Is stated as one of the reasons for the Capital Raising on the news releases for CR and in the paper work sent to holders.
AUT - Aurora Oil and Gas
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Is stated as one of the reasons for the Capital Raising on the news releases for CR and in the paper work sent to holders.
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Condog,
The impact of shale gas discoveries in the USA has been profound. Not only has it crashed oil prices, nat gas and gasoline BUT has also crashed other energy sources like uranium and decimated LNG use in the USA. The technology to drill for shale gas is now being exported overseas. One program that Exxon Mobil is running in Poland may have massive political and financial ramifications. Poland imports 75% of its gas from Russia. Some seers are saying that if Exxon is succesful in Poland then it may be able to replace ALL of the Russian gas with locally produced gas and have enough left over to sell into Europe. Their shale deposits are very large. Shale deposits are everywhere. This will spread cheaper energy across the planet. IMHO is one reasons why the US$ has been so strong over the last year.
Whilst i agree with your sentiment towards shale, it will play a huge role in boosting supply, theres a hell of a lot of issues to be overcome for each shale. Finding competent operators, rigs, equipment, frac crews,. Then theres the fact every shale has totally different characteristics, that take time to develope and understand.
Every shale requires infrastructure: ie roads or pipilines.
So yeh it will be big as it unfolds, but not as sudden and easy as many are predicting imo.
Just an opinion, could be right or wrong.
a good read
Aurora Oil & Gas Ltd (AUT $0.80) Buy
Price Target: $1.32
Reason For Update: Site Visit & 60-day Production Data
What we know:
The Sugarloaf AMI JV (AUT – 10%) has released 60-day production results from their
Easely-1H and Morgan-1H.
Morgan-1H averaged 17.2mmscfe/day (vs. 30-day 19.1mmscfe/day), producing
65,200kkbls of condensate and 201mmscf of gas over the 60 days.
Easely-1H averaged 8.5mmscfe/day (vs. 30-day 10.1mmscfe/day), producing 19.6kkbls
of condensate and 221mmscf of gas over the 60 days.
Euroz has recently been to site with AUT and the operator Hilcorp.
Hilcorp are low cost focused translating to consistently achieving well costs of US$6.5m
(vs. Euroz’ forecast US$8m).
The Turnbull-1H result – specifi cally the oil ratios in the order of 5-600bbls/mmscf – has
prompted Hilcorp to increase drilling activity at 340acre spacing in the near term.
Consequently, the number of wells in CY’11 will increase from 16 to 25wells in the
Longhorn area and from 25 to 35wells overall.
Hilcorp most exited by Rancho Grande-1: the well was choked back (IP 1170bopd
and 3.2mmscf/d) to limit early decline. Early indications appear to support proof of
concept.
Kowalik re-drill will spud within the week.
What we think:
The Morgan well has been exceptional; applying spot pricing, the well has grossed over
US$5.5m in 2 months vs. a well cost of <US$6.5m.
Whilst not as prolifi c – but noting the shorter horizontal well length – Easely has still
generated nearly US$3m on this basis.
This augers wells for fi eld development economics and further highlights the potential
of these wells to average 6mnths payback.
Furthermore, production decline has a tremendous bearing upon the ability for a
company to self-sustain its equity position: high equity positions (+50%) are hard to
fund given the pace of drilling in these plays in the US, particularly where decline rates
are translating to paybacks towards 2yrs in some areas.
The recent Turnbull-1H result is a terrifi c outcome, validating AUT and the JV’s view that
the Longhorn acreage would carry higher associated condensate levels (CGR of 600bbls/
mmscf vs 200 across Sugarloaf).
Similarly, we understand that the natural fracturing in the Turnbull area has resulted in
Turnbull-2H and 3H being in communication: this has huge potential in terms of reservoir
harvesting, particularly early in well life.
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
7 of 33
Weekly Informer
AUSTRALIAN EQUITIES RESEARCH
The increased number of wells next year ie 30-35 (i/o 25; AUT av. participation at 20%) -
extra funding from the recent placement will be more than suffi cient given the rates of
production being realised (we estimate +2000boepd by the end of CY’11 on a discounted
basis ie $50m in revenue at spot prices.
Despite retaining conservative well cost assumptions of US$8m per well and the
minimum NRI (net revenue interest) of 71%, rolling over to FY’11 our valuation increases
to $1.32/sh price target due to the additional Longhorn drilling.
Corporate machinations are evident from heightening acquisition activity in the play –
the recent Reliance-Pioneer transaction; transaction equates to US$13K/acre (vs. AUT:
US$16K/acre on an EV basis fully diluted at 80cps).
Level of activity and production data disclosed suggests that the acreage is not as
prolifi c as the Sugarkane area. Their acreage has 5 wells on production at a combined
28mmmscf/day vs. AUT (5 wells) - but on our calculations - producing at ~60mmscf/day
gross (including 4000bopd) currently.
Investment Case:
These latest production results continue to fi rm the credentials of AUT’s acreage within
the Eagle Ford play. A distinct trend of improving yield, higher pressure and lower
rates of decline is emerging. We remain attracted by the leverage to the oil price that is
offered via investment in AUT as well as the low risk and scalable growth to production
and earnings in the medium term. Buy.
Aurora Oil & Gas Ltd (AUT $0.80) Buy
Price Target: $1.32
Reason For Update: Site Visit & 60-day Production Data
What we know:
The Sugarloaf AMI JV (AUT – 10%) has released 60-day production results from their
Easely-1H and Morgan-1H.
Morgan-1H averaged 17.2mmscfe/day (vs. 30-day 19.1mmscfe/day), producing
65,200kkbls of condensate and 201mmscf of gas over the 60 days.
Easely-1H averaged 8.5mmscfe/day (vs. 30-day 10.1mmscfe/day), producing 19.6kkbls
of condensate and 221mmscf of gas over the 60 days.
Euroz has recently been to site with AUT and the operator Hilcorp.
Hilcorp are low cost focused translating to consistently achieving well costs of US$6.5m
(vs. Euroz’ forecast US$8m).
The Turnbull-1H result – specifi cally the oil ratios in the order of 5-600bbls/mmscf – has
prompted Hilcorp to increase drilling activity at 340acre spacing in the near term.
Consequently, the number of wells in CY’11 will increase from 16 to 25wells in the
Longhorn area and from 25 to 35wells overall.
Hilcorp most exited by Rancho Grande-1: the well was choked back (IP 1170bopd
and 3.2mmscf/d) to limit early decline. Early indications appear to support proof of
concept.
Kowalik re-drill will spud within the week.
What we think:
The Morgan well has been exceptional; applying spot pricing, the well has grossed over
US$5.5m in 2 months vs. a well cost of <US$6.5m.
Whilst not as prolifi c – but noting the shorter horizontal well length – Easely has still
generated nearly US$3m on this basis.
This augers wells for fi eld development economics and further highlights the potential
of these wells to average 6mnths payback.
Furthermore, production decline has a tremendous bearing upon the ability for a
company to self-sustain its equity position: high equity positions (+50%) are hard to
fund given the pace of drilling in these plays in the US, particularly where decline rates
are translating to paybacks towards 2yrs in some areas.
The recent Turnbull-1H result is a terrifi c outcome, validating AUT and the JV’s view that
the Longhorn acreage would carry higher associated condensate levels (CGR of 600bbls/
mmscf vs 200 across Sugarloaf).
Similarly, we understand that the natural fracturing in the Turnbull area has resulted in
Turnbull-2H and 3H being in communication: this has huge potential in terms of reservoir
harvesting, particularly early in well life.
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
7 of 33
Weekly Informer
AUSTRALIAN EQUITIES RESEARCH
The increased number of wells next year ie 30-35 (i/o 25; AUT av. participation at 20%) -
extra funding from the recent placement will be more than suffi cient given the rates of
production being realised (we estimate +2000boepd by the end of CY’11 on a discounted
basis ie $50m in revenue at spot prices.
Despite retaining conservative well cost assumptions of US$8m per well and the
minimum NRI (net revenue interest) of 71%, rolling over to FY’11 our valuation increases
to $1.32/sh price target due to the additional Longhorn drilling.
Corporate machinations are evident from heightening acquisition activity in the play –
the recent Reliance-Pioneer transaction; transaction equates to US$13K/acre (vs. AUT:
US$16K/acre on an EV basis fully diluted at 80cps).
Level of activity and production data disclosed suggests that the acreage is not as
prolifi c as the Sugarkane area. Their acreage has 5 wells on production at a combined
28mmmscf/day vs. AUT (5 wells) - but on our calculations - producing at ~60mmscf/day
gross (including 4000bopd) currently.
Investment Case:
These latest production results continue to fi rm the credentials of AUT’s acreage within
the Eagle Ford play. A distinct trend of improving yield, higher pressure and lower
rates of decline is emerging. We remain attracted by the leverage to the oil price that is
offered via investment in AUT as well as the low risk and scalable growth to production
and earnings in the medium term. Buy.
MIR
This valuation is spot on by Euroz.
Ive got it pegged at $1.29 at present and $2.34 for end of 2011 at present.
The market might actually wake up to the value on offer very soon, bolingers are tightening, consolidation has been prolonged, its low in its trading belt. Should see some action soon, based on both technicals and fundamnetals.
This valuation is spot on by Euroz.
Ive got it pegged at $1.29 at present and $2.34 for end of 2011 at present.
The market might actually wake up to the value on offer very soon, bolingers are tightening, consolidation has been prolonged, its low in its trading belt. Should see some action soon, based on both technicals and fundamnetals.
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Back in today .
Had to chase em a bit but I'm fully reloaded.
The depth is looking interesting atm.... could be off for a run today
Had to chase em a bit but I'm fully reloaded.
The depth is looking interesting atm.... could be off for a run today
Welcome back slipperz.
After a lengthy consolidation and absence of big news this looks like the next leg up.
With the Indians buyining into Pioneer, the Chinese buying into Chesapeak, KKR taking a slice, AWE scooping up ADI, Mobil taking XTO, it looks like the Eagleford is getting the international attention it deserves in the M&A world.
With Euroz, PAttersons and Hartleys now covering the stock its getting up some momentum, its just a matter of time no with the new wells to be drilled, Kowalick and the Turnbull flows (which may well yet be very impressive) and we might see AUT surging towards Euroz price target of $1.32
The rebound in oil futures this week will help the situation as well.
After a lengthy consolidation and absence of big news this looks like the next leg up.
With the Indians buyining into Pioneer, the Chinese buying into Chesapeak, KKR taking a slice, AWE scooping up ADI, Mobil taking XTO, it looks like the Eagleford is getting the international attention it deserves in the M&A world.
With Euroz, PAttersons and Hartleys now covering the stock its getting up some momentum, its just a matter of time no with the new wells to be drilled, Kowalick and the Turnbull flows (which may well yet be very impressive) and we might see AUT surging towards Euroz price target of $1.32
The rebound in oil futures this week will help the situation as well.
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Thanks Condog, good to be back
Been on the sidelines for a while now.
Just wanted to see the post CR price settle and get some results in.
I've had a great couple of months ( aside from this week when I have taken a bath on market despite the bullish sentiment about) and now hold as many AUT as I did when I left and a couple of other substantial holdings as well!
As you pointed out technically AUT is looking ready for the next leg up and I wanted to be in before we head off to the dollar and beyond.
Onwards and upwards !
Lots of mixed up data to consider for this week.
Au economy looks very strong with good unemployment numbers, housing numbers are next week ??, but should pick up on the back of very low unemployment, possibly full employment.
IMF has revised up global growth figures 4.2% to 4.6%
China production is absolutely booming
Crude oil biggest week up in 9 months, up 5.8%
OECD and US consumer confidence ar weak
M & A activity in the eagleford continues and political risk to offshore oil contiunes to rise.
Over all, mixed, but more positive then negative.
Au economy looks very strong with good unemployment numbers, housing numbers are next week ??, but should pick up on the back of very low unemployment, possibly full employment.
IMF has revised up global growth figures 4.2% to 4.6%
China production is absolutely booming
Crude oil biggest week up in 9 months, up 5.8%
OECD and US consumer confidence ar weak
M & A activity in the eagleford continues and political risk to offshore oil contiunes to rise.
Over all, mixed, but more positive then negative.
Sean K
Moderator
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Sorry if I missed it condog but how did you come to $2.34? Why not $2.33? Always interesed in how people come up with fundamental valuations on these types of companies. Cheers.MIR
This valuation is spot on by Euroz.
Ive got it pegged at $1.29 at present and $2.34 for end of 2011 at present.
The market might actually wake up to the value on offer very soon, bolingers are tightening, consolidation has been prolonged, its low in its trading belt. Should see some action soon, based on both technicals and fundamnetals.
Neptune was in line with pluto, and 4 degrees out of line with saturn which would have made it 2.33, but then i saw that venus was lined up with the moon, which definitely made it 2.34 rather then 2.33
Same way i came up with 1.29 and Euroz come up with 1.32
Apply well flows and anticipated well flows to the drilling programs and projected drilling programs. This gives revenues, deduct taxes and royalties, apply a risk deduction and add some value 10% in my case for wells in the near future. Apply a discounted PE of say 10 compared to the sector and you come up with a valuation. I try to be conservative and be surprised to the upside, rather then get shocks.
Clearly though this is only a guide, but its a calculated guide, rather then a guess.
I find this method allows me to compare it to other companies from differnet sectors, which is very important to my strategies.
If you go back to around page 17 of this thread you will see some of my spreadsheets where you can see my methodology.
Please note, do your own research, always seek expert advice and never act on information from forum posts, from anyone.
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Just had a check on the US Market report for the week.
All the indicators are looking positive for the short to medium term pricewise
http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp
All the indicators are looking positive for the short to medium term pricewise
http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp
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Just having a beer and doing a bit of analysis on the recent little uptrend and I have just realised what a narrow uptrend we are ranging in
Second realisation is that uptrend commenced after hitting support at the cap raising price ( it was an intraday low of 74 cents.) see below
My curiorisity then lead me to investigate volumes on that trading day (June 30th no less) and to my surprise they were very very low!
My conclusion?
It would seem that most AUT holders are onboard for the longer term and the dilutory effect of the cap raising has had little to no effect as holders can see the potential rewards from the drilling program to follow.
And finally looking at price and volume action and the trading range at present any sort of good news aka the Turnbulls for instance will see us break resistance and be off and gone above the dollar mark quick smart!
Second realisation is that uptrend commenced after hitting support at the cap raising price ( it was an intraday low of 74 cents.) see below
My curiorisity then lead me to investigate volumes on that trading day (June 30th no less) and to my surprise they were very very low!
My conclusion?
It would seem that most AUT holders are onboard for the longer term and the dilutory effect of the cap raising has had little to no effect as holders can see the potential rewards from the drilling program to follow.
And finally looking at price and volume action and the trading range at present any sort of good news aka the Turnbulls for instance will see us break resistance and be off and gone above the dollar mark quick smart!
Attachments
Ype right now things look set for a very good week. The US and EU have behaved, although it wont take much for them to play up again, oil had a brilliant week, AU economy is powering, Eagleford is getting headlines everywhere, weve got over our SPP and CR imo, Kowalick and turnbulls, should be anticipated, and where cashed up to the hilt imo.
We have consolidated nicely over recent weeks while the rest of the market got punished and we look set imo both on a technical and fundamental ready for a good surge into the mid to late 90's with a pull back to late 80s or so.
Bollingers are tightish, RSI looks good, stochastics crossed, here we go by the looks.
Been wrong before, so DYOR and seek expert advice.
We have consolidated nicely over recent weeks while the rest of the market got punished and we look set imo both on a technical and fundamental ready for a good surge into the mid to late 90's with a pull back to late 80s or so.
Bollingers are tightish, RSI looks good, stochastics crossed, here we go by the looks.
Been wrong before, so DYOR and seek expert advice.
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Ype right now things look set for a very good week. The US and EU have behaved, although it wont take much for them to play up again, oil had a brilliant week, AU economy is powering, Eagleford is getting headlines everywhere, weve got over our SPP and CR imo, Kowalick and turnbulls, should be anticipated, and where cashed up to the hilt imo.
We have consolidated nicely over recent weeks while the rest of the market got punished and we look set imo both on a technical and fundamental ready for a good surge into the mid to late 90's with a pull back to late 80s or so.
Bollingers are tightish, RSI looks good, stochastics crossed, here we go by the looks.
Been wrong before, so DYOR and seek expert advice.
Depth is looking stong as well.
Almost a 3:1 buyers to sellers ratio
If noone wants out in the morning and 85 cents goes we might have to bring out the bananas lol
:dance:
They will appear, no shortage of people trading small movements, but 920K on the buy side and only 380K on the sell side looks like a healthy start to the week.
News is needed on the T's and Kow then we might see some action. Q4 is getting closer and closer and everyone knows what that means.
Also Morgan has basically paid itself off in the next week or so, which means its then fast tracking the repayment of the others.
As highlighted in that euroz report those natural fracs in the shale near T2, T3, could be fantastic for longevity of flow. Perhaps we will see some new decline rates far below elsewhere. Its only speculation, but it does add an element of anticipation towards the 60-90-120 day flow rates for the Turnbulls.
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Just had a check on the US Market report for the week.
All the indicators are looking positive for the short to medium term pricewise
http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp
slipperz
just trying to understand what you saying here on the US side of things.
can you run it past me quickly where and what the short to medium term indicators are?
Agent ........c mon
Stop playing silly buggers
You where optimistic on ADI, thick and thin through good times and bad.
Right now AUT looks better then ever and certainly better then ADI ever did.
C mon brother stop playing silly mind games hoping for a price pullback so you can get back in.
Since when did anyone ever need to justify the Eagleford to you. Youve been its biggest promoter in this forum for years, now suddenly your out and it looks better then ever, you want us to justify to you why we think its red hot.
Cmon dude, really, .....
Stop playing silly buggers
You where optimistic on ADI, thick and thin through good times and bad.
Right now AUT looks better then ever and certainly better then ADI ever did.
C mon brother stop playing silly mind games hoping for a price pullback so you can get back in.
Since when did anyone ever need to justify the Eagleford to you. Youve been its biggest promoter in this forum for years, now suddenly your out and it looks better then ever, you want us to justify to you why we think its red hot.
Cmon dude, really, .....
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Howdy Agentm.
Aside from the slight decline in futures prices this week given the huge demand for airconditioning on the east coast earlier in the week overall the August futures price is trading at at 35% premium to the 2009 price.
Not bad year on year? Especially given the US has been on struggle street all year.
That's indicator number one.
Number two is the decline in storage injections year on year " Working gas inventories are currently 23 Bcf below year-ago levels "
Or roughly 2Bcf a month is coming out of inventory.
So the equation is strong supply and equally strong demand. Good news for the industry overall imo.
And if I were to say build a nice shiny low carbon emission gas fired turbine power plant in the US a healthy gas reserve would be a commercial necessity in my forward cost projections.
Lastly looking forward to the next twelve months the price looks to be fairly strong
"Although the September contract decreased by $0.06 per MMBtu during the report week, slightly more than the near-month contract, declines in futures prices were generally limited further into the forward curve. The 12-month strip, which is the average price of natural gas futures contracts over the next year, ended trading yesterday at $5.06 per MMBtu, a decrease of only $0.01 per MMBtu on the week."
