Entire following Post by esteon:
reserves valuation is published and that should be next week, or the Monday following at the latest.
AUT volume has been pretty small for days even though the price has danced around a bit. Some bought at over 10c more than the closing price. If there was anything negative it might well have leaked out a bit by now. NSAI is probably printing off about 150 incomprehensible spreadsheets as last time - and that's just for AUT.
It's possible that the brokers will be given an early view so that they can get their revised notes and targets out reasonably soon after.
Not long to wait, now. A waste of time and energy trying to speculate on amended assumptions. There are a number of changes that would compound up to produce something quite eye-watering but we can't guess what they will take on board for this valuation. Could see NPV10 for 3p of $2bn (including new land) but who knows? That would take us past the CBA target in a flash. Probably take us through the GMP Securities target of $3.85 also.
What did Euroz say?
"Additionally, strength of the production data bodes well for the revised reserves statement in the Mar Q."
They may be talking about reduced declines.
"Furthermore, tighter development well spacing (vertically and horizontally), continued out-performance vs. the Netherland&Sewell type-curve, and higher EURs encourages
us to see significant upside to 3P reserves can be realized over the next few years."
They are trying hard to suggest reduced declines assumptions and denser drilling. 60 acre spacing would be a 33% increase right away and AUT has mentioned the '60' figure.(page 17 of the 2 Feb 2011 presentation)
"We highlight the leverage AUT offers to rising oil prices; applying US$120/bbl long-term underpins a $4.40/sh valuation"
Can't see NSAI using a $120/bbl assumption but they are trying hard to flag $4+ target and to find an excuse to do so.
AUT also flagged that 10 - 15% of the net acreage might not have been valued in the first report (page 17 of the 2 Feb 2011 presentation).
AUT also flagged on that magic page 17 that the producing wells have a higher condensate ratio than assumed.
All in all it would be a great disappointment if little or nothing of these bullish hints came to be reflected in the reserves report. AUT was presenting that material at a time when NSAI was doing its sums and the management must have had a feel for what NSAI might take into account for its amended assumptions. There must have been discussions between the management and NSAI and the management will have asked what might be reasonably said in the presentation.
You could easily see 120% (oil price), 130% (spacing), 110% (uncounted acreage), 125% (?reduced declines?), 125% (?increased condensate ratio?).
Put that lot together (compound) and you get a breath-taking 268%. Apply that to the figure on page 11 of the presentation for NPV10, $1.374bn, and you get $3.68bn, or $8.85 per share (USD).
I doubt very much that they will publish such a massive figure this time around - spacing might have to wait and declines & condensate ratio might be reduced. But, run with 115% (oil price), 110% (uncounted), 115% (declines) & 115% (condensate ratio) and you get 167%: $2.3bn: $5.53/share.
I can't speculate on what they have run with but they don't need to upgrade the assumptions by all that much to result in a significant upward valuation.
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