there are 5 current asx listed companies actively operating in the eagleford that i am aware of, all with very interesting and different plays under their acreages
TXN operates in live oak and has a great position in the AWP region that petrohawk had recently paid a premium for to get access to,
texon have a well drilling and testing the eagleford atm under the awp field
AZZ operates in the tougher economics zone, the oil zone.. the ADI jvp operates in the more favourable wet gas zone with TXN
these respective oil/wet gas/dry gas zones have vastly different economics due to well spacings for AZZ and very much a hard one to manage with the incredible costs needed to keep those oily acreages
ADI/AUT/EKA and TXN sit in the wet gas zone, and we all know that unlike AZZ the wet gas wells are being classified as gas wells in the sugarkane. all wells from live oak to dewitt have been classified that way by both hilcorp and conocophillips
all players will get significant upside from their respective positions in the play, the biggest factor that will impact upside on all the players is how much the costs will be to hold the acreages considering their respective acreages and the equally important well spacings requirements that will be
needed to hold those acreages.. and how much cash they hold or debt they have is also a critical factor in valuations and future dilutions.. imho a few of the small caps in the ADI jvp will have little requirements for massive dilutions with vastly smaller % giving huge leverage into the play
i totally agree with a lot of opinion that these players have amazing potential, and we have seen one player peak recently in AZZ then fall back heavily as major investors bailed and further again as keen investors spotted production figures reported did not match the reported figures to the RRC
imho this wont happen to the adi jvp. only accurate production figures are given, no hyped up ip's, and all ips and the oil/gas ratio's for the sugarkane are 100% exact to the operators TRRC releases
biggest downside is of course whether any of these players burn their respective investors with inaccurate figures and valuations, which imho makes it hard for the small cap sector to have institutional investors confidence in them.. we can only hope whats happening atm improves and the potential damage doesnt continue
so far i have seen 100% accurate announcements by the ADI jvp, equally i like the txn standard.. its no secret that i am seeing a lot of discrepencies that concern me from azz, as nothing matches up to their operators releases on the IP report nor monthly production to the TRRC. adi has also not held back any long term production figures, which is vastly different to azz, and unlike azz, they see absolutely no reason to not disclose these production figures and announced their 60 day flow rates and have been incredibly open on how good their wells are, even with the 2 wells being drilled for chalks completions and being 2200 and 3000 feet long, they are very impressive 60 day numbers and far superior to anything seen east of the adi acreages in the petrohawk mucmullen and lasalle fields..
this eagleford, and in the case of ADI, the sugarkane (which is eagleford and chalks) has incredible upside potential, but economics have to be there for upside to be realised..
keeping oil wells acreages is far easier for the big players like eog with deep pockets imho, and its very very evident if your a small cap, the oil regions will restrict your capacity to have negotiations in selling out if you cant hold your position
importantly hilcop have done an amazing job as operator, unlike azz, the hilcorp operator for adi has now nailed 19 day completions with a super efficient H&P rig, so rig costs and well costs are significantly down compared to the other aussie listed eagleford players.. azz announced in the last days that it took an entire month to drill their second well, so they have a long way to go before they can demonstrate the economics of cost efficient drilling like hilcorp have.. a well imho at 5000 feet can pay itself off in a month based on them achieving the same ratio on production rates from 5000 feet that the 2 shorter laterals so far have demonstrated.
the eagleford will become very relevant and valuable to many in the very near term imho, adi is imho very much under valued with hartleys seeing near term the sp reaching a .45 valuation.. that will come as these wells come online. so atm adi have a huge amount of potential in just the near term let alone the long term..
waiting for the market to accept the story, which in america is very very much understood but clearly not so in australia
a few years back i said this was the biggest discovery onshore in the us for a long long time, and laughed at.. i hear many US oil giants CEO's saying the same thing openly now.. misunderstood in australia for sure atm, but as soon as these next wells open up in the coming days to weeks a different story will unfold imho
all imho and dyor