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AUT - Aurora Oil and Gas

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As an attempt to get an estimation of 6 month average flow rates, I used the production averages of Turnbull 3 (200 days), Patino (155 days) and May (144 days) wells.

I chose these 3 because they were the closest functioning wells which had roughly been onto production for 6 months (N.B. I used daily flow rates to average it out).

I used a 12:1 gas to condensate ratio as it more accurately scales the price of gas with the price of oil (6:1 exaggerates the sales potential of gas).

These figures came out to a 6 month average of 630 boep/d (I didn't use Rancho Grande, Morgon or Turnbull 4 because they were at the upper end of the production averages, nor did I use Kowalik or Turnbull 2 because they were on the lower end due to experienced drilling/fraccing problems).

If a constant-rate drilling program is assumed then the average age of the 2012 wells come December 2012, will be 6 months.

(information from the March Quarterly production sheet)

With Marathon estimated to be drilling 120 new wells next year, at an average working interest of 21% (15760 net acres divided by 78400 gross acres), this becomes 25.2 net wells to AUT.

25.2 (net wells) * 365 (days) * 630 (daily production) * 0.75 (royalties) * $90 (oil price)

= $391 million revenue from 2012 wells

25.2 * $7.5 million (capital cost for next year is probably just under 7.5 million, operating cost $20,000 per month)

= $189 million expenses (mainly capital) from 2012 wells.

That's already $202 million profit before tax from ONLY the 2012 wells, and almost the entire expenses column (95%) are one-off capital payments for the well.

Add in roughly $120 million revenue from the 2011 wells (in which the capital expenses were paid in this calendar year) and you'll see that AUT's cashflow will start to become incredible come 2012 and onwards.

These are just my figures I thought I'd share with you, happy to answer any questions.
 
Progress report finally out! Looks brilliant.

Check out the 30 day results for the HiWay wells compared to the old frac method. Early days, but it's a massive improvement, not to mention using half the water and additives.

373 and 450 for the old style wells
531 and 558 for the HiWay wells side by side with the above...

...that's a 32% improvement in production! Early days, but it looks fantastic!
 
Sdajii said:
Progress report finally out! Looks brilliant.

Check out the 30 day results for the HiWay wells compared to the old frac method. Early days, but it's a massive improvement, not to mention using half the water and additives.

373 and 450 for the old style wells
531 and 558 for the HiWay wells side by side with the above...

...that's a 32% improvement in production! Early days, but it looks fantastic!
Click to expand...

A very professional report and agreed looks very encouraging..still holding but thread very quiet!
 
Could we be seeing a triangle forming? What do people think?

AUTchart.jpg
 
Technically triangles should have distinct swings.
Personally I like volume to be seen around the swings.
This un fortunatley is in my view a poor example.
The chart at this point gives no hint of coming out of consolidation.
 
Don't personally believe in technical stuff and past share prices all too much. I see AUT possibly trending upwards once the debt ceiling has been lifted etc... it is holding a lot of things back unfortunately.
 
The quarterly is out.

I'm only on page 2 so far, but this has made it a very very very price sensitive report.

The production is one thing (and expected considering how the amount of wells brought onto production), but what really caught my eye is this

"The company now holds a net position of 16,230 acres..... within four AMI's"

Before this announcement the following acreage distribution for AUT was:

Total Net: 15760 acres.

Longhorn - 8600
Sugarloaf - 3700
Ipanema - 1700
Excelsior - 1760

After this announcement there is now 16320 acres.

Longhorn - 9020
Sugarloaf - 3700
Ipanema - 1670
Excelsior - 1840

The best news of all is that Longhorn has experienced the largest increase. I rate this the best AMI. (The Sugarloaf would be next, however the Sugarloaf has a mixture of beastly wells e.g. Morgan, Rancho Grande and not so good wells e.g. May, Luna).

Turnbull 4H has produced at a rate of 938 boep/d for this quarter, despite being (now) 6 months old.

The well has paid off the costs of drilling + a whole lot more profit already, just 6 months after being brought onto production.

When you extrapolate that 2500 boep/d before royalties was reported to be 1850 boep/d after royalties, the July 20 production rate of 2767 boep/d is calculated to be roughly 2050 boep/d.

On a non-cross promoting note, I'm interested to see if EKA state what AUT have about the consolidation/acquisition of land within the 4 AMI's. I know the Sugarloaf area didn't 'gain' any land for AUT, however the Ipanema, Excelsior and Longhorn area's were affected (very positively for AUT).

With what I said before about Longhorn being 'the best AMI in my opinion', that was purely based on production figures so far.

There are too many unknowns (with each particular well) to conclude if one area is better than the other (although Sugarloaf/Longhorn look to be the best so far).

It'll be very interesting to see if any more 'acreage trades' occur. The more acreage (across the 4 AMI's) attributable to AUT the better.
 
Surprising to see there's no comments from Agentm or Condog of late on any threads of AUT TXN EKA ect. Any ideas as to why?
 
jancha said:
Surprising to see there's no comments from Agentm or Condog of late on any threads of AUT TXN EKA ect. Any ideas as to why?
Click to expand...

Far for me to speak on behalf of them, but they have spent a bit of time on those threads over at HC. Perhaps it's holiday time, Condog has been away.
With the way the market has been over the past 3 months, I think everyone has been a bit quite. Sure different to this time last year. I wonder if it's because AUT is now so de-risked everyone is just happy holding and are concentrating on finding the next AUT. Any tips? :confused:
 
I think you're right, Assassin, although there are probably also a lot of people who have been sitting around waiting to take profit, and now selling out to lock them in since the massive upwards trend has ended for now. Like you say a lot of them will be off looking for the next ten bagger, which AUT probably won't be, at least in the same timeframe it was last time. I think there is still probably a fair bit more upside than a lot of people give it credit for with the chalks, decreased spacings, etc. Gone are the times when the results of a single well would cause big price fluctuations. AUT is not what it was a year or two ago, and so it appeals to a different demographic.

I think at the moment we're probably seeing a a transition. The big risk takers moving out and the longer term investors wanting something safer moving in. Once that is more complete and AUT is more tightly held we'll probably see the price move higher. People generally don't like risk and when AUT is held by a different demographic it will probably be a good thing. At the moment there are still heaps of people sitting on big profits waiting for their 12 months to pass by, but there will be fewer and fewer of those left over the next few months. I think right now is probably a great time to buy AUT if you're the kind of person wanting a long term investment, and it's probably worth waiting a while if you want to take profit (because you're competing with so many with the same idea at the moment), unless you're just dying to grab another 10 bagger and you're pretty sure about something else.
 
Yeah, that's a good post Sdajii,
It's also difficult to get used to being a top 200 stock and having to put up with there swings and slides like today. I was expecting a nice bounce today but saw even the big boys (BHP etc) were down.
I agree with what you say, I too have taken out 2 times my initial outlay and freecarry my holding and very happy to hold for another 12 months, where I hope to be rewarded again.
AUT sure has been a game changer for me.

Holding, AUT, EKA, TXN, HOG, GGP, MHM, FAR.
 
Assasin said:
Yeah, that's a good post Sdajii,
It's also difficult to get used to being a top 200 stock and having to put up with there swings and slides like today. I was expecting a nice bounce today but saw even the big boys (BHP etc) were down.
I agree with what you say, I too have taken out 2 times my initial outlay and freecarry my holding and very happy to hold for another 12 months, where I hope to be rewarded again.
AUT sure has been a game changer for me.

Holding, AUT, EKA, TXN, HOG, GGP, MHM, FAR.
Click to expand...

With the upcoming probable recession in the US, it's likely oil prices will fall - right? Anyone have any theories on how this should affect AUT and other oil stocks?
 
Billyb said:
With the upcoming probable recession in the US, it's likely oil prices will fall - right? Anyone have any theories on how this should affect AUT and other oil stocks?
Click to expand...

Oil stocks are a big question mark. Particularly AUT. I have done well with AUT having invested in them during the last crash. At that time they were an explorer having run short of funds and also not having good drilling results.

This time it is different. AUT is now a producer with income and with sufficient cash to get through this period.

The big question is going to be the price of oil. Included in that is also the peak oil situation. Have we reached "peak oil". I suggest we are about to finds out. On a world wide basis are we going to cut back on oil usage?. I suggest probably not. With oil being priced on a supply and demand basis then I can see little change. Certainly not a crash in oil prices. India and China will probably still increase their oil consumption.

Once we pass the lemming rush point and margin borrowers get over the margin call point then we should see what we are in for. :2twocents
 
nioka said:
With oil being priced on a supply and demand basis then I can see little change. Certainly not a crash in oil prices.
Click to expand...

From memory it only took a relatively small loss of oil demand in the GFC for oil price to plumet from $150 to under $40?
 
poverty said:
From memory it only took a relatively small loss of oil demand in the GFC for oil price to plumet from $150 to under $40?
Click to expand...

Yep, and it makes a lot of sense. If you suddenly have just a tiny bit more supply that the total demand and enough sellers are going to sell regardless of price, prices crash, whatever the product or service. With oil though, when it becomes cheap a lot of people switch to it from other energy sources, and some proders (well, OPEC mainly will cut back supply to prevent a massive crash.

Oil is still over $80 per barrel. That's still pretty expensive even by the last few years' standards. I doubt it will fall as much as it did in 2008 even if things get similarly ugly, which is very possible in my opinion. I see oil getting extremely volatile but counting higher, and the economy overall getting really nasty. Scarey times ahead, but when the smoke clears I think a company like AUT will be standing pretty. Or maybe we'll get lucky and see a slow, stable recovery... harder too see!
 
I bought a little more AUT around $2.75 last week, although I was hesitant as AUT is now just under 30% of my entire portfolio, however I think global demand for oil will stay strong and these guys seem to be great at getting it out of the ground.

CBA has a buy rating for AUT in it's latest Research Insights
(12month price target of $3.70)

In case anyone is interested in what they're saying:
 

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Probably a smart thing to top up.

I was watching it hit $2.54 on tuesday and biting my tounge trying to decide whether to top up.

But alas, i pussied out because i was pretty afraid of losing it all.

Results come out today i think- Lets see this baby skyrocket!!
 

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