AED - AED Oil

[chops_a_must]

Guys, just to keep you informed, the fully diluted mkt cap is over 1 Billion, as they have approx 150M shares fully diluted.

But between the two main fields they plan on developing they should have 80MBO that will be recovered. And I think the p/e of 2.5 is based on the expected 10MBOPD!

So the field has a life of 8 days?

Yes, they have a fully diluted market cap of over 1 billion dollars... BUT the oppies have an expiry in 2010. SO, as with all options, taking into account the half life etc. they really shouldn't have an impact on the price action of the heads until closer to the expiry date. Especially considering the best part of the production will be over and done with well before this expiry... so I doubt whether the forward P/E figure takes into account the diluted market cap... as it couldn't be if the options weren't exercised at the time of share earnings...

The total ongoing annual operating costs have been estimated by the Company to be U.S.$70
million. The Company believes that the most significant ongoing cost will be the cost of leasing the
Front Puffin FPSO.

Costs are obviously low in this case due to the sale of oil effectively on the FPSO facility.

Make of this what you will. However I don't think MacBank would be too much off the money.

However on these figures 30,000 bopd ~ 10,500,000 bopa

@ US$60pb = US$630m

EBITDA = US$540m

Even doubling these expected costs AED still looks attractive.

All figures are as of Convertible Note Offering -Exercise of Lead Managers Option 23/02/07.

Looks OK to me .... any opinions

Ha! Looks like I wasn't far off with my punt of costs close to 6USD per barrel! Obviously that will increase as the field ages...

Just wondering how you got an EBITDA of USD$540m after total earnings 630m? Is that with the 70m yearly costs + 1/5 of the total costs (100m)? It's late... maybe I've missed something...

Really really really good post chops, thanks

If you have it, I'd love to see AED/NWE estimates on costs per barrel.

Well, I aim to please lol. There has been some good data on here that I had forgotten about...

I still think on a bang for buck analysis, NWE is still ahead... as the 1.25% royalty as I understand it is to be paid prior to any costs being taken into account...

Obviously, I happily hold both.

Cheers,
Chops.

P.S. Dr. J, did you ever play this game in your younger years?: http://en.wikipedia.org/wiki/One_on_One:_Dr._J_vs._Larry_Bird

 

[doctorj]

P.S. Dr. J, did you ever play this game in your younger years?: http://en.wikipedia.org/wiki/One_on_One:_Dr._J_vs._Larry_Bird

Sort of. The only difference is back then we actually got outside with a ball and pretended to be the players. Sure my hair was never quite as good as the good Doctor, but the rest was almost identical

I'm astonished the costs are so low. I guess I'll have to eat my hat. Glad to see some good analysis come out of it though. Some of the posts in the last couple are amongst the best in the stock threads on this forum I think. Thanks for sharing your research

I guess I'll have to pick on people in another thread and see I can get some good analysis out of them too In the mean time, neither this report or this bottle of vino will finish themselves...

 

[rocka1]

hi chops , Dont you guys sleep ,just like to thank you guys for very imformative posts, im learning heaps im only a newbie really , i got out of aed today only as im a bit uncertain on what the markets got in store next 2 weeks , sell in may more like sell in june ill sit on the fence after tomorow see what happens metal prices up tonight might get a rebound tomorow , ps friday is normally a pullback day i hope not cheers rocka ps sorry guys just checked Kitco web site prices on all metals down almost 3 %or more not good

 

[mick2006]

interesting to see the price divergence between WTI Crude now at $64.33, UK Brent Crude $70, and Asian Tapis $78.90 a barrel. With Brent and Tapis heading north overnight and WTI heading south.

With the location of the Puffin fields AED/NWE will be selling their oil at the premium price of Asian Tapis, which in turn will lead to higher revenue in the long run.

Will be interesting to see how they both trade today given their recent strength and the selloff in the US overnight, against the continued strength of the Tapis oil price and the impending commencement of production from Puffin.

What do you guys think?

 

[gunditrader]

Just wondering how you got an EBITDA of USD$540m after total earnings 630m? Is that with the 70m yearly costs + 1/5 of the total costs (100m)? It's late... maybe I've missed something...

Chops, my subtraction skills seem to be failing me. EBITDA at these figures should be revenue minus operating costs.
So US$560m

 

[imajica]

I know we had a poor lead from the US but why on Earth would people be selling with production approaching?

volumes are small so Im not too worried

 

[somesortoftrader]

A stumble through the day .... a low of $6.90... close at $7.26.

$7.00... the new floor?

 

[nizar]

Yeh it could well be, i was waiting at 6.70 to top up as i thought she may fill the gap, but no go. Looking strong in a generally down day.

Imajica - who cares about production, people could have all sorts of reasons to sell, maybe to buy the next AED? THis has come a long way from 85cents.

 

[imajica]

AED Oil
Coverage initiation
Stock: AED AU
Recommendation: Outperform

Event

We initiate coverage of AED Oil with an Outperform recommendation and A$7.90 target price.

Impact

Delivering the cornerstone development: AED Oil is currently developing the Puffin oil field (100%) with first oil expected mid-August 2007. The Puffin oil field is AED Oil's cornerstone development and is located ~700km west of Darwin, and 80km south west of the mature Challis and Jabiru oil fields. We forecast AED Oil to produce up to ~8mmbbl in 2008 from the FPSO Front Puffin.

Reserve growth potential: AED Oil expects its 40mmbbl 2P reserve base to grow significantly as oil initially in place (OIIP) estimates are de-risked through seismic re-interpretation, appraisal drilling and field production. We highlight that the Puffin South West region has the potential to significantly increase AED Oil's current 2P reserves. AED Oil is currently evaluating all available data and is expected to confirm SW reserve estimates by first oil.

Further regional upside: AED Oil expects to begin a three well program (two confirmed, one optional) in October, focused on appraising the Puffin North East 2 and South West regions. The greater Puffin horst area has the potential for additional exploration and development upside following project delivery.

Strong demand expected for Puffin's crude: Puffin is expected to produce a high quality, light (API of ~44 degrees) sweet crude, which is forecast to trade at a premium to Tapis. We note that Tapis is currently trading at a US$9-11/bbl premium to West Texas Intermediate (WTI). We currently forecast Puffin's crude to trade at a ~US$6/bbl premium to our WTI forecast in 2008, with risk to the upside.

Price catalyst

12-month price target: A$7.90 based on a discounted cash flow methodology.

Catalyst: Reserves upgrade following review of OIIP estimates and reprocess/analysis of seismic and well data. Delivery of Puffin development by mid-August. Further appraisal drilling.

Action and recommendation

We initiate with an Outperform recommendation.

AED Oil is an emerging oil development company currently focused on delivering the Puffin oil field. We highlight that although AED Oil is leveraged to some significant reserve and production upside, it presents a higher risk investment thesis than its Exploration & Production peers with asset and commodity diversification. Unique risks specific to AED Oil include project delivery risk, single asset exposure and commodity prices.

Macquarie

 

[mick2006]

for those of you that are on AED it maybe worth putting some of your profits into NWE as they have the upside from the puffin fields with their royalty and exciting global exploration over the next 18 months. With large drill targets in the UK north sea, the timor sea, Australia and gas targets in the US.

With AED firmly focussed on the development of puffin they won't have the time for further exploration of other projects in the near term, where NWE just banks the royalties from Puffin and Jingemia and can continue their efforts finding the next big thing.

I am a holder of both stocks and like AED for its upcoming strong cash flow and future dividends, but I am now accumulating NWE for its exploration upside due to the cashflow created from its royalties.

Would be interested to hear thoughts on the upside of both stocks.

Below is an analysis of the cash flow created by puffin for NWE

just working on some calculations as to the value of upcoming puffin field oil royalties for NWE. Please feel free to correct me if I get it wrong.

Field production of 30,000 bopd
NWE share 1.25%
Tapis Oil Price Received $78.90
Exchange Rate of .8194


= 375 bopd * current tapis price $78.90 usd
= $29587.50 usd per day or $36108.75 aud per day

or

= 2625 barrels per week
= $207,112.50 usd per week or $252,761.25 aud p/w

or

= 136,500 barrels per year
= $10,769,850 usd per year or $13,143,585 aud p/year

The above calculations use the current spot tapis oil price and the current USD/AUD exchange rate.

It shows that without any capital expenditure NWE stands to earn over $13 million dollars in royalty per year for at least the next 5 years and that doesn't include any further explorational upside from the puffin fields, which are considered prospective to hold at least double current discovered oil.

On top of that they are currently earning $1 million per year from royalties from the Jingemia fields.

So with $14 million in revenue per year to go toward the $7.8 million they already have on hand it gives plenty of scope for some high risk/reward exploation targets.

Goes to show that even a small interest in a big oil field can earn some serious dollars for a junior explorer.

And with many large scale drill targets over the next 18 months you can see why the investment community are starting to sit up and take notice!!

 

[laurie]

I'm sure NWE had a 2.25% royalty and AED cut it down to 1.25%

cheers laurie

 

[cloggs]

I read somewhere that NWE had a 2.5% stake, but that meant they had to pay their way for developing the field. It was cut to 1.25% for a free ride.

 

[bigdog]

SP looking great this morning up 26 cents

Code Last Move % Move Buyer Seller Open High ..Low ..Volume .... Value ...Last Traded
AED $7.52 +$0.26 +3.58 $7.52 $7.54 $7.34 $7.52 $7.34 205,736 1,530,072 28-May 10:57:56

 

[laurie]

I read somewhere that NWE had a 2.5% stake, but that meant they had to pay their way for developing the field. It was cut to 1.25% for a free ride.

hmm don't know if that's the reason AGS has a 25% stake and is free carried

cheers laurie

 

[imajica]

typical flat day on the market after holiday on wall street

nice bit of consolidation for AED today - low volume

a strong lead from wall street + strong oil price + announcement of first commercial oil production from Puffin will see AED's share price re-rated

 

[imajica]

AED gone into pre_nr status

announcement pending?

strong bidding this morning, just when will AED start producing? is it next month?

 

[imajica]

here is the announcement - market has responded with AED jumping to $7.70

could someone please explain the potential of the talbot oil field


ASX Announcement 31 May 2007
ACQUISITION OF TALBOT OIL FIELD

AED Oil Limited (AED) is pleased to announce that it has entered into an agreement to
acquire Retention Lease AC/RL1, including the Talbot Oil Field. Under the agreement, AED will acquire 100 percent of AC/RL1 from Apache Northwest Pty Ltd for a cash consideration of AUD 2 million. The sale will be effective 2 July
2007.
A further announcement regarding the acquisition will follow.


Ken Tregonning
Managing Director

 

[imajica]

source site: http://www.nt.gov.au/dpifm/Minerals_Energy/index.cfm?header=Prospective Fields

4. Talbot

Talbot oil field was discovered in 1989 and is now under retention lease.



Reserves: 2 to 5 million barrels

Development: Possible use of Floating Production Barge for processing and storage with periodical offloading into a tanker.

 

[imajica]

current estimates for Talbot are between 2-5 million barrels - they are essentially getting the field for about $1 per barrel approx. when in production - say having a $15 per barrel profit margin - at the upper end of estimates we can see this transaction worth 75 million for AED

 

[laurie]

current estimates for Talbot are between 2-5 million barrels - they are essentially getting the field for about $1 per barrel approx. when in production - say having a $15 per barrel profit margin - at the upper end of estimates we can see this transaction worth 75 million for AED

So why did Apache sell it cheap! $2m unless they have a % free carried status then again is Apache on the ASX

cheers laurie