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fyi - Euroz raised target, retained buy.
Pattersons retained hold.
Macquarie cut to hold.
AUT - Aurora Oil and Gas
- Thread starter nioka
- Start date
fyi - Euroz raised target, retained buy.
Pattersons retained hold.
Macquarie cut to hold.
McCoy Pauley
Get out of here Budweiser!
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Tim Boreham has written about AUT in today's Australian.
http://www.theaustralian.com.au/bus...its-over-the-top/story-e6frg9lo-1226068254728
A bit of a misleading headline given to the article by the subbie, IMO.
http://www.theaustralian.com.au/bus...its-over-the-top/story-e6frg9lo-1226068254728
A bit of a misleading headline given to the article by the subbie, IMO.
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Sh*T article by some Skirt who would know nothing about the company
seems a fairish assesment to me as to price of acreage, the market is valuing aut acreage higher than for hilcorp, aut paid 23529USD per net acre in last transaciton vs 24822USD for marathon.
The people at Hilcorp are the operators of all AUT fields so should have a fair idea of what the value of the acreage is and the prices paid are consistent.
The people at Hilcorp are the operators of all AUT fields so should have a fair idea of what the value of the acreage is and the prices paid are consistent.
skc
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Regarding the newspaper article....
"the quality of Aurora's shared acreage is superior to that of the total ground acquired by Marathon. But at face value Aurora has either overshot the platform, or we have a rare case of private equity selling far too cheaply"
The important thing that needs to be emphasized is that Marathon acquired a lot of land of varying degrees of quality, on average of course they paid less than the prime land that AUT holds. Its crazy to average it all out and then value AUT accordingly, when AUT clearly has prime land. I do think Marathon have pulled off a great deal though and wish AUT could have had a slice of some of it. On the other hand we distinguish ourselves by the fact that we are in the sweet spot and therefore enjoy the benefits of lower risk and I doubt we could have purchased only the best land, it would have been a package deal.
AUT have said they are hungry for a suitable acquisitions but I wonder if there is much land left that AUT can purchase in the sweet spot?
"the quality of Aurora's shared acreage is superior to that of the total ground acquired by Marathon. But at face value Aurora has either overshot the platform, or we have a rare case of private equity selling far too cheaply"
The important thing that needs to be emphasized is that Marathon acquired a lot of land of varying degrees of quality, on average of course they paid less than the prime land that AUT holds. Its crazy to average it all out and then value AUT accordingly, when AUT clearly has prime land. I do think Marathon have pulled off a great deal though and wish AUT could have had a slice of some of it. On the other hand we distinguish ourselves by the fact that we are in the sweet spot and therefore enjoy the benefits of lower risk and I doubt we could have purchased only the best land, it would have been a package deal.
AUT have said they are hungry for a suitable acquisitions but I wonder if there is much land left that AUT can purchase in the sweet spot?
5100 of the 15600 net acres was recently purchased at similair rates to the marathon transactionaction for 120m USD unless the other 10500 net acres is instead worth substantially more i.e. the 1bn+ ausd in extra market cap, unlikely given they are in the same area something is missing here.
Hillcorp is also the operator so should have a larger margin than aut, if the mistake is that AUT's acreage is that much better it should raise capital again and pre-empt the marathon bid.
Hillcorp is also the operator so should have a larger margin than aut, if the mistake is that AUT's acreage is that much better it should raise capital again and pre-empt the marathon bid.
skc
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OK I think I now understand...
Marathon bought essentailly 7000 boepd at $3.5B. AUT has 2000 boepd. If you take that ratio than AUT is valued at ~$1B based on the deal.
Now AUT is at market cap of $1.4B which is only ~40% premium - and one can quite easily explain that based on them being in the sweet spot etc. Makes a lot more sense than being 3 or 4x over on a per acre basis.
The chart is looking like a good gap close. Will square my short then...
:
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OK I think I now understand...
Marathon bought essentailly 7000 boepd at $3.5B. AUT has 2000 boepd. If you take that ratio than AUT is valued at ~$1B based on the deal.
Now AUT is at market cap of $1.4B which is only ~40% premium - and one can quite easily explain that based on them being in the sweet spot etc. Makes a lot more sense than being 3 or 4x over on a per acre basis.
The chart is looking like a good gap close. Will square my short then...
A few key points from the GMP report - This should clear things up SKC
- AEF trading at discount to the Marathon metrics on a proven reserve basis:-
Given that there has been over 40 wells drilled into the Sugarkane Field with consistent results that are ahead of expectations we believe that the best way to value this is based on reserves. Aurora is currently trading at just under $28.00/boe for potential proven reserves at the end of 2011, which is cheaper than what Marathon is paying for in this deal.
This is also very relevent to the above statement -
The deal metrics work out to approximately $25,000/acre for the land, $500,000/boe/dfor current production $43,750/boe/d based on the 2016 estimated production and$35.00/boe for the potential proven booked reserves at the end of this year.
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- Marathon's EUR assumptions significantly higher than AEF bookings:-
In Marathon's presentation highlighting the deal today they stated potential EUR's on the condensate wells at 965,000 boe, which is 29% higher than the 748,000 boe that Netherland gave AEF in last years reserve report. Also in the volatile oil window Marathon is looking for EUR's of 645,000 boe versus AEF bookings of between 268,000 boe and 467,000 boe. Marathon is forecasting IRR's of at least 50% on the volatile oil wells and north of 100% on the condensate wells and as a result are talking very highly about the new acreage position in Karnes County, which is the heart of the AEF acreage position.
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- Other Catalysts for AEF:-
They have now completed 3 of the 4 HiWAY fracs and we expect initial results on these wells within the next few months. Again if these prove successful we could see a material increase in the potential EUR's from the Sugarkane acreage.
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In its conference call Marathon was talking about having between 20 - 24 rigs operating in the Eagle Ford trend by the end of 2012, focused primarily on the new acreage. Hilcorp currently have only 6 drilling rigs and 2 frac crews under contract, so this will be a significant ramp-up in activity. Marathon is projecting to spend about US$750 million next year and then roughly US$1 billion per year on the play through to 2016 at which time they forecast from the new Hilcorp assets to reach 80,000 boe/d.
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Valuation:-
Based on the NSAI type curves and using the GMP price deck, we estimate the NPVs per well range in value from $1.2 million to $13.4 million based on the various type curves. With an inventory of ~900 (190 net) locations this
generates total value of $1.9 billion or $4.59 per share.
test this theory:
A company that owns acreage but does not have the wherewithal to produce the HCs likely to be in formations at depth in that acreage will be valued on the realisable value of the undeveloped acreage.
A company that owns acreage but does have the wherewithal to produce the HCs and turn them into cash, whether through contractual relationships or though using its own resources, will be valued on the basis of recoverable reserves.
As AUT is in the process of monetising the value of the reserves, it is valued by the market by reference to that valuation.
Two years ago, before the company had provided any evidence that it could monetise the reserves, it was valued at a fraction of the current amount even though it had then a higher net acreage.
skc
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Thank you to you both. Good logical arguments grounded in facts and numbers.
skc
There is another point and that is that the leases are depreciating assets and need to be held by production. AUT is on course to do just that but Hilcorp had a lot of other acreage scattered around and it is possible that it did not itself have the wherewithal to drill in those other acreages, familiarise itself with the different formation characteristics and successfully hold those other leases by production.
Agentm has been recently mentioning that a number of O&G companies are struggling to drill to hold their acreage.
I didn't invest in AUT pre-Hilcorp for precisely that reason - I couldn't see how the company could secure and monetise its significant acreage. It was only once Hilcorp had proved that it could fracc and produce from the TCEI drilled wells that I bought in - February 2010.
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What is going on with this today, Started well then big drops in price, recovers a little and then another big drop in price, The Marker depth has again turned around to the poor side since the recent run. Consolidation or is the shine wearing off?
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If some buyers showed up it could easily take off again here, not many sellers on my screen they must all be above 3.55..
Sdajii
Sdaji
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If you could see an hour into the future you'd have done pretty well on AUT today!
In my amateurish opinion, it seems pretty easy to see AUT quickly moving in either direction in the immediate future. Medium to long term I think the fundamentals will push us up, but it seems like there is trouble finding a comfortable price to sit at for now.
In my amateurish opinion, it seems pretty easy to see AUT quickly moving in either direction in the immediate future. Medium to long term I think the fundamentals will push us up, but it seems like there is trouble finding a comfortable price to sit at for now.
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Sdajii
Sdaji
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I'll admit there happens to be some decent information in all that hype, but I can't help but be disturbed to see the format in which people are increasingly wanting their information delivered in. I can't help but be reminded of the film "Idiocracy". Nothing solid to back the claims up... but he is using fierce body language and vocal tone, so I suppose it's all reliable information and advice.
I hope enough people keep a sufficient demand for calm, rational, thoughtful, logical discussion based on demonstrable facts and methodology.
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Falling price of oil starting putting a downer on the sp this week perhaps?
Spooked market I'd day.
Euroz speculative allocation of the MRO $3.5bn:
"...we assess that a large portion (circa 100k acres) of the Hilcorp acres lie within the ‘dead-oil’ zone (ie requiring artificial lift and corresponding high rates of decline and low EURs) or dry gas window (as per map above)...We highlight recent the CNOOC-Chesapeake and Reliance deals for similar areas, where-by prices paid were in the order of US$10k/acre blended average. Highlighting Marathon’s comments from the conference call regarding acreage quality, we assess that US$5k/acre was likely applied to the aforementioned 100k acres. Thus US$400-500m would apply to this portion, leaving US$3Bn applied to the residual.
This would underpin circa US$75k/acre for the net 40k acres. This would constitute an EV of US$1.2Bn for AUT’s 15.7k acres on this basis."
"...we assess that a large portion (circa 100k acres) of the Hilcorp acres lie within the ‘dead-oil’ zone (ie requiring artificial lift and corresponding high rates of decline and low EURs) or dry gas window (as per map above)...We highlight recent the CNOOC-Chesapeake and Reliance deals for similar areas, where-by prices paid were in the order of US$10k/acre blended average. Highlighting Marathon’s comments from the conference call regarding acreage quality, we assess that US$5k/acre was likely applied to the aforementioned 100k acres. Thus US$400-500m would apply to this portion, leaving US$3Bn applied to the residual.
This would underpin circa US$75k/acre for the net 40k acres. This would constitute an EV of US$1.2Bn for AUT’s 15.7k acres on this basis."
