ADI - Adelphi Energy

rock86 · 3 June 2010

LMAO at the reply by AWE, do they think we are utterly stupid. Honestly, they try to back up the reasons they made in their offer statement, which were laughable.

AWE need a reality check, and to smell that black gold coming from the wells. Everyone else can, and knows how much it is worth.

Hatchy · 3 June 2010

WRONG'UN said:
If GS buy another 5% they will be able to block AWE's right to compulsorily acquire the last 10% of ADI - ie they would be in a position to force AWE to raise their bid if they want the company.

Very Smart thinking Wrongun. It's a cunning plan.
I would imagine that the supporters of ADI would hold greater than 10% currently, but a large company taking up greater than the 10 would be a fairly solid stance against AWE.

AWE's statement today really does think we're all stupid.
I note the 3rd section that states that ADI will need to raise capital. How about everyone just step back and realise that cash flow is going to happen. Perhaps if Hilcorp gets aggressive and pushes for more wells soon there will need to be another raising, but i'm happy to see where the shares sit in 9 months and if ADI sits significantly higher than where they are now then capital raising will offer far less dilution than the cost of a well in 25c parcels.

It really does frustrate me to see AWE try and buy back the companies it spins off at a price unreasonable and unfair.

AWE must surely be joking.

WRONG'UN · 3 June 2010

The 9.5m odd shares bid for at 40.5 and 41.0 amount to about 5.6% of the company - just what GS needs.

AWE are making a lot of a perceived need for a CR, and not saying much about the revenue that will come on stream from the completed wells.
Critical to this, apart from the oil/gas price, is the cost of drilling a well (Hilcorp are getting this down - the independent report estimates $7m/well, but I have seen estimates of $5m from the Goodrich/Common Resources deal).
Also critical is the depletion rate - there should be some progress figures for Kennedy and Weston available any time. This will give three data points on the depletion curve, enabling the one year depletion rate to be extrapolated with more certainty. We have a one year estimate of 80% from ADI, but if it is 60%, for example, the effect would be hugely beneficial.

Sdajii · 3 June 2010

I found it very funny that they said the money in the bank wouldn't last until the end of the year! It would only last nine months, I think they said, before the money for new wells would run out...

Stupid indeed! They're only drilling wells because oil comes out of them, and that oil is sold for money! If they weren't profitable they wouldn't be drilled, and since they're producing money, we're going to be having income over that nine months, so in nine months when we've spent as much money as we now have, we'll have more money from the previous nine months of oil sales. It's so simple I'd feel insulting putting it in those terms to a five year old!

I'm sure more than 10% of holders have a similar attitude to mine (you can prize my ADI shares out of my cold, dead hands before I sell to AWE for 40c). I got my proposal from AWE in the mail the other day, I went as far as opening it, but it was in the rubbish within about 30 more seconds (largely because I'd already gone through it online, admittedly : )

Good news about GS. It's a message that ADI has solid value, they wouldn't be buying in if they didn't have good reason to believe it was a good move, and they've obviously done their research. A bidding war would be nice, but I'd rather be able to hold on for another year or two or three rather than take quick profits now.

rock86 · 3 June 2010

sdajii, my AWE proposal got as far as halfway out of the envelope before it was rubbished. thought about going out side and p#ssing over it, but did the adult thing

zerolimit · 3 June 2010

AWE's statement today really is quite weak.

Look forward to a higher offer

i too saw those big order stacked up just above the 0.40

love it

happytown · 3 June 2010

Sdajii said:
I found it very funny that they said the money in the bank wouldn't last until the end of the year! It would only last nine months, I think they said, before the money for new wells would run out...

Stupid indeed! They're only drilling wells because oil comes out of them, and that oil is sold for money! If they weren't profitable they wouldn't be drilled, and since they're producing money, we're going to be having income over that nine months, so in nine months when we've spent as much money as we now have, we'll have more money from the previous nine months of oil sales. It's so simple I'd feel insulting putting it in those terms to a five year old!

...

Good news about GS. It's a message that ADI has solid value, they wouldn't be buying in if they didn't have good reason to believe it was a good move, and they've obviously done their research. A bidding war would be nice, but I'd rather be able to hold on for another year or two or three rather than take quick profits now.

ADI will not be making any money from sales from the wells until Hilcorp recoup costs

see for eg, ADI activities and fins for Mar qtr dated 23/04/10, p 4 ("Production/Forward Program")

Following the completion of the three new farm-in wells, Adelphi will have an interest in six horizontal wells within the Sugarloaf AMI of which at least 5 are expected to be on production by mid 2010 across a large proportion of our lease area (refer illustrative map below).

Production revenue from these wells will accrue to Adephi following rescoupment of the farm-in costs incurred by Hilcorp which is expected by later this year.

or a week later in the Adelphi Investor Presentation dated 30/04/10, p 22 ("Adelphi Outlook")

Cashflow to Adelphi expected Q4 2010 after farminee cost payout

and p 17 ("Sugarloaf Single Well Scoping Economics")

Approx 6 months payback per well

The GS purchases are interesting from several perspectives

they have purchased just above the legal reporting requirement for subs holders, 5.05% (5% reporting threshold)

yesterday when there was more than 1,000,000 available at .415 they only picked up 168,000 approx, that 1,000,000+ sell has since been pulled

why didn't they pick up the 1,000,000+ yesterday (was it their sell order at .415 trying to squeeze out other sellers at .41, for GS to pick up)

why have they thus far only picked up the bare minimum for the reporting threshold

do AWE use GS for advisory/bookbuilding etc - are GS pimping for business

interesting times ahead

NB - shout out to AgentM for his work on this and one or two other threads

AngusSmart · 3 June 2010

Hey just a quick question regarding the above. where do you see orders on queue?

does comsec show this?

zerolimit · 3 June 2010

AngusSmart said:
Hey just a quick question regarding the above. where do you see orders on queue?

does comsec show this?

I don't use commsec but on my broker you can have a look at market depth and then market detail to see the individual orders and the size of each one

im sure commsec would have this

Agentm · 3 June 2010

wrongun

imho a new well will happen in the ami acreages, one that is not involved in the AMI farm in deal, so instant revenue @10% for adi.. i say that as i dont believe the jvp will let some critical acreages go.. so some real happy landowners are going to be pretty excited in only a matter of days really..

that will mean instant revenue to the jvp partners if the event takes place..

imho awe will want to think this plan through a little clearer..

lets see if this happens..

cheers

condog · 3 June 2010

40c is trash talk

i read the AWE staeemtn and in my opinion its underpricing ADI.

imo ADI should be 40c plus with or without the interest of AWE.

60c is in the ball park , but still forgets about CGT problems and future growth

75c would be fair imo, but i think 60c will get up come early july.

40c will only get up if holdrs are ill disciplined and lack unity.

WRONG'UN · 3 June 2010

Thanks for sharing that great idea, Agent - a catalyst to really set the cat amongst the pigeons if it happens!

Sdajii · 4 June 2010

Rock86: Hahahaha!

I should have thought about that! I was tempted to throw it into the fire, but the bin was closer.

happytown: Sure, Hillcorp needs to be payed back, but with oil constantly flowing to sales, they'll get their money, and once paid back, further revenue can be put into more wells. In nine months, even if they haven't fully paid Hillcorp back, they're going to be producing a nice amount of oil from multiple wells, and it won't take much longer. With that much oil being produced by that stage, it's hardly going to be difficult finding a line of credit if required - any lender will be able to see a clear method of paying it back, and by then there will be a good idea of the timeframe. Even if CR is required at that stage, it's presumable that it will be happening at greater 40c anyway, assuming this play is viable, and AWE can't possibly try to convince us that they don't believe it is a viable play if they are trying to buy it!

Fair comment though, happytown. Point taken.

Ramblin Round · 4 June 2010

I found the AWE rebuttal a bit interesting on the topic of the examples used. Share sales at .25 did indeed happen but should that be used to support a lower share price offer ? Stock options are offered all the time on the open market. What's the difference ? And again, how can they say ther is no cash for futures when clearly they are not recognizing the producing wells and near producing wells connected to the pipelines for sales ? How can you totally dismiss the sale of oil and gas as a future revenue source ? Fools.

The AWE response is greatly flawed. I expect another offer soon but probably not within the time frame. If AWE holds on to this crazy notion that there is not money to be made in ADI we might be in it for the long haul. I would hope that they are smarter than that. They need to get off their billionaire high horse if they want some action.

zerolimit · 4 June 2010

Ramblin Round said:
I found the AWE rebuttal a bit interesting on the topic of the examples used. Share sales at .25 did indeed happen but should that be used to support a lower share price offer ? Stock options are offered all the time on the open market. What's the difference ? And again, how can they say ther is no cash for futures when clearly they are not recognizing the producing wells and near producing wells connected to the pipelines for sales ? How can you totally dismiss the sale of oil and gas as a future revenue source ? Fools.

The AWE response is greatly flawed. I expect another offer soon but probably not within the time frame. If AWE holds on to this crazy notion that there is not money to be made in ADI we might be in it for the long haul. I would hope that they are smarter than that. They need to get off their billionaire high horse if they want some action.

if they didn't believe there was money to be made they wouldn't be trying to buy everyone out, they are just trying to make it seem like there isn't THAT much value and the risks are higher so they don't pay top dollar.

I would be doing the same if i was them.

rock86 · 4 June 2010

SUGARLOAF PRODUCTION AND OPERATIONS UPDATE
Adelphi Energy Limited (“Adelphi”) is pleased to provide the following update on production
and operations at the Sugarloaf Area of Mutual Interest (“AMI”) within the Sugarkane Gas &
Condensate Field, Texas.
Production Update
The recently completed Morgan #1H and Easley #1H wells have now been on production for
sufficient time to provide the following first 30 day production figures:
Total Gas Production(mmscf) Total Condensate Production (bbls) Average Daily Equivalent Gas Rate (mmscfe/d)*
Morgan #1H 109.4 38,500 19.97
Easley #1H 125.9 12,212 10.13
* The equivalent gas rates have been calculated to reflect value using a 12:1 conversion ratio for
condensate and a 25% uplift on gas equivalent volumes due to the high calorific value of the produced
gas.
These additional production figures continue to be very encouraging for the economics of
the field. Further production updates for these wells will be provided in quarterly reports
going forward.
Rancho Grande #1H
Adelphi has been advised by the Operator that the multi-stage fracture stimulation operation
of the Rancho Grande #1H well has now been completed and the well is presently
unloading. A production update will be provided to the market once stabilised flow has
been achieved.
Kowalik #2H
Adelphi has been advised by the Operator that the Kowalik #1H well location will be twinned
with a new well, which is planned to spud in July 2010. This decision has been made in light of
the sub-optimal original well design for the now preferred completion activities and the
previously reported operational difficulties at the well. The Kowalik redrill will be the first of a
number of Sugarloaf wells to be drilled during this calendar year where all Joint Venture
partners will contribute to costs and derive revenue on a post farm out basis.
ASX listed participants in the Sugarloaf AMI are:
Adelphi (ASX: ADI) – 10% (post farmout)
Aurora (ASX: AUT) – 10% (post farmout)
Eureka (ASX: EKA) – 6.25% (post farmout)

rock86 · 4 June 2010

Wow, Morgan is a monster producing almost 1,300 BOCD.

Rancho finished, results will be next week I'm guessing.

Kowalik#2, now that brought a smile to my face. What also brought a big grin was the quote,
"The Kowalik redrill will be the first of a number of Sugarloaf wells to be drilled during this calendar year where all Joint Venture partners will contribute to costs and derive revenue on a post farm out basis."

Lots more wells in the AMI by years end, bring it on.

AWE 40c, LMFAO hahahahahahah

zerolimit · 4 June 2010

rock86 or anyone

im not to ofay with the volumes and production amounts and whether they are good or not? the vibe from the release seems to indicate they are good?

will this help push our price up or what?

zerolimit · 4 June 2010

thanks for that rock86 we must have posted almost at the same time

sounds good

i do hold adi

Agentm · 4 June 2010

rock86 said:
Wow, Morgan is a monster producing almost 1,300 BOCD.

Rancho finished, results will be next week I'm guessing.

Kowalik#2, now that brought a smile to my face. What also brought a big grin was the quote,
"The Kowalik redrill will be the first of a number of Sugarloaf wells to be drilled during this calendar year where all Joint Venture partners will contribute to costs and derive revenue on a post farm out basis."

Lots more wells in the AMI by years end, bring it on.

AWE 40c, LMFAO hahahahahahah

morgan was running state records on the biggest producing oil well, and as you know those numbers are averaged out over 30 days, the Ip flows were off the dial!!

putting it into perspective.. the AZZ francis dilworth 2h well produced a total of 14612 bo over 90 days, morgan did 38,500 in 30 days.. so twice the 90 day flow rate of the other well in one month..

monster.. absolutely!!

can you see why AWE is putting in a bid for ADI at .40 and not chasing down the far bigger acreages that the AZZ region holds??

kowalik 2 needed to be drilled, i am aware that locals in the ami were very certain that the hilcorp jvp would not want to drop the acres to other competitors, so the jvp imho are wise to keep the leases and are completing kowalik 2h now. with that very nice flow rate on morgan, the wells are paying themselves off in the 90 day region..

kowalik 2H and morgan are going to be side by side in terms of how the sit on the trend..

my view is that without the awe offer,, the adi share would have been trading in the low to mid .30's by now with that morgan announcement.. and heading towards the near term .47 price target that harleys were talking about..

the drilling of kowalik 2 imho and the knowledge that the jvp are deciding to drill leases before expiry rather than let them go, and who wouldnt with the spectacular results thus far, makes it a very busy time in the very near future..

sure awe will be hopeful of a current bid being looked at, but imho the price is not going to be that attractive as the days roll by..

with that shocking response from awe yesterday, it almost was trying to say that adi would never achieve the current price on its own merits.. that will be a very tough one to get over later as i think there is momentum and weight to say adi would be mighty close to these bid prices on their own accord

awe imho is saying you will be worse off without a bid.. well maybe a few cents worse off, but i think there is better upside in adi and personally i would like to see adi trade 6 months more and sell on market then..

ADI - Adelphi Energy

Sdaji

Sdaji

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