AUT - Aurora Oil and Gas

[stefan_invester]

hey, just another quick question..

as hurricane season approaches the united states, and
AUT drilling in texas, will the hurricane season have any effects
on the drilling that is taking place and in turn in the share price?

thankss
cheers.

 

[estseon]

September 2008

"The authorities said the hurricane could still prove to be the most punishing storm to hit the area since Hurricane Alicia 25 years ago.

Almost the entire metropolitan Houston area lost power and the authorities said that more than three million people were trying to manage in the dark. Utility officials said it could be weeks before power was restored across the region.

The magnitude of the power loss and the flooding raised the possibility that some major oil refineries could take more than a week to reopen. As a result, gasoline prices jumped an average of 6 cents a gallon, or 3.78 liters, around the United States. The Associated Press reported that a gallon of gas rose above $5 a gallon at a few stations in Tennessee and Alabama."

Unusual event around there. Danger of flooding though structural damage unlikely from hurricanes (rigs are pretty robust structures). Probably too dangerous for crews. Flooding will hamper transportation of supplies.

If you're worried about natural hazards, government bonds might be safer.

 

[Agentm]

hey, just another quick question..

as hurricane season approaches the united states, and
AUT drilling in texas, will the hurricane season have any effects
on the drilling that is taking place and in turn in the share price?

thankss
cheers.

when a hurricane comes onshore, the rig operators stop drilling a few days before and generally lay the rigs down and send the crews home. they are rated to a certain wind strength.

i have seen no reports of any hurricane predictions for the south texas region so i would not be at all concerned

 

[condog]

Dont forget hurricanne season traditionally corresponds with higher oil and energy prices, which is a positive (note concern for victims).

Tack that onto higher oil price futures and the legislative risks and cost associated with the BP fallout and energy looks like being rediculously expensive in the not too distant future (medium term).

Right now overall market sentiment and a short term buy sell imbalance from the CR will dictate price, no the hurricanes, imo in the medium term economic recovery and legislative change adding to costs of offshore drilling will help sustain higher energy prices, in the long term, india and china will imo dictate prices.

So all looking good when the market comes back in a happier mood and the CR is in the past.

 

[springhill]

Dont forget hurricanne season traditionally corresponds with higher oil and energy prices, which is a positive (note concern for victims).

Tack that onto higher oil price futures and the legislative risks and cost associated with the BP fallout and energy looks like being rediculously expensive in the not too distant future (medium term).

Right now overall market sentiment and a short term buy sell imbalance from the CR will dictate price, no the hurricanes, imo in the medium term economic recovery and legislative change adding to costs of offshore drilling will help sustain higher energy prices, in the long term, india and china will imo dictate prices.

So all looking good when the market comes back in a happier mood and the CR is in the past.

Condog, this completely off topic, but curiousity has gotten the better of me, can i ask the meaning of the nick? I know it's :topic, but i have a thirst for asbtract information (and pornography) .

 

[condog]

springhill, nothing major, just a nic that stuck from real life.

Also on the positive is the KKR deal which highlights the upside KKR see in the eagleford and cleaner energy overall.

Additionally the AWE / ADI proceedings have a few long term holders looking to pull the pin. July 1 could see a big day for ADI if punters decided to cash out . All bodes well as that money looks for a new home in AUt and EKA. Thats a lot of buying pressure.

On the energy front we have BP legislation likely to cause long term price rises and possibly supply disruption (small scale) , hurricane season, china and india demand for energy continueing to rise, energy future prices up, and possibly major CO2 reduction targets 12-36 months off, imo leading to a considerable premium on future condensate and gas prices.

KKR are no fools, they look to make big profits in short spaces of time. Watch this space carefully. KKR may even become a serious predator in the future imo.

 

[estseon]

Hurricane Alex - "About 25 percent of crude oil production in the Gulf of Mexico and 9 percent of natural-gas output was shut down, the U.S. government reported".

Looks like it will miss our part of Texas.

 

[condog]

Looks set to cross land in Mexico about 350miles south of Karnes City o all should be safe for us at this stage.

 

[Agentm]

new permit for the ipanema section by hilcorp

may unit 1H

will have a 5000 foot lateral if completed correctly and no natural fractures in the well to interfere with the completion

that will finish off the farm in for the ami and extended acreages for AUT

 

[Agentm]

Dont forget hurricanne season traditionally corresponds with higher oil and energy prices, which is a positive (note concern for victims).

Tack that onto higher oil price futures and the legislative risks and cost associated with the BP fallout and energy looks like being rediculously expensive in the not too distant future (medium term).

Right now overall market sentiment and a short term buy sell imbalance from the CR will dictate price, no the hurricanes, imo in the medium term economic recovery and legislative change adding to costs of offshore drilling will help sustain higher energy prices, in the long term, india and china will imo dictate prices.

So all looking good when the market comes back in a happier mood and the CR is in the past.

i have no idea what you talking about here condog? can you present some facts on this that back up what you saying

the bp macondo prospect being drilled by the deepwater horizon rig, was an ultra deep drilling prospect. its 5000 feet down in the mississippi trench..

i cant see any evidence of what your talking about, there are not many drilling at that depth, very few have the technology to do so.. a lot about the bp well is not being published, as bp has a stranglehold on the information coming out, but i have a suspicion they drilled into something more than just a oil prospect..

springhill, nothing major, just a nic that stuck from real life.

Also on the positive is the KKR deal which highlights the upside KKR see in the eagleford and cleaner energy overall.

Additionally the AWE / ADI proceedings have a few long term holders looking to pull the pin. July 1 could see a big day for ADI if punters decided to cash out . All bodes well as that money looks for a new home in AUt and EKA. Thats a lot of buying pressure.

On the energy front we have BP legislation likely to cause long term price rises and possibly supply disruption (small scale) , hurricane season, china and india demand for energy continueing to rise, energy future prices up, and possibly major CO2 reduction targets 12-36 months off, imo leading to a considerable premium on future condensate and gas prices.

KKR are no fools, they look to make big profits in short spaces of time. Watch this space carefully. KKR may even become a serious predator in the future imo.

kkr? can you confirm where your getting all that info on its "big profits in short spaces of time" aspect please?

i wonder how many adi holders will move on the aut share immediately. there is nothing stopping me from buying a huge swag of aut, but i see many very concerning indicators on the oil prices that will see me sit this one out for a while yet.. maybe a long long while..

re energy future prices up?? can you confirm that is correct please.. imho if you research oil futures which i think are the relevant ones to look at, you will find its been down for 5 days straight!!


your very exuberant on aut condog, and it has the potential, but make no mistake condog, you need to be a little more accurate on the statements you make. when people make statements like you have it sounds very exciting, so i had to research it and make sure it was correct.. i cant confirm most of the things your saying when i check it and examine it, can you confirm that what your stating is accurate for me please?

TIA

 

[Agentm]

dates are important to consider here

Jul 1, 2010



HOUSTON, July 1 -- Enterprise Products Partners LP announced June 29 an additional expansion of its natural gas and natural gas liquids pipeline system in South Texas and Mont Belvieu, Tex. serving the Eagle Ford shale play. Enterprise plans to install 350 miles of pipeline, build a natural gas processing facility, and add an NGL fractionator at its Mont Belvieu complex near the Houston Ship Channel, with most of the work completed by early 2012.

Included in planned construction is an expansion of Enterprise's East-West rich-gas main line that will involve adding three pipeline segments totaling 168 miles. Phase 1 calls for 26 miles of 24-in. OD pipeline extending the mainline to the far western reaches of the Eagle Ford shale. The remaining 142 miles, to be built in two segments, will consist of 30-in. and 36-in. OD pipelines serving the eastern portion of the Eagle Ford shale. Upon completion, Enterprise’s Eagle Ford shale-rich gas mainline system and associated laterals will include roughly 300 miles of pipeline with gathering and transportation capacity of more than 600 MMcfd.

The east end of the Eagle Ford mainline will terminate at a natural gas complex that Enterprise plans to build. The complex will feature multiple processing trains designed for deep ethane recovery and production of mixed NGLs in excess of 60,000 b/d. Following completion of these projects, expected in early 2012, Enterprise's Texas assets will be able to gather, transport, and process almost 2.5 bcfd of gas and produce more than 150,000 b/d of NGL.

Takeaway capacity for residue gas from the new processing facility will be provided by a combination of existing Enterprise systems and construction of a 64-mile, 30-in. OD residue gas line from the cryogenic facility to its Wilson gas storage facility in Wharton County, Tex. Wilson offers access to major interstate pipelines, including Trunkline, Tennessee Gas, Transco, NGPL, Gulf South, and Texas Eastern. An expansion project to increase capacity at the storage facility by 5 bcf is under way.

Transportation of mixed NGLs from the new processing facility to Mont Belvieu will be accomplished by a 127-mile, 12-in. OD pipeline. The NGL line will have an initial capacity of more than 60,000 b/d readily expandable to more than 120,000 b/d. Enterprise expects completion in early 2012.

To accommodate increased volumes from the Eagle Ford shale and other producing regions, Enterprise is moving forward with plans to construct a fifth 75,000 b/d NGL fractionator at its Mont Belvieu complex. Construction of the fourth fractionation train is on schedule for completion by yearend, at which time the Mont Belvieu complex will have capacity in excess of 300,000 b/d. Enterprise expects to bring the fifth unit online in early 2012.

Enterprise also announced completion of the initial 34-mile segment of the East-West rich-gas Eagle Ford mainline and the final leg of the 62-mile White Kitchen lateral allowing gas transport to its seven South Texas gas processing facilities with a total capacity of 1.5 bcfd. Included among these is its Shoup gas processing and fractionation facility in Nueces County, Tex., modifications increasing its NGL capacity to 77,000 b/d to which were completed June 27.

Expansion of the 140-mile crude line Enterprise operates between Karnes County, Tex., and Austin County, Tex., is scheduled to be completed in fourth-quarter 2011. The line is supported by a long-term transportation agreement and Enterprise is in talks with other producers regarding transportation through the pipeline.

Activity in the Eagle Ford shale continues to increase with roughly 75 rigs currently working in the play having drilled nearly 180 wells, according to Enterprise, which estimates current production from the play at 250 MMcfd of gas and 15,000 b/d of oil and condensate.

 

[tonudiki]

I believe that AUT shares are still relatively cheap at the moment.

For the "Target's statement" on ADI, a fair value of 61 cents per share was promulgated by PWC, and this was after excessive discounting at 15%, largely due to the Sugarloaf project not yet being fully developed. ADI have 169 million shares in issue and AUT (after the recent placing) will have ~275million.

The market caps/ net Eagleford acreage, compare as follows:-

ADI 169m shares @ 61 cents = A$103.1m market cap // Net Acreage = 2350 acres

AUT 275m shares @ 79cents = A$217.25m market cap // Net Acreage = 10,500 acres

Comparing the market caps and acreage, then 10,500 AUT acres would have a "fair value" per PWC of $103.1m /2350 * 10,500 = $460.66m or $1.67 per AUT share.

I appreciate that ADI have a little bit in their market cap for Yemen and that current cash figures are different from AUT's etc, but this is only a "broad-brush" approach to comparative value.

I consider that $1.67 per share is actually a minimum, because as Sugarloaf and surrounding Eagleford acreage gets more and more de-risked, the discounting percentages for value calculation will decrease considerably.....

In March 2010, for example, Hartleys prepared a report on ADI which gave an unrisked value to their Sugarloaf net acreage of $268.7m ( 147.3m shares then in issue * 182.4 cents per share) . Grossing that up for AUT's acreage would give $268.7m / 2350 * 10500 acres = $1200.6m or $4.36 per AUT share. The Hartley's numbers were also done before some of the recent excellent drilling results e.g. Morgan.

As I have said, these comparisons are very broad-brush, but even given some pretty wide margins for error, they still clearly demonstrate IMHO the future potential value in an AUT share. There will always be some residual risk in a project and another big assumption I have made is, of course, that production levels from wells in the Sugarloaf Vs. the Longhorn & Ipanema acreage will be the same. We will need quite a few Longhorn & Ipanema well results to know what level of confidence to assign to this ......

Mind you, is there any chance of Longhorn & Ipanema delivering BETTER results than the Sugarloaf acreage??

 

[estseon]

Hi ton,

ignoring external factors (the fragile confidence of the financial markets etc) I have traded between ADI & AUT buying AUT at 1.5 x ADI or less and selling at around 2.5 ADI.

Currently, on the basis of the fair value figure for ADI, that being the most scrutinised available, I have bought at around the current price and will tender for more under the offer at 75 cents (about 1.25 ADI).

However, being mindful of external factors, I have retreated from the markets with the greater part of the ADI proceeds. It is not the path to optimised returns but it will allow me to sleep at night.

 

[condog]

Agent - thats a bit random and uncharachetirstic of you??? think you needed some coffee.
2nd post i like. ta.

Keep an eye on energy futures, its the best indicator we have.

Ton - agree with much said, but Morgan so far is a stand out, an outlier in terms of using its numbers.

I do however very much agree its been so far monumentally de risked as its:
Proven its technology
Proven the acerage is going to producs
Proven the Sugarloaf as one of the very sweet spots in the Eagleford
Proven to be reliable safe operators - so far

In terms of your values allow for tax and royalties
I agree well over the dollar and much hicher in 12-24 months time.

Looking forward to seeing what thier acerage acquisition might be.

 

[tonudiki]

Agent - thats a bit random and uncharachetirstic of you??? think you needed some coffee.
2nd post i like. ta.

Keep an eye on energy futures, its the best indicator we have.

Ton - agree with much said, but Morgan so far is a stand out, an outlier in terms of using its numbers.

I do however very much agree its been so far monumentally de risked as its:
Proven its technology
Proven the acerage is going to producs
Proven the Sugarloaf as one of the very sweet spots in the Eagleford
Proven to be reliable safe operators - so far

In terms of your values allow for tax and royalties
I agree well over the dollar and much hicher in 12-24 months time. in their valuations

Looking forward to seeing what thier acerage acquisition might be.

Yes, it will be interesting to see what the acreage acquisition is, and where. (Somewhere very condensate rich will do nicely!)

Just to clarify, my extrapolations of the potential value of an AUT share was from ADI's recent Target's Statement "fair value" and also the earlier Hartleys report on ADI, both of which already included Taxes and royalties in their valuations and did not include the Morgan result.

I agree that Morgan was (so far) an exceptional result and should not be used for realistic calculations at this stage. I do wonder though, just how many "Morgans" are waiting to be discovered in AUT's acreage?

 

[condog]

Its not just us securing a stake in the eagleford energy play.

India-based firm invests $1.3 billion in Eagle Ford Shale
BY ROBERT FRANCIS
July 05, 2010
India-based oil and gas firm Reliance Industries Ltd. will pay $1.3 billion for a stake in the Eagle Ford Shale assets of Irving-based Pioneer National Resources Co.

Reliance subsidiary Reliance Eagleford Upstream LP announced June 24 it will pay $363 million upfront for a 45 percent interest in Pioneer’s Eagle Ford Shale acreage in south Texas and will pay an additional $879 million to carry Pioneer’s share of future drilling costs. Reliance also will participate with Pioneer in the development of midstream assets in the Eagle Ford Shale as a 49.9 percent partner. The investment holds about 10 trillion cubic feet of gas equivalent, according to Reliance.

“We are very excited to partner with Reliance, a global energy industry leader, and pleased that they share our confidence in the development potential of Pioneer’s large, liquids-rich acreage position in the Eagle Ford Shale,” said Scott Sheffield, chairman and CEO of Pioneer. “Our joint development plan will add significant production and reserves for Pioneer while enhancing shareholder value.”

This will put the Eagleford on the Radar in India, hopefully for us in the not to close future China will begin sniffing around too.

I personally detest a TO, but every bit of attention helps boost confidence.

 

[AngusSmart]

Yes, it will be interesting to see what the acreage acquisition is, and where. (Somewhere very condensate rich will do nicely!)

People are talking about this new acreage acquisition? where was this is the news/announcements?

New flow rates out for rancho grande #1h today also

 

[Agentm]

People are talking about this new acreage acquisition? where was this is the news/announcements?

New flow rates out for rancho grande #1h today also

you can either acquire acreages by taking over a smaller player in your play and also looking to get more acreages as yet not leased

i can see both possibilities in the region for aut

 

[sydneysider]

Dont forget hurricanne season traditionally corresponds with higher oil and energy prices, which is a positive (note concern for victims).

Tack that onto higher oil price futures and the legislative risks and cost associated with the BP fallout and energy looks like being rediculously expensive in the not too distant future (medium term).

Right now overall market sentiment and a short term buy sell imbalance from the CR will dictate price, no the hurricanes, imo in the medium term economic recovery and legislative change adding to costs of offshore drilling will help sustain higher energy prices, in the long term, india and china will imo dictate prices.

So all looking good when the market comes back in a happier mood and the CR is in the past.

Condog,

This year there has been NO rise in energy prices in the USA. Natural gas is near multi year lows because the USA has now discovered so much shale gas that it has about 120 year supply (and growing) on current consumption rates. So nat gas is trading between $4-5 mcf down from record highs of $10-12 mcf of a few years back. This is seriously impacting oil prices that are having a hard time holding US$75 per barrel. Even gasoline which usually spikes at the begining of the summer driving season is barely holding on to US$2.00 gallon. At the local pumps it is down to around $2.55 - 2.65 gallon. I suspect that the push to convert the U.S. transporatation fleet to use local gas will get a decent lift from the fact that it now costs around half the price of diesel or gasoline for the same miles. All of this is keeping oil weak.

 

[condog]

Condog,

This year there has been NO rise in energy prices in the USA. Natural gas is near multi year lows because the USA has now discovered so much shale gas that it has about 120 year supply (and growing) on current consumption rates. So nat gas is trading between $4-5 mcf down from record highs of $10-12 mcf of a few years back. This is seriously impacting oil prices that are having a hard time holding US$75 per barrel. Even gasoline which usually spikes at the begining of the summer driving season is barely holding on to US$2.00 gallon. At the local pumps it is down to around $2.55 - 2.65 gallon. I suspect that the push to convert the U.S. transporatation fleet to use local gas will get a decent lift from the fact that it now costs around half the price of diesel or gasoline for the same miles. All of this is keeping oil weak.

gas up frm recent lows - at the time of writing. - has since fallen again

and oil "FUTURES" not oil - oil futures. At the time of writing where all upward of $80 for 2yr onwards. and where approaching $80 even within 12 months. They have since plumetted to just over $70 for the short termers.

Medium to long term oil futures doubled in the space of a few months at the time of writing that post. they are now droping sharply.

Yes right now oil is hovering. In my opinion long term outlook for energy according to the futures is looking good, but certainly not as good as it was 3-4 weeks ago. Of course thats based on a world economic recovery of sorts, not a faltering. Since writing that post several alarm bells have been raised re-double dips.... posibilities.

Yes right now outlook significantly weaker for global energy then when that post was written.

Updates on AUT are out today on T2, T3 and Morgan has 30 day flows over 1000bocpd