves, production and cash flow is not compromised by geological risk and that field production decline is some 10yrs away.
Aother update out
Direct access with great flows and low declines - 60 day flow at 666boepd
Hollman at 884 boepd for its 30 day flow.
All good news, these flows continue to be very impressive, incredibly economic imo and will continue to impprove valuations going forward.
With Sienck yester day in the high 900's this should sustain AUT valuations.
note the sell numbers taking us down are tiny, looks more like manipulation then genuine selling.
Direct access with great flows and low declines - 60 day flow at 666boepd
Hollman at 884 boepd for its 30 day flow.
All good news, these flows continue to be very impressive, incredibly economic imo and will continue to impprove valuations going forward.
With Sienck yester day in the high 900's this should sustain AUT valuations.
note the sell numbers taking us down are tiny, looks more like manipulation then genuine selling.
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Thanks Condog.
I hope so, been a holder of AUT for over 3 months, bought in at 3.2, todays price is 2.7.
Lets hope to hear some good news soon, AUT is decreasing my portfolio value. Im on the verge of selling.
Keep us inform. thanks
The interesting well is Weston. It's 2/3rds the length of Morgan (4,400ft) or Rancho (5,000ft) but almost as productive at the 7 month point. Furthermore, it's in the Austin Chalk, not the shale - see AUT news release 18 Feb 2009. The reported reserves include NOTHING for the chalk.
Yeah I been looking at the graphs from the last 6-12 months.
The XAO bounced as predicted, which provided good buying as usual when all the lemmings over react.
So far AUT has not bounced back. Yet you only have to look at those updates to see the value thats been added, and whats more, about to be added.
When those frac results start rolling in at a rate of faster then 1 per fortnight, the value of AUT will be hard to ignore.
Im led to believe Jon is on his way to the US today. Hopefully to acquire some more prime acerage.
So far AUT has not bounced back. Yet you only have to look at those updates to see the value thats been added, and whats more, about to be added.
When those frac results start rolling in at a rate of faster then 1 per fortnight, the value of AUT will be hard to ignore.
Im led to believe Jon is on his way to the US today. Hopefully to acquire some more prime acerage.
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All thing going right Condog, how long does the HC frac crew normally take to frac an average well?
A week per frac, plus set up and pack up makes it about two weeks per frac.
What do you know the US congress approved more debt, well enough to get them thru to October anyway. Within two hours of govt shutdown. Its something to keep a careful eye on as October approaches.
Comodities should now rally, and the AUD should rally against the USD. One wonders if the devaluation of the USD is deliberate. Either way it doesnt help us from our earnings, but it does help us with our CAPEX and OPEX.
The translated results might be a bit depressed but whilst the cash is being recycled back into drilling and land acquisition, it's not going to make a difference to the operations.
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Very good point! Cheaper USD is not a bad thing when we are paying HC in USD plus potentially buying land in a devalued currency.
By the time we are selling sizeable amounts of oil it may not be in USD anyway.
very good point in regards to capex/opex and land acquisitions.
I've no doubt AUT will continue to be very selective with their land holding, and they have no reason to change.
AUT is already an ASX leading oil and gas company, and value accretive acquisitions like the most recent investment in Hilcorp's acreage is the way to go IMO, and most of you would agree.
Paying $24,000 per acre like the last acquisition is a great deal for this company, provided the working interests (Sugarloaf/Ipanema/Longhorn/Excelsior) are in Hilcorp's current plans, which they very much are.
EKA has tried to fast-track several years by buying extremely cheap land (1/10th of the cost) in the outer regions of the eagleford, which may or may not be successful. Further well results will give us indications along the way. There are definite risks involved.
I hold EKA and i'm happy with the direction they took, but that company is in a different scenario (it's up and coming), AUT is very much already an industry leading company on our stock exchange and there business plan does not need to be changed one bit, just further developed. I'm sure I'm just pointing out what most people here are thinking.
Good to see the buying back today!
I've no doubt AUT will continue to be very selective with their land holding, and they have no reason to change.
AUT is already an ASX leading oil and gas company, and value accretive acquisitions like the most recent investment in Hilcorp's acreage is the way to go IMO, and most of you would agree.
Paying $24,000 per acre like the last acquisition is a great deal for this company, provided the working interests (Sugarloaf/Ipanema/Longhorn/Excelsior) are in Hilcorp's current plans, which they very much are.
EKA has tried to fast-track several years by buying extremely cheap land (1/10th of the cost) in the outer regions of the eagleford, which may or may not be successful. Further well results will give us indications along the way. There are definite risks involved.
I hold EKA and i'm happy with the direction they took, but that company is in a different scenario (it's up and coming), AUT is very much already an industry leading company on our stock exchange and there business plan does not need to be changed one bit, just further developed. I'm sure I'm just pointing out what most people here are thinking.
Good to see the buying back today!
