AED - AED Oil

[sfx]

Well - I was just looking at the SINOPEC sign overlooking Victoria Harbour in HK a few days ago, and little did I know at the time...

Not too sure of how to look at this one - positive and negative sides to this.

One thing is certain is that SINOPEC have a very agressive strategy for oil aquisitions etc. Take a look over the documentary - China vs the US - The Battle For Oil (2007). I wouldn't be surprised if SINOPEC gains more control of the assets if the forthcoming drilling is successful.

Should be interesting to see the deal in more detail. Hopefully this will be released to the market soon.

 

[jimski]

Does anyone know when will trading resume for AED shares? Will the suspension continue through March 31st?

 

[laurie]

Does anyone know when will trading resume for AED shares? Will the suspension continue through March 31st?

Mate the report tonight said "Reinstatement To Official Quotation" so it's Monday morning and don't forget another plus NO DILUTION

cheers laurie

 

[jimski]

Thanks Laurie. Are you going to take a wild guess at the SP close of play on Monday or is that kind of speculation not allowed here?

 

[laurie]

Thanks Laurie. Are you going to take a wild guess at the SP close of play on Monday or is that kind of speculation not allowed here?

Based on the sp when it went into a trading halt of $1.85 and if you go over the figures and since we still have 150m shares on offer the JV may add anything up to $2 per share so lets assume the market likes the deal and they should as AED will become debit free we should see a price range of between $3-$4 JMHO

cheers laurie

 

[urgalzmine]

Based on the sp when it went into a trading halt of $1.85 and if you go over the figures and since we still have 150m shares on offer the JV may add anything up to $2 per share so lets assume the market likes the deal and they should as AED will become debit free we should see a price range of between $3-$4 JMHO

cheers laurie

Not bad, whoever bought below $2, 10.17am and the stock is $2.30 20%+ gain

Laurie you are my hero. I shall listen to you more often

 

[qr2007]

The Chinese Comp. bought 60% assets of AED. Does it mean AED SP will drop because the value of AED is now less by 60% and its forecast will be less 60%? Even though, it is now debt free but its income or production will drop by at least 60%?

Pls help?

 

[qr2007]

The AED is heading south in the afternoon? any suggestion?

I am not sure if the Chinese deal is a takeover/merger or just buy assets? It sounds like a JV which they would share profit by % of JV? i.e. AED will take only 40% of the profit? does it mean that SP will be re-valuated at 60% less before the deal???

I am currently holding AED and not sure which way to go now?

Pls help ...

 

[oldblue]

The AED announcement refers to a joint venture.

"AED will utilise the funds received from the transaction to retire debt, settle its creditors and fund its joint venture interest and development opportunites."

Can't help you with your decision but imo having a JV partner with the strength of Sinopec was essential for AED at this critical time.

 

[qr2007]

The AED announcement refers to a joint venture.

"AED will utilise the funds received from the transaction to retire debt, settle its creditors and fund its joint venture interest and development opportunites."

Can't help you with your decision but imo having a JV partner with the strength of Sinopec was essential for AED at this critical time.

Thank you Oldblue.

I checked the news around, it keeps saying "Sinopec Group agreed to buy a majority stake in the troubled oil producer's assets (60%) for US$550 million"

It means AED's assets reduced by that amount %60 so this will impact the SP????

 

[Knobby22]

It means AED are able to go forward now. It is great news considering the situation the company was in. SP will rise tomorrow.

 

[oldblue]

It means AED are able to go forward now. It is great news considering the situation the company was in. SP will rise tomorrow.

Yes. It means that AED now have a 40% interest in a project which should produce a lot of Oil rather than 100% of a field which they didn't have the capacity to operate profitably. There was a risk that that may have amounted to 100% of nothing.

 

[qr2007]

It means AED are able to go forward now. It is great news considering the situation the company was in. SP will rise tomorrow.

According to the news it said
"Puffin has been producing between 6,000 and 10,000 barrels a day, less than expected, AED said Jan. 10".

The ann. on 10/Jan also mentioned that it expected to produce about 20,000 barrels a day. So even if with the JV now, the full capacity can go up to 20,000 barrels a day, AED would get only 40% i.e. only 8,000/day which is less than it is getting now? will it mean the profit will be more or less than before the JV????

From my understanding, the JV is great for AED as it can get cash to solve its current problem but not sure if it can increase profit for share holders which reflected by SP????

I am trying to convince myself to hold on to AED???

 

[Justthinkin]

I'm long and I'm nervous also. But it doesn't matter which way I cut it, today's close at 2.28 isn't fair value!

If the transaction proceeds as per the scant releases so far, it seems to me that someone has valued the majority of assets of AED at A$1B (I keep seeing the 60% for US570M being pushed about). If we assume that these are the only assets in AED (almost true but for some maybe assets) then this compares with market valuation of AED at about A$340M plus debt & creditors of about A$300M gives a ASX market value at about A$640M...which is significantly less than A$1B. In theory then, AED should be reappraised to the tune of 1000/640 * 2.25 = 3.52.

Another way to look at it. AED will receive $600M for 60% of the assets.In it's balance sheet it will retire debt and creditors of $300M and so have change [cash] of $300M. It has 152M shares on issue so cash alone is about $2 / share. Plus it retains entitlement to 40% of the Puffin et al assets which has got to worth more than 25 cents. This is especially true if we assume the new operator JV partner is capable. There is some logic to suggest that 8000 bopd is worth 1.80 per share... a bit of a stretch.

Ah but there is leakage! Unsecured note holders will have their hands up. The ATO might have an interest and I'll bet Mac Bank are not too far away.

I'm looking forward to tomorrow!

 

[resourceboom]

Hi, I do not hold AED.
But just because Sinopec may value AED assets at $1B, does not mean the australian market will do the same. It wasn't that long ago that the market valued AED at AUD$150M. There is still plenty of work to do before the assets are in good shape, but I hope for holders sake it does, at which point the sp may rise to around $3.50... imo

 

[oldblue]

I don't think we can make too many assumptions.
AED end up with 40% of a JV which has been valued at $1b. We don't know for sure that Sinopec paid $600m for their 60%. We are assuming they did, but they might equally have driven a hard bargain and got it for less. The AED announcement is not clear on this. We also don't know how much of the consideration is cash. Some of it may be in an agreement to pay a disproportionate higher share of the remedial/development costs or in other ways.



What we do know, is that AED were in a bind without such a deal and that they should have a better future now than they had this time last week.
I don't think we can be more precise than that without making a number of assumptions/guesses.

 

[Justthinkin]

Oldblue

Agreed. Just looking for a sense of direction. Most importantly, and again I must assume competency on part of JV partner, that AED no longer responsible for delivery of project. At a minimum this is [sadly] great!

 

[qr2007]

Pls read the article.
"It looks like a good deal, good enough to get them out of jail because they were really stuck between a rock and a hard place with their poor production rates and overdue debts," said Johan Hedstrom, a resource analyst at Bell Potter Securities Ltd.

"I'm sure the share price will react positively to the news but it probably won't be euphoric because AED will be a much smaller company and they won't be calling the shots anymore."

AED said it also plans to work with Sinopec to seek other project opportunities in the region.

http://www.reuters.com/article/inno...1520080307?pageNumber=2&virtualBrandChannel=0

 

[oldblue]

Yes, but nothing in the Reuters article that we didn't already know!
We will have to wait for the necessary approvals and then a further statement from AED, hopefully spelling out prospects going forward.

 

[The Piper]

Well SINOPEC have just bought 60% of 100m barrels of oil at $10 per barrel. Add on extraction costs of $25 per and they have a load of cheap oil. In my view thats a good deal, and that works for AED Oil as well.
AED Oils only sin was to spend too much on further exploration before securing satisfactory production output.
In two weeks time AED should have the funds to retire approx $300m debt, leaving $300m cash at hand, and have assets worth $400m ( if you want to value the oil at $10.00 per barrel) .