Not quite, Mick.
A person with lack of confidence is worried that it might fall. He doesn't want it to fall. A person with confidence may want it to fall so that he can pile in and make money on the inevitable rise.
But I take it that you were talking tongue in cheek.
The gap between AUT and ADI could close significantly if the arbitrage traders switch horses.
nursery reported a corker of a trade between EKA and ADI on HC. He reported turning 100k ADI into 145k ADI. Good for him. It wouldn't surprise me to hear of others doing the same using AUT bought before the recent rise.
i am loving the long term holders smashing the sentiment on adi
why not
i see an definite advantage
so i think the sellers should believe it all and sell away imho
do i believe the oil in the eagleford has evaporated.. no
do i see many scenarios about to unfold in the ami and adjoining acreages.. yes
do i believe the sp will drop post the morgan flow results.. i absolutely dont, but most holders have such a negative outlook on the adi share i am certain they wouldnt want me to be placing my money on buy orders and getting ahead out of it, that would cut them to pieces if i made a killing off their negative sentiment.... and i have plenty in reserve if it does..
will the usual suspects maintain a negative stance on their investment day in day out regardless? yes
do i think the likes of hartleys have it understood better? yep
so sell it down big time i say. i am loving the aut price shift and eka's atm
ADELPHI ENERGY LTD
What happened?
Adelphi Energy has reported sustained average 30 day flow rates from its
first two wells at its Sugarloaf project onshore USA. The Kennedy #1H well
has averaged 11.7 million cubic feet of gas equivalent per day* (“mmcfe/d”)
and the Weston #1H well has recorded average 30 day production of
11.4mmcfe/d. These results have been achieved without the benefit of
installation of production tubing, which has been indicated in nearby wells to
result in a decrease in initial decline.
The Company has also reported that it now has three additional wells in the
process of being drilled or fracture stimulated.
ADI is free carried through the current work program.
What does it mean?
At these rates, we estimate that each well is making US$50k-US$65k in
revenue per day, with combined revenue from both wells grossing estimated
US$3-4m in the first 30 days. We calculate that the average gas /
condensate production per well is 3.75 million cubic feet of gas per day with
615 barrels of condensate per day (flow rates will decline significantly in the
first year). With well costs estimated at US$6-8m, payback should be
achieved within 5-8 months.
It is still early days; however, each piece of new information received to date
has increased the potential of the play and estimated ultimate recovery per
well is now likely to be significantly greater than 5 billion cubic feet of gas
equivalent. To give an indication of potential value, there could be over 200
well locations on the Sugarloaf acreage, resulting in over 1 trillion cubic feet
of gas equivalent. We estimate that Adelphi’s share of this at current spot
prices (US$80 oil, US$4 gas) is worth ~150cps (using US$2 per mcfe
calculated net present value and 10% working interest post farmout).
At US$100 oil, the valuation potential increases to over 200cps.
Strong newsflow is expected over the next 2-3 months as the additional 3
wells are completed, fracture stimulated and flow tested. Now that the
technical risk has been decreased due to a substantial number of successful
wells being drilled in the play,
we view these wells as very low risk (90%
chance of success).
Hartleys Initial View
We recently upgraded ADI to a Buy based on the initial flow rates received
from its first two wells and consistent information from wells in the
surrounding acreage. This new information has increased our confidence in
the potential of the resource and we re-iterate our Buy recommendation and
short term price target of 45cps.
If initial results from the next three wells (expected over the next 2-3 months) continue to be strong, there is substantial room in our valuation for further large upgrades in price target and valuation, as indicated by our unrisked valuation of 188cps.
*mcfe is calculated using a 12:1 conversion ratio for gas / condensate and a 25% uplift in gas equivalent volume due to high calorific value of the produced gas