AUT - Aurora Oil and Gas

Whistler · 5 May 2010

condog

If the cost of a well in the Sugarloaf AMI is Aust $8,000,000 per well then AUT's 10% share (post farm out) is A$800,000 per well - which would cost A$9,600,000 over the next 12 months if one well were drilled per month.

For this to occur, the net operating surplus for the 4 wells (i.e gross sales less expenses) to be enjoyed by all joint venture participants (all players that comprise the total 100% ownership of the Sugarloaf AMI) would have to be Aust $96,000,000 per annum (ignoring payback to Hilcorp).

What gross revenue per annum are you assuming for each of Kennedy, Weston, Morgan and Easley and what extraction expense ratio are you deducting from gross sales revenue? Your views would be very much appreciated.

Cheers

Whistler

condog · 5 May 2010

Whistler said:
condog

If the cost of a well in the Sugarloaf AMI is Aust $8,000,000 per well then AUT's 10% share (post farm out) is A$800,000 per well - which would cost A$9,600,000 over the next 12 months if one well were drilled per month.

For this to occur, the net operating surplus for the 4 wells (i.e gross sales less expenses) to be enjoyed by all joint venture participants (all players that comprise the total 100% ownership of the Sugarloaf AMI) would have to be Aust $96,000,000 per annum (ignoring payback to Hilcorp).

What gross revenue per annum are you assuming for each of Kennedy, Weston, Morgan and Easley and what extraction expense ratio are you deducting from gross sales revenue? Your views would be very much appreciated.

Cheers

Whistler

Hey who said its $8million, the highest figure ive heard is $7m and that was when TCIE where stuffing things up. Now hillcorp are doing it less then half the time and getting it right forst time, its likely to be less then $5M , cant go too much lower unless frac materials become cheaper and steal + cement, which i doubt.

I rather simply use a net fee its far simpler to estimate and use. Today i used $65 net to the JVP's after all expenses except admin.

I realise your being quiet complimentary and polite in your questioning, but if you feel its wrong, please provide an alternative, or correction. Im genuine, my reason for positng these cals is three fold, to help others, to help me and to have them cross examined. So if there is a mistake by all means yep point it out. Ta,.

The other thing to consider is last presentation Pattersons valuedc each well at $16M NPV. Morgan has the potential to massively booost that, given lower costs and much higher returns. Possibly up to $40 M NPV for Morgan. If Rancho comes online or a few of the turnbulls with similar figures id imagine at least a 25- 60% upgrade in valueatuion.

The last valuation was 92c fully risked. So a new one from pattersons might be around $.115 to $1.47 in the short term.

All opinion so DYOR and seek expert advice.

Slipperz · 5 May 2010

Amazing results.

Has anyone mentioned condensate sweet spot recently?

That seems to be where we are in the play.

Oh well I guess someone has to make lots of money, it might as well be us.

:chimney

philly · 5 May 2010

PATERSONS have released an update on AUT today. The target price is 93 cents

Investment Highlights
●
Significant progress achieved during the March Q. During the quarter AUT achieved maiden production from its Eagle Ford acreage with IP rates announced for the Kennedy #1H and Weston #1H wells and today announced strong results from the flow-back of the Easley #1H and Morgan #1H wells.
●
Farm-in works well progressed. Hilcorp has rapidly progressed through its farm-in commitments, completing the fraccing of the 3 x existing wells, drilled and cased 3 x new horizontal wells in the Sugarloaf AMI, drilled and completed 1 x well in the Longhorn AMI with a further well underway and as announced today, has completed the fracture stimulation and flow back of 2 x Sugarloaf wells. At the end of the program AUT will have interest in 10 x producing wells drilled into the highly productive Eagle Ford Shale.
●
Further success announced today. AUT today announced the completion of the stimulation and flow back of the Morgan #1H and Easley #1H wells, with IP rates of 5.16mmscf/d & 2,046bcpd (31mmscfe/d) and 6.81mmscf/d & 780bcpd (17.9mmscfe/d). This is in addition to the previously announced rates from the Kennedy #1H and Weston #1H wells and highlights the productivity of the Eagle Ford shale and the upside to be achieved from the development of AUT’s interest in the shale. The results tie-in well with our assumption of 6.5mmscfd and a CGR of 180bbls/mmscf.
●
Decline rates better than expectations. During the quarter AUT reported 30 and 60-day production rates with the 30 day rate at Kennedy and Weston 50% higher than rates observed in the region.
●
We maintain our BUY recommendation with a price target of $0.93/sh based on a risked assessment of a full field development across AUT’s 3 x AMI’s. AUT is funded through a definitive 2010 drilling program, which at completion will provide interest in 10 x productive wells and further define the prospectivity of AUT’s net interest in 9,620acres across the Sugarkane field. Ongoing drilling/testing and potential reserves certification mid-year will provide short term catalysts going forward.

I'm one happy holder

5haretrader · 6 May 2010

philly said:
PATERSONS have released an update on AUT today. The target price is 93 cents

Hi Philly, I'm pretty new to the life of share of trading and if you dont mind me asking, where can you source these sort of predictions?

condog · 6 May 2010

Thanks Philly, they are playing it very conservatively by using the reserve certification as thier primary valuation method. And hence that explains to me why thier valuation in my opinion is so super conservative.

They have not acknowledged the massive reduction in drilling and fraccing time which multiplies the effect of the higher flow for calculating NPV's.

I know Morgan is the only big one yet, but the lower drill costs and thus higher NPV will apply to every well going forward and would imo change the valuation by at least 25%.

Looks like they haowever are waiting till july for the certification change. I guess they have to cover thier bums by using someone elses numbers to justify thiers.

They have also overlooked that having a huge producing well like Morgan so early in the project
Brings forward cashflow
Reduces chances of dilution
Significantly de-risks many aspects
Provides chances of substantially more income and accelleration of the entire project.

At some point they could also acknowledge this does not need a fully risked valuation. A bit premature yet, but, if / when they do that it would be a big re-rating.

tonudiki · 6 May 2010

condog

I also find Patersons latest valuation unbelievably conservative and in fact I cannot fathom their latest target of only 93c per share for AUT "based on a risked assessment of a full field development across AUT’s 3 x AMI’s."

I am not a client of Patersons and so I cannot access their latest report on AUT, but I have managed to do a rough comparison with Hartley's March 2010 assessment of the unrisked value of Sugarloaf to ADI.

Hartleys figure for the "unrisked" value of Sugarloaf to ADI was $268.7m or 147.3m issued shares X 182.4 cps. (Post the latest placing by ADI that would now translate to 169.3m shares X 158.7cps). I would guess that Hartleys will soon be updating their value at a higher figure, given the latest excellent initial flow results. However, even comparing the out of date Sugarloaf Hartley values for ADI with the latest Paterson's value for AUT, the comparison seems very odd.

Paterson's latest "risked" value/target for AUT is 219m issued shares X 93cps = $203.7m. So, Patersons value Sugarloaf at only ~76% of Hartleys value for ADI, even though at 9,620 net acres, AUT HAVE GOT OVER 4 TIMES THE NET ACREAGE OF ADI (who have 2350 acres).

As far as I am aware, the Longhorn and Ipenama acreage of AUT is just as prospective as the Sugarloaf JV acreage. Therefore, for the ADI and AUT unrisked values per acre to "line up", it would require an AUT unrisked value of ~A$1100m or 502 cps.

I appreciate that Patersons value for AUT is a "risked" assessment, but atttributing less than 20% of a comparative unrisked value to the project does seem too severe?

Perhaps the devil is in the detailed assumptions and the latest Paterson's report has an explanation for this apparent wide discrepancy???

estseon · 6 May 2010

ton,

they've been talking about a re-appraisal mid-year after the Longhorn wells (and Ipanema) and after a new certification of reserves since AUT's March presentation.

Hilcorp has has so upgraded its performance none of those valuations will have much meaning. Also, we have yet to learn the programme for the 2nd half of 2010.

We need to sit it out.

condog · 6 May 2010

estseon said:
ton,

they've been talking about a re-appraisal mid-year after the Longhorn wells (and Ipanema) and after a new certification of reserves since AUT's March presentation.

Hilcorp has has so upgraded its performance none of those valuations will have much meaning. Also, we have yet to learn the programme for the 2nd half of 2010.

We need to sit it out.

Stuff sitting it out, they claim to be brokers, yet despite all those anomilies, upgrades, extra capaity they come out with a 1c revision. Some one at pattersons, presumably the one who did or approved the valuation change has done them a severe dis service.

If they want to be taken seriously, they need to act accordingly.

Theres rouchly 200,000,000 AUT shares yet a well that comes out at over double the current predicted rate only changes the valuation by 1c. They have the thing priced at a 3% chance of success, despite 5 from 5 hitting prolific condensat and gas , and 4 from 5 producing to sales, with another god knows how many about to produce, and one of them massively bigger then anything else in the entire eagleford that we know of.

Wake up Pattersons, youve made fools of yourself. Either leave it unchanged or get real.

philly · 6 May 2010

5haretrader said:
Hi Philly, I'm pretty new to the life of share of trading and if you dont mind me asking, where can you source these sort of predictions?

All brokers regularly do research on companies and make a BUY or SELL or HOLD recommendation. If it is a BUY recommendation they will also give a target price.

If you are a client of the broking firm then you get access to the research reports.
If not then the company being researched usually will post the brokers report on their web page.

Whilst these reports are helpful the brokers have a vested interest they want you to trade shares so they can get the brokerage fees.

Don't over rely on broker's reports.
You need to consider much more before you act on a trade
That is why ASF is good because lots of people give us information to consider. For example Condog and others believe that Patersons are too conservative in their analysis of AUT.

As a new share trader there is one commodity that you can never have enough of and that is information.
Good luck

condog · 6 May 2010

HOUSTON, May 5 -- Pioneer Natural Resources Co., Dallas, said it is pursuing a joint venture in the South Texas Eagle Ford shale play and expects to reach agreement by midyear.

The company’s latest completion, its fifth successful well in the shale, made an initial 14.1 MMcfd of gas and 255 b/d of condensate with 5,600 psi wellhead flowing pressure on a 24/64-in. choke. Gas is 1,200 btu/Mcf.

Pioneer must be crying when they see results like Morgan the other day with 2000+ bocpd and half as much gas.

Makes the AUT acerage almost prime eagleford imo.

More buying today. sold of others that where up, took a loss, but got a relative gain and into a better more insulated stock.

Agentm · 7 May 2010

condog, your missing the point on the well bigtime.. are you serious about pioneer here?? this isnt a case who's got the best well, this well demonstrates many many things critical for aut in their forward planning

condog.. firstly the pioneer well is positioned right next to the AUT region, they hold over 300,000 acres and has a massive edwards play going on down there in pawnee and across the live oak, bee, karnes and dewitt counties

yes they also have blocks further north in the prime acreages, dont be fooled by their position.. and they have the majority of the dry gas region, but what your missing the point on the announcement, they did not list the oil value on the well

pioneer are not backwards on the play, there are wells they have not disclosed in the chalks in dewitt county, they understand its sugarkane there abouts also.. most players are not talking the chalks aspect up at all.. for very obvious reasons

Pioneer Natural Resources Continues Successful Eagle Ford Shale Drilling Program

DALLAS—-Pioneer Natural Resources Company today announced its fifth successful well in the Eagle Ford Shale in South Texas. The Chesnutt Gas Unit #1 well, which is located in Karnes County, Texas, tested at an initial production rate of 15.6 million cubic feet of gas equivalent per day on a 24/64 inch choke with approximately 5,600 pounds per square inch wellhead flowing pressure.

this well is pretty close to adi/aut ami acreages and right next to ipanema imho

i think the whole thing is being missed by many,, that well result is what i have been hearing about recently and its why i jumped into aut..

imho it has huge implications on the derisked aspect for the entire jvp.. but importantly for AUT, in fact critically condog, you failed to mention it demonstrates the ipanema acreages are now very very perspective..

if you see the opportunity imho take it! this one is very obviously under the radar for most investors in aut. they simply are not in any way keeping track of regional activity what so ever.. but i assure you that this well, and a few others near by, is the primary reason why i am loading into this play.. imho its pretty much as hartleys said.. 95% derisked

condog · 7 May 2010

Agent, settle pettle, no need for such an unjustified launch at me. I havent missed the point at all, i was simply saying when they see us bore Morgan and come up with 2000+ they must be spewwing, that it wasnt theirs.

Its a good result for Pioneer, but they must absolutely wish they had a result like Morgan under thier belt, especially as early as we have.

I reiterate, so far the AMI is proving to be one of the best acerages in the entire Eagleford. No points missed, all good, relax. This result is one of the trophy results of the region so far.

WRONG'UN · 7 May 2010

For what it's worth, the Morgan IP, at the latest oil and gas prices, and exchange rate, is worth (5.16 x 1.25 x 1000 x 3.91 + 2046 x 76.7) / 0.885 = $A205,817 per day. 86% of this is from the oil component.

condog · 7 May 2010

WRONG'UN said:
For what it's worth, the Morgan IP, at the latest oil and gas prices, and exchange rate, is worth (5.16 x 1.25 x 1000 x 3.91 + 2046 x 76.7) / 0.885 = $A205,817 per day. 86% of this is from the oil component.

Yep a little over 40 days and its payed for itself, give it another 40 days and its topped up the contributions of Kennedy and Weston and payed them of, around 20 days more its payed of the remainde of Easily... get the picture.

Obviously these IP should drop, but we will wait to see.

Agentm · 7 May 2010

condog said:
Agent, settle pettle, no need for such an unjustified launch at me. I havent missed the point at all, i was simply saying when they see us bore Morgan and come up with 2000+ they must be spewwing, that it wasnt theirs.

Its a good result for Pioneer, but they must absolutely wish they had a result like Morgan under thier belt, especially as early as we have.

I reiterate, so far the AMI is proving to be one of the best acerages in the entire Eagleford. No points missed, all good, relax. This result is one of the trophy results of the region so far.

sorry condog

it is not a bad result that pioneer well. it demonstrates the play is very prospective, and the ip means squat, its all about stabilized flow rates and declines. they would not be upset with their well in any way, and it sure looked great to me..

different regions with different characteristics.. these zones have different declines, a point made a lot by the jvp but missed by many

the pioneer handy well is on a par with the morgan well in the wet gas zone

unfortunately the crash had hit the jvp hard, but fortunately i am able to add in these hash days as i think the jvp will have to put out reserve estimates and be re rated in the very near term post the hilcorp farm in agreement wells completion in the ami

not pretty or nice for anyone atm.. but there is opportunity still imho to add some more

Sdajii · 7 May 2010

Agentm said:
not pretty or nice for anyone atm.. but there is opportunity still imho to add some more

Perhaps I am crazy for thinking this, but it's a very nice and pretty situation for many at the moment. With the whole world in panic there are some bargains around. Everyone is terrified and wanting to get out of anything, unable to stop and think clearly amid the panic. People aren't going to want to stop wanting oil, I think we can be sure of that, and it looks pretty certain that we (holders of AUT, as well as ADI and EKA) are going to have plenty. When people calm down in a few days/weeks/months and this current patch of fear is settled, we'll be looking back at today and thinking "Wow, that was a very nice opportunity for anyone who had the money and calmness on the day".

Even in a crisis, people need to drive around, which takes oil, they need to eat which requires oil to produce and transport.

Buy in gloom, sell in boom. There's plenty of gloom about this week, and it looks to my green eyes like a good opportunity.

5haretrader · 7 May 2010

Couldnt agree with you more Sdajii. A market recovery is inevitable, the world's economies wont just deteriorate to nothing. I think the fear of what happened in late 2008/early 2009 is sparking needless doubt in the minds of investors. Ofcourse there are some concerns in the world's economy at the moment, but the Aussie market should be able to hold its own. Nevertheless considering the potential of AUT, the share price is nothing short of a steal.

Sdajii · 7 May 2010

5haretrader said:
considering the potential of AUT, the share price is nothing short of a steal.

I just about feel like stealing some money so I can use it to steal/buy some more Texas oil. It's driving me mad being unable to buy more today.

condog · 7 May 2010

It aint over yet, greece that is. US employment data tonight is expected to be good which will hopefully help things a bit.

We need some more news on Rancho or turnbull to keep us floating against the tide. Its hidiously good buying imo as long as the oil prices remain high.

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