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AUT - Aurora Oil and Gas

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A quick point on crunching the numbers of AUT and EKA ....

It might be worth considering the relative value of these two based on their comparitive market caps .... AUT is currently trading at around 6X the value of EKA.

6X looks ok at the moment, but considering EKA's newly aquired lease is basically not factored into their SP imo, any half reasonable results from that in the future could be prove to be a nice trump card.

Either way, based on proven and probable reserves alone, both of them look pretty solid medium term.
 
All true Barney.

I been saying for some time i think they deserve a rerating and ive thought AUT to EKA should be about 1: 5 or 1:6, but the market hasnt agreed with me. Im not sure it can happen and stay like that so suddenly. Bur eventually as we head towards 2011 when most of the action will be in Longhorn, AUt has to outperform, as growth prospects for EKA in 2011 compared to AUT are limited.

Someone has to get left holding that bunny, so 4:1 cant last imo. Having said that TO speculation is rife with EKA which gives it a false premium.
 
The US housing data is out and was lower then expected, triggering some knee jerk reactions to currencies, which affect the oil prices. There was a rush to the YEN as a safe haven triggering a slide in the US on fears of FED stimulus action deflating the worth od the greenback.

A fall in the USD makes oil cheaper to other nations around the world and slows any decline in oil prices that would have otherwise occured. Which is a slight positive for AUT. The US house price data is very ordinary though.

US inventory report from the Department of Energy due 10:30 am EDT Wednesday, analysts imo are tipping a modest fall of up to 400,000 BO.
 
condog said:
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.
Click to expand...

Partial Quote from wall Street Journal
The American Petroleum Institute, an industry trade group, released similar data Tuesday evening that said U.S. crude stocks fell by 1.8 million barrels last week. Gasoline inventories rose by 692,000 barrels..... Refinery runs fell 0.5 percentage point to 85% of capacity.

Analysts said inventory reports will need to show significant changes in stockpiles to influence the pessimistic outlook.
End Quote

Interestingly the futures dropped, but still have a positive 12 month outlook, imo thinking the FED will respond decicively. At these prices below and thats the absolute best possible forcast we have imo, AUt would still have incredibly growth prospects and be very profitable imo.

DYOR and seek expert advice.

 
Barring external influences one would have to think the drop in sp is approaching its bottom very soon.

 
Condog, thank you for your continual updates, they are greatly appreciated. I find myself checking this thread several times each day.

I'm glad you appreciated my pointing out your error rather than taking it as an attack (people seem to get touchy all too often on forums!). I have a pretty good critical eye and a lot of experience with number crunching, Excel, etc etc and a reasonable amount of AUT and EKA. If you would like to team up and work together on some number crunching (I'm happy to do all the crunching and making the data look presentable etc - they've trained me hard at all that! I'd just need some gaps filled in, which with your understanding of and knowledge of the situation would be easy) I would be keen for it. Some of your figures are really good, but I often just get a bit frustrated, thinking if I had the spread sheets and a few extra pieces of data I could make them more meaningful.

You can email me at sdaji@sdaji.com if you're interested.

Cheers
 
condog said:
I been saying for some time i think they deserve a rerating and ive thought AUT to EKA should be about 1: 5 or 1:6
Click to expand...

What's frustrating is that you keep saying it, but with no justification. You talk of crunching numbers and, on this one, it appears to just be a vague opinion which you hope will come true if you say it enough.
 
condog said:
Barring external influences one would have to think the drop in sp is approaching its bottom very soon.

View attachment 38591
Click to expand...
That chart looks something like mine. I have support around 90c. Both are not semi log which would make a difference, but it's close.

I would be very happy if those lines didn't break, very nervous if they did.
 

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No share can keep going up. Profit takers will come in and with falling markets those that want to lock in profits. Plus there will be lack of news for a little while. This is a healthy fall because their is alot of good prospects for the coming months.
 
Condog I don't think enough information is known by us shareholders, to compare AUT's future operations (including longhorn) with EKA's, as EKA's land purchase could turn out to be an absolute terrific buy, or it could be the opposite.

So I think it's fair to say only time (and results) will tell.
 
Kremmen said:
What's frustrating is that you keep saying it, but with no justification. You talk of crunching numbers and, on this one, it appears to just be a vague opinion which you hope will come true if you say it enough.
Click to expand...

Kremman I cant justify it with numbers as i havent crunched all the numbers on EKA. But let me put it this way.

IF AUT and EKA where locked into the AMI and only the AMI, the continual 1:4 ratio would obviously be much more palatable.

But my rational is this.

History tells us 1:4 is definitely the ratio of days gone by up till now. However the game is changing rapidly. AUT has all that extra acerage which is fast fast fast approaching being developed. Not only that but pretty much all of next year hilcorp has said the focus will be on developing longhorn. So what are the growth prospects for EKA from Dec 2010 to Dec 2011, possibly pretty stagnant.

Now sritics will say , but wait EKA just acquired all that other acerage. Yes they did, but intil they have a funded development plan with a competent partner its realy only an asset to sell. Its actually a liability, till they either sell it or get a funded development pland and competent partner.

Hence my suggestion 1:5 or 1:6

When i look at the growth for 2011 with all other factors being equal, i project AUT to rise from roughly 1.30 to 1.50 up wards to about the $2.70 to $3.15 range on either forward cashflow projections or NPV calculations.

If you then extrapolate that upon EKA it in my opinion would be grossly over priced if it held 1:4 against AUT in its current status to close to the end of 2010.

I could be wrong its just my opinion.
 

Maybe your right, maybe i am.

What i think is important to recognise is its an asset if they sell that extra acerage or develop it. But until they have a funded development plan and cometent proven partner, its a liability.

Note: imo if a TO transpired that would count as a sale and hence would be an asset. but if it doesnt i see EKA having a much lower growth curve during 2011 then AUT. At some point that gets factored into the price.

We know from the broker US tour what hilsorp intends to do , that should soon be reflected in prices.
 
kennas said:
That chart looks something like mine. I have support around 90c. Both are not semi log which would make a difference, but it's close.

I would be very happy if those lines didn't break, very nervous if they did.
Click to expand...

Im not too concerned. AUT imo can now be trusted to keep adding value rapidly. What we need to watch is the US recovery and how that might affect oil prices.

Prgudula (sorry if wrong) found a cracker of an article on NBC, that basically points out my viewpoint on what might be transpiring with oil at present. http://www.cnbc.com/id/38831892

We are seeing nervousness due to concerns on the US recoveries and Western inventories. In doing so we are focusing nera term , very near term.

The real picture is the premiums that will need to be paid very shortly on the back of China and Indias insatiable demand that will not be able to be met by OPEC or current producers growth curves "IF" oil demand continues to rise. Thats the real picture.

Just rememebr , everyone tried to put the fear of god into us in June about a CR, then the SPP, the July pull back on US double dip fears. Weve been here done that. Right now at $1 AUT is good to fair value in my opinion and rising rapidly . By Dec all other factos being equal we have two brokers with good research arms telling us $1.30-$1.50

imo watch the us situation carefully and the oil price futures. The oil price futures imo tell the real story. Right now they are still saying oil will increase to $78 within 12 months.

All opinion so do your own research and seek expert advice
 
Recent historical relationship between AUT and EKA, plotted on Pair Trade Finder (separate thread on ASF). I've no idea where it's going next, but the momentum seems to be with AUT at the moment.
 

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Thanks Wrongun thats a cracker, it would be awesome if you could give us that once or twice a week. Then we will really get to know it.

Id be surpirsed to see EKA holding anything below 1:4 for long. AUT has the momentum now becasue EKA got a bit hot last week.

I pulled off several intra day trades on EKA, then stupidly got caught in with a small parcel i bought at 30c. I managed to dump 3 parcels around 30c and just got tooo greedy. Not to worried, just dont like having my trading money locked up.

Just on EKA, i noted a pretty big parcel in that change in substantial holding notice today. Someone obviously thinks its terrific value at present. And i dont think hes a trader, given he already had 8% holding we would have seen all his other notices if he was.

funny how the rich buy when everyone else panics.
 
condog said:
Kremman I cant justify it with numbers as i havent crunched all the numbers on EKA. But let me put it this way.

IF AUT and EKA where locked into the AMI and only the AMI, the continual 1:4 ratio would obviously be much more palatable.
Click to expand...

IF AUT and EKA were locked into the AMI and only the AMI, the 1:4 ratio would be totally laughable and nobody with a single functioning neuron would invest in AUT. EKA receives 95% of the income (per share) of AUT from the AMI, which would justify a 1:1.05 ratio. (modified by an adjustment for AUT's cash in the bank)

The 3-4x price of AUT has always been based on AUT's other prospects. Now, you're saying the extra area is worth 4x-5x-6x the AMI. Without some solid evidence, that seems like a multiple you've just pulled out of thin air.
 
Kremmen
i think what condog is saying ,if AUT had 6 times the net acres of EKA in AMI only, it would be 4 to 1 ratio..
 
mir said:
Kremmen
i think what condog is saying ,if AUT had 6 times the net acres of EKA in AMI only, it would be 4 to 1 ratio..
Click to expand...

Yep thats what im sayong. All other factors being equal. ie development pace, operator etc etc , AUT has 4 x the acerage hence 4:1 ratio.

But once you then consider the differing development stages etc etc explained above, AUt deserves a premium and a significnat one as 2011 approaches imo.
 
Crudes up nicely pretty much accross the board in the ST, indicating imo the US market has now factored in the reaction to those horrible housing numbers.



 

It is also important to factor in market cap and the ability to finance any development with funds on hand until the companies are cash flow positive. The earlier wells on the joint venture will be cash flow positive before the later turnbull ones. Remember ther eis also a big difference in 4 to 1 and 5 to 1. there are 10 decimal points there and the value is probably somewhere in between.

My guess is about 4.2 to 1 with that possibly changing in favour of EKA when the value of their new lease areas are clearer.
 
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