AUT - Aurora Oil and Gas

condog · 21 August 2010

Just another little juicy tid bit for you to chew over on the weekend.

In 2010 we have two rigs with a planned 20 wells
In 2011 we have 3 rigs with 30 wells planned
In 2011 I presume they plan for 5 rigs with 50 wells planned.

On that basis consider the growth curves in 2011 and 2012. Clearly its operating from a bigger mcap each year. So the growth to mcap ratio is lower ie, the % growth.

But in terms of mcap the additional mcap in 2011 should roughly be 1.5 times the mcap growth of 2010. And the 2012 growth with all other factors equal should be roughly 2.5 times the 2010 mcap growth.

Well worth considering.

condog · 22 August 2010

In relation to the above. The yellow indicates growth from 25c to 1.30 Hartleys old projection. Both scenarios allow for CR or SPP in H2 2011.
This is a mere extrapolation of gross mcap growth. It does not imply it will eventuate. It relys on all other factors remaining equal which is unlikely. Please do your own research and seek expert advice.

The left column is number of shares, the midle is sp, the right is mcap. The % is percentage growth in mcap in that 12 mth period, or extrapolated projected mcap growth in that 12 month period.

The second scenario, the yellow uses the 1.32 target and then the 1.50 target.

As you can see it pays to be into these early, however, the longer term results are not to be sneezed at either, especially given your capital base has expanded many times , CGT implications of selling , and the de-risking and knowledge of the stock you hold, by year 2 or 3.

rcm617 · 22 August 2010

Condog,
In your update on the T1 well, you used boe/d instead of b/d for the 30 and 60 day production averages. The figures should be 700 and 599 for the 30 and 60 day production respectively.

condog · 23 August 2010

rcm617 said:
Condog,
In your update on the T1 well, you used boe/d instead of b/d for the 30 and 60 day production averages. The figures should be 700 and 599 for the 30 and 60 day production respectively.

Ta good pick up.

Heres my projected cash flows based on $70 boc net. Havent taken gas into account so that will allow for tax and royalties on condensate. Just as a guide. Assuming all remaining wells for 2010 after Direct Acess are 10% NRI, and all wells in 2011 are 20%NRI @ 500 bocpd.

With boc at $50 its the same shaped curve but peaks at $200,000 pmonth. @ $85 it peaks at $350,000 pmonth, @ $100 it peaks at $403,000 per month.

Sdajii · 23 August 2010

condog said:
Ta good pick up.

Heres my projected cash flows based on $70 boc net. Havent taken gas into account so that will allow for tax and royalties on condensate. Just as a guide. Assuming all remaining wells for 2010 after Direct Acess are 10% NRI, and all wells in 2011 are 20%NRI @ 500 bocpd.

View attachment 38555

With boc at $50 its the same shaped curve but peaks at $200,000 pmonth. @ $85 it peaks at $350,000 pmonth, @ $100 it peaks at $403,000 per month.

I am clearly missing something or making a completely stupid mistake, but when I crunch those numbers I get something in the vague ballpark of $3,000,000 revenue per year, divided by a ball park of 300,000,000 shares gives 1c of revenue per share per year, which would make the current share price an order of magnitude too high. I'm obviously making a stupid misunderstanding somewhere, can you see what it is?

Also, I take it your figures are gross income rather than profit (since at double the price you get double the figure - no factoring in of production costs). This would make the above problem even more extreme.

I'm not at all saying I disagree with your figures, just that I can't see what you're saying.

condog · 23 August 2010

Sdajii said:
I am clearly missing something or making a completely stupid mistake, but when I crunch those numbers I get something in the vague ballpark of $3,000,000 revenue per year, divided by a ball park of 300,000,000 shares gives 1c of revenue per share per year, which would make the current share price an order of magnitude too high. I'm obviously making a stupid misunderstanding somewhere, can you see what it is?

Also, I take it your figures are gross income rather than profit (since at double the price you get double the figure - no factoring in of production costs). This would make the above problem even more extreme.

I'm not at all saying I disagree with your figures, just that I can't see what you're saying.

I havent had time to cross check, but those figures in the bar chart are monthly figure. They are gross, but on a conservative boc price, and i havent included the dry gas, its just as a rough estimate. So we have some idea of revenue streams for cash flow purposes. Its impossible to work out net figures as we dont know thier tax credit structures etc, so its not worth the effort.

Sdajii · 23 August 2010

Okay, that makes me even more puzzled. $300,000 per month (ish) or $3,000,000 per year (ish) is only around 1c of gross revenue per share per year. Wouldn't that make the current share price worth around 3c? (given the risks, etc, and with a positive outcome of profit of around half a cent per share per year).

Clearly there is a massive error somewhere, and I assume it's something I have made, I'm just trying to find it. Are you talking about average income per well rather than in total? The potential of a future 1c income per year per share can't give a current share price of over $1. Where have I gone wrong?

condog · 24 August 2010

Sdajii said:
Okay, that makes me even more puzzled. $300,000 per month (ish) or $3,000,000 per year (ish) is only around 1c of gross revenue per share per year. Wouldn't that make the current share price worth around 3c? (given the risks, etc, and with a positive outcome of profit of around half a cent per share per year).

Clearly there is a massive error somewhere, and I assume it's something I have made, I'm just trying to find it. Are you talking about average income per well rather than in total? The potential of a future 1c income per year per share can't give a current share price of over $1. Where have I gone wrong?

Yep my mistake Sdaji, thanks for following it up. A few too many pain killers yesterday morning i think.

Attached is corrected graph. pls cross check it too as i still have some pain meds on board this morning as well.

Please cross check, crunch your own numbers. Info for discussion purposes only.

condog · 24 August 2010

Is this our nice healthy pull back prior to our next run, if so its a good opportunity to top up. Problem is im not s fortune teller. Id say its dependent on the US recovery, which this week is looking grim, but in amongst a lot of ordinary news there are also glimmers of brightness.

Im seriously thnking right now the big players are in my opinion playing some possible game of lets talk everything up one week, down the next. Punters often suggest this conspiracey theory, but right now there seems to be a pretty obvious pattern emerging. Is it deliberate or coincidental?

The cahrts arent giving too much away this morning as to which direction, it imo seems down for a bit longer, but thats only a guess.

Ingnore the buy sell labels they are merely theoretical points of interest, for mapping.

Sharejon · 24 August 2010

I cannot understand how EKA has been dropping so signicantly. I am happy with the amount of EKA i'm holding, but at these prices I'm starting to look at shares which I can sell to top up with EKA. AUT has handled it's retrace much better than Eureka has.

(n.b. im a holder of both)

AngusSmart · 24 August 2010

I'm also considering topping up on Eka at these prices.. i thought the 29 i got the other week was gold..

Perhaps its got something to do with this new acreage? has anyone run the numbers on that yet? or is it still way too early to tell whats going on..

also the operator whos to drill on these new acreages? will it be hillcorp or someone else, considering EKA said its 100% owned?

Sdajii · 24 August 2010

I'm no expert, but a lot of the activity I have seen with AUT lately looks very botty.

I assume the big drop with EKA is due to all the new 17c shares freshly in peoples' hands, some just want to take profit, and some are probably getting scared - if you're sitting on a very quick, easy, big profit of over 50%, it's easy to be spooked into selling by a market in the red. Obviously I wish I'd waited for 23-24c rather than topping up at 28 and 26.5c, but I'm still glad to have topped up. If I'd been watching over the last few hours I'd have bought more, and still might later today. I really can't see anything other than a whole heap of 17c shares causing today's dramatic action, and people are probably selling out of AUT to buy EKA, bringing AUT down a little too.

Agentm · 24 August 2010

Sdajii said:
I'm no expert, but a lot of the activity I have seen with AUT lately looks very botty.

I assume the big drop with EKA is due to all the new 17c shares freshly in peoples' hands, some just want to take profit, and some are probably getting scared - if you're sitting on a very quick, easy, big profit of over 50%, it's easy to be spooked into selling by a market in the red. Obviously I wish I'd waited for 23-24c rather than topping up at 28 and 26.5c, but I'm still glad to have topped up. If I'd been watching over the last few hours I'd have bought more, and still might later today. I really can't see anything other than a whole heap of 17c shares causing today's dramatic action, and people are probably selling out of AUT to buy EKA, bringing AUT down a little too.

the bots been doing its magic for some time now, a joy to watch..

doubt it will be turned off any time soon.. not at these prices..

Assasin · 24 August 2010

So, who's going to explain "bot" to an "L" plater.
Sorry to have to ask the question but it seems to keep on coming up.
Regards

condog · 24 August 2010

Yeh i been pulling a few trades on EKA as well. I honestly think it is over priced, simply due to it having signif less acerage and most of 2011 program will be in the longhorn acerage.

Having said that i think all holders and traders are saying it will be a to target.

condog · 24 August 2010

Assasin said:
So, who's going to explain "bot" to an "L" plater.
Sorry to have to ask the question but it seems to keep on coming up.
Regards

Broker software selling or buying small chunks repeatedly. Sometimes its legitimate, just buying or selling for a client rather then placing a huge order the software buys repeatedly or sells repeatedly with small parcels when ever they become available.

However imo sometimes its more sinister and its algorithmic trading software designed to buy or sell in small chunks to try and alter the price structure of the stock, so they can then achieve a positon. There position may involve the stock, may involve options on the stock or any combination.

Some argue they are ok some argue they are not. My take is they are not, becasue the market is meant to be an even playing field and the bots give bot traders and advantage. They argue everyone has access to bots. Which imo is not the case.

Thats the basic nutshell version.

Sharejon · 24 August 2010

at 24c you think it's overpriced, or at 32c?

At 32, that is probably the case.

At 24, I think that is really quite harsh.

condog · 24 August 2010

Sharejon said:
at 24c you think it's overpriced, or at 32c?

At 32, that is probably the case.

At 24, I think that is really quite harsh.

Na at 32c imo it was very high to over priced relative to AUT.

I think from 24c ish you might get a few easy trades away.

5haretrader · 24 August 2010

The other thing to remember is there is that apparent parity between EKA and AUT of 1:4. Perhaps this has plagued investors minds in the recent trading of the two stocks.

IMO, it is hard to justify if a stock is overvalued or undervalued unless you do your own research. For example, you can get a ballpark figure of, say, 25-30c as fair value of a stock, but unless you put in the hard yards and crunch out the numbers, you are really only speculating on the issue.

Condog is a real inspiration for us all in regards to research. Maybe everyone else should give it a go if you have some spare time. We are all investors, and should be prepared to put in a similar effort in our research of companies. Having just done it with a much smaller O&G company in GGE, you'll be surprised what you'll find with some stocks imo.

condog · 24 August 2010

Thanks 5haretrader - I agree - if your not prepared to crunch the numbers, put the money in a term deposit. Especially in the current climate.

Posting them in here is one way if you have thick skin. People will soon tell you its right or wrong. Like Sdaji picking up my error, which i appreciate. Marvelous how them pain killer meds make everything seem fine. Go run the numbers on SEA its an iteresting comparison (dis- i dont hold)

Market attention tonight is focused on U.S. July home sales data, due at 10 a.m. EDT and then weekly U.S. oil inventory data by the American Petroleum Institute at 4:30 p.m. EDT.

Right now oil is down 70 odd cents to a 7 week low. Its a bit of a turning point where the punters need to decide whether to go long, hoping for a rise and face possible margin calls, or look to buy lower. Inventories are high and the US recovery is showing nervous to inconsistent signs.

Interesting weeks ahead for crude. We will have a better picture when we wake. Till then sleep tight omegos.

AUT - Aurora Oil and Gas

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