AUT - Aurora Oil and Gas

[condog]

Agent on page 21 of this thread 21st May AUT pice = 74c prior to Turnbull results , may unit or Patinio unit, prior to successfull CR and

great buying opportunities right now

the second turnbull well is complete and the third turnbull is about to spud

its obvious the average punter has no fraccing idea whats going down atm..

waiting for the low point in the volatile aut share and will be taking full advantage.. and definitely a huge strong HOLD on all adi shares..

lots of news is on the horizon imho.. lots of very positive news

Then on 22nd May AUT price = 72.5c

i am buying AUT right now, but only because the value is there.. with the turnbull 3 well on the way and the rancho well about to demonstrate its flow.. and more rigs to arrive any day out there.. all very very positive for aut..

AUT will only appreciate on the base that the ADI bid is creating for it..

100 cents is where it should be right now.

cant see AWE staying out of the jvp partners in the future, so i view AUT as a future takeover target..

nulla i am thinking about the .40 bounce also, will it happen?

i almost swear there is a poster here (very exuberant) almost trying to talk for you..lol

the aut spruikers whom earlier talked up the ability of the small caps to keep up with the massive capital requirements with only a few million in the bank, and laughed at any comments on capital requirements made by me, now are suddenly not laughing nor criticising me any more, so pointing out how completely wrong they were on the ability of these small caps to survive in the acreages they have obligated to seems to have come and gone, and suddenly aut is this amazing share thats going to go to some massive $2 or $8 share. what on earth is going on here?

what else are they wrong on??

upside is there, but i know what the leasing costs are now, and i know what a sudden fall in oil prices does to the operations.. it just shuts it down.. massive downside risks are very much needed to be calculated by the recent sophisticated investors.. fair value for what you have now, not later is where reality is ...

whats strange with the gas prices in the US slipperz.. is the massive expansions into the shales are producing so much gas, that imports are reducing, and gas prices look to be suppressed for a long long time.. and oil imho can not be looking at a run up unless something happens globally to drive it.. i see NIL there driving the US economy up. all indicators i look at are bleak..

for me, i see oil pipeline companies not really driving hard into the region for a long time, so where is all the gas going to go?

pipelines are at capacity in the region.. and you cant just flare the gas off

my view on gas is that its looking at a downward leg.. long term, and gas is at capacity in the region..

Oh and another huge backflip for no apparent reason

One minute its being ramped at 74c, the next after 2.5 more successfull fracs and a CR higher then the price it was being ramped up we are supposed to believe its suddenly lost value for no apparnet reason.

If it can pull off a CR within weeks at a higher price then you where singing its praises and pull of 2 more fantastic fracs with a 3rd impending then how on earth can it be a worse investment???

Then you accuse us of being overexhuberant. And call us arrogant for wondering why your sudden change in stance.

And now you want us to believe after years of you promoting it with little to no flows, at much lower oil prices and much higher costs that it has questionable economics??

Come on big fella we aint that stupid.

 

[condog]

Where is the price of oil likely to head?

Well according to Ron Paul and i agree its to do with the price of the dollar. And with record stimulus packages world wide increasing money supply in almost every nation , all competing for the same limited resources, where do you think its heading??

Im undecided as if global growth is weak its likely to stall, but if those stimulus packages do kick in and create growth, and if india and china keep steaming along theres certainly some upside pressure from the money supply in store at some point.

http://www.youtube.com/watch?v=dLGvybCr6AM

Fast-growing nations to spur global oil demand in 2011: IEA

DUBAI: The world oil demand next year will be fueled by economic growth in fast growing countries like China and India, despite a drop in rich
countries' appetite for oil, International Energy Agency has said.

The Paris-based agency in its monthly report on the oil markets estimated the global oil demand in 2011 to rise by a daily 1.3 million barrels or 1.6 per cent, to average 87.8 million a day.


http://omrpublic.iea.org/

Global oil demand for 2011 is expected to rise by 1.6% or 1.3 mb/d year-on-year to 87.8 mb/d, assuming consensus trends in the world economy, crude prices and efficiency gains. Growth will be driven entirely by non-OECD countries (+3.8% or +1.6 mb/d), while the OECD sees resumed decline (-0.5% or -0.2 mb/d). The 2010 outlook remains largely unchanged at 86.5 mb/d (+2.1% or +1.8 mb/d versus 2009).

LONDON (ICIS news)--World oil demand is forecast to grow by 1m bbl/day to 86.4m bbl/day in 2011, reflecting continued caution about the pace of the global economic recovery, OPEC said on Thursday in its monthly oil report.
http://www.icis.com/Articles/2010/0...mand-projected-to-grow-1m-bblday-in-2011.html

 

[nunthewiser]

Gday Agentm,

can you please give me the figure on the complete market cap on this stock taking into account all cap raising issues and spp extra dilution stock when it is all released.

just a rough number will be fine.

Thanks for your posts, its great to have a voice of reason and no bias regarding fundamentals here instead of the usual one eyed sunshine and lollipops analysis here most of the time.

Please keep up the posts.


On a personal note i still have no reason to change my first price target expected of .72 as yet according to my previously posted analysis.

Happy to be wrong and trade it if proven so, until then i will sit and wait and watch the volume games that have been ocurring as pointed out a few posts back in regards to a close it had.

 

[Moderator]

All this discussion on AUT is throwing up some great analysis, both fundamental and technical, and some great ideas showing the differing approaches to trading - different timeframes, different entry criteria etc.

What is not great are the accusations of ramping and downramping. Let's cut that out. It is possible for reasonable people to disagree.

 

[estseon]

"Must say though, my bearishness is not in the charts. It's the the worlds inability to find a long term solution to the disaster we have created. Cheap money, low rates, bs lending practices, encouraging people to get in to debt, and bebt, and debt ...... unsustainable."

The Mr Micawber law is well and truly history: "Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." Charles Dickens

The real problem is the combination of high debt and low inflation. People and governments seem to have got into the debt habit when inflation was running at 5%+ and that was not too bad because of the annual diminution. Anybody who could look forward to 10 years of gainful employment would expect the debt to fall in real terms considerably. True, the debt had to be serviced but banks had less risk to the capital of the loan. Governments could look to increasing income taxes in line with wage inflation, which normally ran at 1%-2% higher than RPI.

If governments are not prepared to inflate out of the problem, there will have to be a heavy clamp down on consumption. And that could result in lower energy demand.

Having gone in a bit of a loop, that seems to me to be the other alternative to collapsing currencies and, either way, there will be reduced energy demand.

However, that does not necessarily apply to China, which is a huge market. So the question is whether China and other eastern economies can take up the slack without having to rely upon demand from the indebted western economies.

As regards AUT, I feel that it is necessary to take a longer term view. There are plans (Enterprise Products Partners LP - news release 1 July) to build substantial new infrastructure to collect gas from the region and the target is to complete by Q1 2012. AUT has to continue drilling to secure the leases but may be constrained in the amount of gas that it can produce until that new infrastructure is operational. The bad news is that the drilling density to secure 'oil well' leases is one every 320 acres and that one half of Longhorn may fall into this category (Hartleys 9th July page 5). But the prospective value is greater and there is less dependence on infrastructure because of the lower gas yield. Sugarloaf is less of an issue because of gas field status and the lower WI. There is also Ipanema but I haven't seen much on that yet.

I feel that any bad hit to the price of oil will be reflected in the share price. The forward drilling programme seems to be in a constant flux of change but the significant cash reserves from the capital raisings should insulate AUT's ability to meet its drilling costs obligations for some considerable time to come.

 

[condog]

Gday Agentm,

can you please give me the figure on the complete market cap on this stock taking into account all cap raising issues and spp extra dilution stock when it is all released.

just a rough number will be fine.

214M + 36M CR + estimated 10M SPP = 250M, roughly 10640 net acres
How about dazzle us with a realistic view point rather then the devils advocate ill founded pesimism like the 40c prediction of last week that you and agent tried to conspire.
ADI had 144M approx post CR at T/O @ 42c and 2500 net acres

I have no problem with alternative views and discussion (two sides to an argument) but when proposturous arguments are put forward with absolutely no reason, evidence or foundation and it affects the psych of holders in here i think we owe it to ourselves to counter that argument with what our calculations are based on.

Gday Agentm,
Thanks for your posts, its great to have a voice of reason and no bias regarding fundamentals here instead of the usual one eyed sunshine and lollipops analysis here most of the time.

Did you not read the last two pages of bias?

My sunshine and lolipops is consistent whether i own the stock or not, its not fluctuating from day to day on when i want to buy or sell. Thats called integrity, aka honesty something i place a very high value on.

I fully respect that traders operate on different time lines and hence have very different entry and exit triggers, and justify different prices, but so far you are yet to put forward any real evidence to support the prices you keep throwing at us. At least my sunshine and lolipops has detailed analysis that is out there for all to question. So far no one has used that information to discredit the figures put forward. Why, because they are real and based on unquestionable real facts of recent weeks.

I do a lot of trading nun, but not on this stock, its a poor stock to trade, with low volumes and low volatility, so i fully understand charting and technical analysis. Its just you and Agent have put no valid technical analysis forward that justifies such dramatic price calls of 40c and now 72c. 72c may be realistic at some point, although i doubt it given the down pressure of a CR/SPP and market pull back didnt go below 74c. But your unfounded claim of 40c was and is proposterous especially since the only evidence to support your and agents claim was one very very basic trendline and reswistance line on a chart.

So please by all accounts present realistic alternative viewpoints, but just like mine, be prepared to have them questioned.

 

[condog]

Nun as previously held in very high esteem and promoted by Agent, Hartleys report and Eroz reports and valuations are the best information we have to date.

They have end of 2010 targets / valuations of 1.23 and 1.32 = average 1.28

Presume they are being optimistic as you think and discount it by 20% = 1.02

now they have told us hilcorp plans to drill 10 - 13 wells for the remainder of 2010 and up to 50 wells in 2011, which AUT will have involvement in 75% = 37. Now lets take a dim view and assume they only drill 10 more in 2010 and only achieve 30 in 2011.

That pans out to $1.02*48/18 = $2.73

Thats still heaps of upside from 82.5c today

Now lets bee even more pesimistic an assume oil falls by 20%, lets round it off and presume that lowers well economics by 25% and hence the Hartleys end of 2011 valuation by 25%

Working = $2.73 * 75% = $2.04

Now surely thats pesimistic enough for you to stomach. Even thats a whopping 248% estimated return on todays price for 18 months. or 165% annualised return.

If you want we could discount it further, but im sure most can see the potential.

I used these exact same calculation methods 7 months ago to justify my investment in AUT at 25-27c and its proved incredibly accurate. Id projected 90c by end of FY09/10 well it got to 88c, i was pretty dam close.

Not saying any of this will come true, but DYOR and sums and work it out for yourselves.

 

[condog]

On the flip side if Hartleys are being conservative and we can expect plenty of upgrades as stated in thier report, consider this.

Current average valuation by Hartleys and Euroz = $1.28

If they have been 20% too conservative and oil remains constant.

Working
$1.28 * 120% = $1.54 predicted end of 2010 valuation
Assume they drill 13 more for a total of 20 wells in 2010
Then dril projected 37 more in 2011
=57/20*$1.54 = $4.39

So it works both ways.

Im not trying to ramp this, i just truly believe this, which is why i happily put my calculations out there for scrutiny. I actually believe this is too optimistic, but i dont believe its not possible.

Id be more inclined to do my workings on the pesimistic viewpoint as what i want, but what i believe is the original one at $3.91 minus any SPP or CR or debt effect in H2 2011.

This does not take anyones individual circumstances into account, nor is it implied or guaraunteed in anyway by me or ASF that it is true or accurate or will eventuate. Do your own research and seek expert advice.

Go right back to the AUT investor presentations of Oct Nov 2009. I posted the chart in this thread which shows even AUT where predicting possible growth rates in the hundreds of % once they started to add wells. As we have all witnessed , so far the results and drilling have been better and faster then was ever anticipated, and importantly the oil price is higher, then those original projections.

This growth was no secret - check out the 3rd and 4th last page of the broker presentation from Oct 2009 http://www.auroraoag.com.au/docs/2009/AUT20091006_2.pdf

Then look at the most recent presentation from June 2010 on page 20 at the declines in drilling times. That adds significantly to the economics of each well, and the low break even prices on page 21.
http://www.auroraoag.com.au/docs/2010/AUT20100609_1.pdf

Then when you want to start comparing relative company values and acerage values, look at the results of our wells on page 11, compared to our neighbours.

 

[Slipperz]

You're the early bird today Condog!

Ran en eye over who was reporting today in the US and saw Haliburton was up so naturally I thought it would be a bit of a bellweather for the drillers in the US.

Just quietly I thought given the frac crews and drill rigs in the eagleford and elsewhere are probably working around the clock now they would bring home the bacon and that is indeed the case.

"Halliburton's ($28.87, +$1.36, +4.94%) second-quarter earnings rose 83% as the oilfield-services company reported stronger revenue and sequential growth across all its markets. Results rebounded from a weak prior-year period and beat analysts' expectations. Rival services companies were also getting pumped up by the report, including Sclumberger Ltd. (SLB, $58.89, +$2.21, +3.90%), Baker Hughes Inc. (BHI, $47.48, +$1.48, +3.22%) and Smith International Inc. (SII, $40.69, +$1.54, +3.93%)."

Happy with that result! Actually it's closing strongly http://www.google.com/finance?q=NYSE:HAL

Price of oil and gas holding steady, dow ticking up 0.5% on company results. IMHO there is a lot of fear in the US markets that is driven by sentiment and this index or that. At the end of the day it's all about who's making money and that's exactly the sort of concrete news the market is receiving atm.

I think the fundamentals are still looking okay for AUT atm.


Oh here's a calendar for US reporting season. Looks like tech day tomorrow with Apple and Yahoo reporting, but Apple reports after market.

http://biz.yahoo.com/research/earncal/20100720.html

 

[nunthewiser]

But hey .......... it could always bust up all those stars allighning and run for the moon .........in which case i will trade it and go with the flow in a not so DANGEROUS area..

I am not currently holding , unbiased and happy to trade it.

i just regard this current area it is in a highly DANGEROUS pivot point and if it busts south it will catch a few out.

I personally would not enter here as the risk level is too high for my own personal use but would reconsider on a break north and maybe a retest OR another look between .66.and .72 if it made it .

from there i would be at ready on close watch to analyze the actual action at time to see who was playing the action.

If it broke south from there i would be waiting a proper grounding before looking again.



p.s i just noticed chart and it seemed i got vol transfer correct but didnt point out the obvious

Yep as indicated on my chart and analysis posted last night , the sellers are definately in control of this one at present.

Yet another bounce off the major resistance line and south she heads .

My chart post shows where i think the likely turning/bounce points are and on current and yesterdays action i am inclined to reiterate that my ST target will be met.

i could be wrong but at present it sure is following my analysis to plan (scroll back)

Its just you and Agent have put no valid technical analysis forward that justifies such dramatic price calls of 40c and now 72c. .[/QUOT

my posts say it all , scroll back for analysis instead of heresay.

My target has been 72 all along and i agreed that 40 was a major pivot point when nulla produced a chart ,

MY CHARTS have also been posted with analysis provided pointing out the 72 target.

Agentm when you read this please scroll back as i asked a question to you bud and wouldnt mind an answer.

cheers

 

[nioka]

Good news just out. Increased production rate and still on restricted choke for Turnbull. Evidently room for more improvement. This should help preventing the SP fall to 75c as predicted by the "gloomers". My calculated comparisons with EKA are now 5 to 1. With EKA holding at 20c then the value I place on AUT must be $1.

Fundamentals reign supreme for prospectors.

 

[condog]

LONGHORN AMI PRODUCTION UPDATE
Aurora Oil & Gas Limited (“Aurora”) is pleased to provide the following update on production at the Longhorn Area of Mutual Interest (“AMI”) within the Sugarkane Gas & Condensate Field, Texas.
Production Update
The following well has now been on full production for a period of 30 days:-
Fractured Horizontal Length (ft) 3980
Total Gas Production (mmscf) 37
Total Condensate Production (bbls) 21,000
Average Daily Equivalent Oil Rate (boe/d)* 853
Turnbull #1H

* The equivalent oil rate for this well has been calculated to reflect value by uplifting the gas by 25% due to the high calorific value and then using a 12:1 conversion ratio. This is consistent with previous calculations of gas equivalent rates made in earlier announcements.
The equivalent rate for this well has been calculated on a barrels equivalent basis recognizing the likelihood that it sits within the oil leg of the Eagle Ford Shale. It is planned to carry out down hole sampling in the future to confirm the hydrocarbon phase under reservoir conditions. This well continues to be operated on a restricted choke as part of the ongoing efforts to optimize recovery and the economics of the wells in the Sugarkane Field.

 

[condog]

Nun, i feel you probably wont believe me , but i firmly 100% honestly believe what i am saying. I would not ramp as i feel its totally unethical and risky behaviour. If i didnt believe and couldnt back it up with analysis, what im saying i wouldnt state it.

I have topped up 10 times on AUT and sold out twice, yet you wouldnt know, becasue i have always remained positive and dont change my posting style to take advantage of others selling who might be influenced.

The AUT story has been a long time transpiring and several have severely hassled me via posts and PM's for my alleged "over exhuberance". Should i appologise for bringing a stock to the attention of other investors and allowing them to share in a 300%+ gain in 6 months. I feel not. But just incase anyone is annoyed with me for bringing this to your attention, i do firmly appologise, and i feel Nokia should for starting this thread.

I am personally (and im not advocating for others) just expressing my opinion : more confident and feel there is less risk in the next 300% on this stock. I do not think it will be as fast, however i am confident of its attainment. In saying that the 3 big risks are failed wells, oil prices and global growth, particularly china and the USA.

I feel i have always expressed my honest opinion and i feel i have justified this opinion with supporting evidence and facts. I feel from time to time people enter this thread with alterior motives or to play devils advocate and make seriously defamatory statements and proposterous allegations about prices with absolutely no justification or justification that does not stand up to any scrutiny.

So if you have information to the contrary to that posted please feel free to post your reasons for proposing your revised target of 72c so we can scrutinise it and discuss it.

I have given detailed reasons why i feel AUT is worth what it is :
Hartleys valuation $1.23
Euroz Valuation $1.32
Pattersons outdated valuation 93c
Reliance purchase of 45% interest in Pioneer
KKR purchase
Forward cashflow projections
Charts

On the flip side you have stated 72c and given one very basic chart.

By all means people are entitled to completely different views, but they should at least attempt to back up a contrarian view with some level of detail that can withstand scutiny or be discussed.

As Joe has continually reminded us, all prices must have justification.

 

[estseon]

A fuller version of the Hartleys comment was posted on HC.

Oil field classification for Longhorn is now estimated at 35% (previously 50%). So drilling requirements to secure leases are reduced. They say that there will be 'back-to-back drilling (though they don't say on which acreage - Sugarloaf will be for the rest of 2010 if they are to drill the target number of wells). They also say that AUT is fully funded for the drilling.

The poster on HC suggested a scale back of 1/3rd in the SPP.

 

[condog]

Gas IP mmcf/d Oil IP bopd Gas 30 day mmcf/d Oil 30 day bopd
Kennedy 4.39 1,132 3.05 661
Weston 5.68 414 5.49 388
Morgan 5.16 2,046 3.65 1,283
Easley 6.81 780 4.20 407
Rancho Grande 3.19 1,170 2.83 1,040
Turnbull 1 1.53 893 1.23 700
Turnbull 2 1.12 526
Avg 3.98 994 3.41 747

Turnbull 2 is expected to be higher as it has been restricted and spent several days shut in due to H2S

Excellent results and confirms the quality of the extremely important Longhorn acerage that makes up 65% of AUT's play at 25% net interest.

Its early days but results also seem to indicate the restricted chokes may be helping as planned for lower declines and better well longevity.

Aurora is well funded to meet its share of drilling costs moving forward so this is not an issue for the Company.

We also expect significant newsflow over the coming weeks and months with back to back drilling planned into the foreseeable future.

The Company has also flagged a maiden reserve report within the next few weeks, which may provide an upside surprise for the market.

Valuation: $1.64
Issued Capital: 253.6m
- fully diluted 278.5m
Market Cap: $204.1m
- fully diluted $224.2m
Cash Equiv (31 Mar '10): $38.0m
Debt (31 Mar '10): $0.0m

Them is some nice apples Esteon, MIR, Nokia, Slipperz you got to love that.

 

[condog]

Ive update my spreadsheet using the 30 day averages supplied. and discounted them slightly to give an estimate of the end of 2010 valuation in my opinion at 40% tax and royalties, $70 boc and $3.80 gas.

Ive applied the average accross all wells as its far easier to update. So whilst each well is not truly indicative, the sum total is correct as per the information supplied by AUT.

Please do not rely or make decisions on this. It is an opinion, it could be right or wrong.

I came out with a valuation of $2.03 for end of 2010 based on a forward cash flow model and 5% of 2011 well values applied for future revenue premium.

Always DYOR and seek expert advice.



Realistically imo it will be lower due to the market taking time to understand the play and each well not having full 12 months revenue. Id actually for my own purposes now discount that by 25% to get around $1.54 or so.

This is not an implied eventuality or guarauntee of future price. Its merely my opinion and calculations for discussion.

Using 600bocpd and 2500mmcfgpd it comes out at 1.75 - 25% = approx $1.29

 

[nioka]

Them is some nice apples Esteon, MIR, Nokia, Slipperz you got to love that.

Grand apples indeed. However the grand apples have already been achieved and in the process of being devoured. I started in this play and invested the grand sum of $5000 as the apple seed. Had the germination and growth been fast I may have had a ten bagger at best, $50,000. Because there were droughts,floods and pestilence that slowed the growth I have ended up with over $500,000 from that initial outlay. It was all done by trading the regular changes in the relative value of the three. Now that the play has been proven it is impossible to make a trade a week and those trades yield very little improvement. My strategy now is to sit and wait. I hold a reasonable number of AUT and EKA and will hold until I calculate that there is little more to be gained by holding. I suggest that point is a long way off but the best apples have been harvested from this tree. However there is now less risk as AUT becomes a producer not a wildcat prospector.

I believe that a point of peak oil is here and new oil fields will be harder to find and costlier to develop. The cost of finding this one has been paid and the field has been "found". Oil prices will not fall below the cost of production at worst and best prices are probably yet to be seen. Drilling times have been substantially reduced along with the cost of drilling. I'm not going to suggest a future SP but I do feel that the current SP is far below true value.

 

[rcm617]

You're being very optimistic with decline rates there condog. When you average production for 30 to 60 day production from the four wells we have those figures for, I get an average production of 456 bopd and 3.5mmcf of gas per day. That includes morgan which is an exceptional well and not indicative of the other wells since.I'm sure production will be well below the second months figures by the end of the year.

 

[condog]

You're being very optimistic with decline rates there condog. When you average production for 30 to 60 day production from the four wells we have those figures for, I get an average production of 456 bopd and 3.5mmcf of gas per day. That includes morgan which is an exceptional well and not indicative of the other wells since.I'm sure production will be well below the second months figures by the end of the year.

RCM can you post some more working on how your calculating that. And are you taking into account todays numbers out. Ta. Point taken and i agree mostly, which is why i discounted to 600 and 2500. Probably could go further, but waiting on new declines for restircted chokes.

The 456 might be a bit low for 60 day averages as those new 30 day flows are significantly reduced declines on the restricted chokes. Although 450 might be a more realistic 12 month average.

The 30 day decline is averaging 24.8% by the figures above. So the 30 - 60 day decline should theoretically be substantially below that.

Using 450 bocpd and 2000mmcfgpd it comes out at $1.29 in line with Hartley and Euroz average valuation.

Using 450 and 2000 for 2011 - I get $2.20 for end of 2011 based on $70 $3.80 40% tax+Royl and 30 wells in 2011

 

[rcm617]

I just subtracted the 30 day production totals from the 60 day production totals for the 4 wells and averaged them to give me the second months production figures.