AUT - Aurora Oil and Gas

condog · 2 October 2010

Oil up strongly accross the board makes for an interesting week ahead.

Intersting it hardly strays below its 10 day moving average, and its 10 day moving average rarely turns negative. Similarly but obviously hardly any negative with its 15 day moving average. And its 20 day average has no down turns in the last 12 months. Not abad guide for buying points, and so far a good guid of support levels.
Its 20 day MA is currently at about $1.20
Its 15 Day MA is currently at about $1.27
Its 10 day MA is currently at about $1.38

To me and its only opinion but imo unlikely to pull back far or for long, and if trends continue we are likely to be well past 1.48 in 20 days time.

condog · 3 October 2010

Analysis
The above is an extract from the Oil & Gas Journal Newsletter of October 4 (on line). How could it be otherwise? Except for the interdicted Gulf of Mexico, U.S. activity is quickly being restricted to first class shale plays such as the Eagle Ford and Bakken plus limited redevelopment in the Permian basin and the San Joaquin Valley. Prospects for large crude oil discoveries in the U.S. are slim but that is not true in Africa and Asia. Already discovered giant fields in Iraq alone are enough to attract vast sums of capital. Eastern Siberia is only now getting required infrastructure to support development of big oil and gas fields. Mexico, Libya and even Algeria are far down the mature trail but much inexpensive oil can be produced from the Orinoco Tar Belt. That one will not go away. Activity in the Magdalena Valley of Colombia is robust. Petrobras, flush with over $25 billion of newly raised cash will be continuing Brazil's ambitious Santos basin developments and the Campos basin is still highly prospective. The reality is that the international decline rate for existing oil fields exceeds 6%/year which translates into a loss of 4 million bbl/day/year. Saudi Aramco recently announced a 5 year capital and exploratory budget focused on natural gas plus downstream spending. The situation in Saudi Arabia is that only one large field remains to be redeveloped - Manifa. That is the last of the Mohicans. Without further giant and supergiant oil fields to develop, Saudi Aramco now faces an era of substantial high decline rates. They will soon match those of the U.K. North Sea, Mexico and the U.S. The sharp capital and exploratory cutbacks of late 2008 and much of 2009 are now beginning to lower estimates of new production coming on line next year and in 2012. Once OECD inventories level off and even begin to decline again, crude oil prices will get back on the track of first half 2008. Oil company and service company CEOs can see this. Schlumberger's Andrew Gould, who occupies the catbird seat when it comes to acute observation of global activity can clearly see what is happening and his most recent remarks at the Barclay's Conference reflect this.

From
http://www.glgroup.com/News/Last-we...prices-a-sign-of-shortages-or-not--50813.html

basilio · 5 October 2010

The reality is that the international decline rate for existing oil fields exceeds 6%/year which translates into a loss of 4 million bbl/day/year. Saudi Aramco recently announced a 5 year capital and exploratory budget focused on natural gas plus downstream spending. The situation in Saudi Arabia is that only one large field remains to be redeveloped - Manifa. That is the last of the Mohicans. Without further giant and supergiant oil fields to develop, Saudi Aramco now faces an era of substantial high decline rates. They will soon match those of the U.K. North Sea, Mexico and the U.S.

Click to expand...

Worth reading that extract again slowly and carefully. The projected 6% annual decline in current oil supplies is troubling beyond measure. Attempting to keep a highly energy based civilization operational with such an ongoing reduction in energy resources just seem possible. In the vernacular (as well as the actual) it ain't gonna fly.

Assasin · 5 October 2010

Is this a case of no news is good news? Very flat day all round. Carn't see an Aussie interest rake hike affecting AUT to much. The current pullback of around 8% from peak is about the same as past pullbacks. Possibly a good chance to top up for the long term believers.

condog · 5 October 2010

basilio said:
Worth reading that extract again slowly and carefully. The projected 6% annual decline in current oil supplies is troubling beyond measure. Attempting to keep a highly energy based civilization operational with such an ongoing reduction in energy resources just seem possible. In the vernacular (as well as the actual) it ain't gonna fly.

I agree - with the real or unreal threats of peak oil, its clear thes cos offer cheap insurance.

Sharejon · 6 October 2010

I was very pleased to see AUT up just over 3% today. It's a good way to hopefully get the ball rolling again. Volume was reasonable as well.

Much better than the news that one of my O&G stocks went down 25% today (CTP), although it is a make or break stock, so this is to be expected on occasions.

You win some and you lose some, as they say. And I'm thrilled to say I've easily won AUT so far

, and I'm fairly keen to keep on winning!

condog · 6 October 2010

Yep theres plenty of underlying support and few willing to sell there shares , which is a nice way to be.

Was having a moment of contemplation this arvo, about where the oil price was heading. And ive got to say im comforted that with all the dire headlines around and us barely recovering from the biggest global economic shock and recession in most our lives, look where oil is. Its $82 on the back of a global rout so to speak.

I came to the conclusion if this is where oil is with Europe in the poop tank, the US with one hand and a foot out of the poop tank then im pretty sure the situation for global oil prices has already changed for ever.

India and China is what im putting it down to , that they are now demanding so much more energy, with both bumping just under double digit growth and having half the worlds population, its game on for oil already imo, barring a huge global shock or GFC 2.

Think about it for a moment, with everything as subdued economically as it is and oil at $80 its either a scary sign of things to come, or its simply a case of every one exiting dollars to hold commodities and other assets.

Either way it makes little old oiolers like AUT look imensely profitable going forward if the trend continues.

Im also wondering like many others whether some of the OPEC countries are fudging , guessing or worse about there reserve figures. There seem to be some very static figures beeing supplied

Given the massive decline in world discoveries, i find it hard to beleive the OPEC (already highly explored areas) have manged to find new reserves as fast as they are depeleting them. And judging by the oil price im not alone with this viewpoint.

Agentm · 7 October 2010

Plains E&P announced a significant acquisition in the Eagle Ford oil shale trend and provided an operational update.

PXP, Plains E&P, has agreed to acquire interests in approximately 60,000 net acres in the Eagle Ford oil and gas condensate windows in South Texas for $578 million in cash. Of the 60,000 net acres, approximately 20,400 net acres are located in a joint operating area between PXP and EOG Resources, Inc. (NYSE:EOG - News). The Eagle Ford properties are located primarily in Karnes County of South Texas and have net resource potential of approximately 140 to 175 million BOE, projected net production capability of approximately 2,000 BOE per day and a year-end 2011 production target exit rate of approximately 5,000 BOE per day net to PXP.

James C. Flores, Chairman, President and CEO of PXP commented, "We are pleased to announce this significant acquisition which enables us to aggressively expand our large, high-margin onshore oil business. The Eagle Ford transaction adds a high-quality oil asset with substantial reserve and oil production growth opportunities to PXP's existing domestic oil resource position. As part of our focused oil growth strategy, PXP will operate substantially all of its oil assets, maintain total company liquids volumes between 50% and 60% of total production, and continue to deploy a hedge strategy to protect our cash flows."

The Eagle Ford oil shale acquisition is expected to close during the fourth-quarter 2010, subject to customary closing conditions and adjustments, with an effective date of September 1, 2010. J.P. Morgan provided financial advisory services related to the acquisition. As previously announced, the data room process for the planned Gulf of Mexico deepwater divestment is underway with final bids expected in late-October to mid-November. PXP expects the divestment to close by year-end 2010. Barclays Capital and Jefferies & Company are assisting PXP in the Gulf of Mexico deepwater divestment.

10K ish an acre

disclosure: not a holder of aut

Assasin · 7 October 2010

Agentm said:
Plains E&P announced a significant acquisition in the Eagle Ford oil shale trend and provided an operational update.

PXP, Plains E&P, has agreed to acquire interests in approximately 60,000 net acres in the Eagle Ford oil and gas condensate windows in South Texas for $578 million in cash. Of the 60,000 net acres, approximately 20,400 net acres are located in a joint operating area between PXP and EOG Resources, Inc. (NYSE:EOG - News). The Eagle Ford properties are located primarily in Karnes County of South Texas and have net resource potential of approximately 140 to 175 million BOE, projected net production capability of approximately 2,000 BOE per day and a year-end 2011 production target exit rate of approximately 5,000 BOE per day net to PXP.

James C. Flores, Chairman, President and CEO of PXP commented, "We are pleased to announce this significant acquisition which enables us to aggressively expand our large, high-margin onshore oil business. The Eagle Ford transaction adds a high-quality oil asset with substantial reserve and oil production growth opportunities to PXP's existing domestic oil resource position. As part of our focused oil growth strategy, PXP will operate substantially all of its oil assets, maintain total company liquids volumes between 50% and 60% of total production, and continue to deploy a hedge strategy to protect our cash flows."

The Eagle Ford oil shale acquisition is expected to close during the fourth-quarter 2010, subject to customary closing conditions and adjustments, with an effective date of September 1, 2010. J.P. Morgan provided financial advisory services related to the acquisition. As previously announced, the data room process for the planned Gulf of Mexico deepwater divestment is underway with final bids expected in late-October to mid-November. PXP expects the divestment to close by year-end 2010. Barclays Capital and Jefferies & Company are assisting PXP in the Gulf of Mexico deepwater divestment.

10K ish an acre

disclosure: not a holder of aut

Thanks for this agent. Any chance we could get your view on what this means for AUT or other surrounding companies?

condog · 7 October 2010

RIL fails to expand acreage in Texas Eagle Ford Shale field news

06 October 2010

Reliance Industries Ltd (RIL), the $45-billion Indian hydrocarbon giant, has failed to expand its acreage in Eagle Ford Shale field after talks collapsed with Chesapeake Energy Inc, the largest player in the Eagle Ford gas field in South Texas.

continued:
Citing sources Reuters today reported that RIL has ended talks for a stake in the Eagle Ford shale liquid play in south Texas with Oklahoma-based Chesapeake.

Chesapeake, the second-largest producer of natural gas in the US, holds around 400,000 acres in the Eagle Ford shale, making it to be the largest holder of shale acreage in the area.

Like other shale acreage holding companies, Chesapeake has been looking for a partner to invest and develop its 400,000 acres position in the Eagle Ford.

Chesapeake had said on 10 May 2010, ''By the end of the third quarter of 2010, the company intends to enter into a joint venture on its Eagle Ford Shale play that currently includes approximately 400,000 net acres of leasehold.''

Had the talks fructified, RIL would have added to its 45-per cent interest in approximately 212,000 net acres in Eagle Ford Shale fields, which it had acquired in June 2010 through a joint venture with Pioneer Natural Resources Co for $1.15 billion.

Aat the company's annual general meeting in June 2010, the oil refinery-to-retail conglomerate's chairman Mukesh Ambani had said that his company would continue to pursue ''similar joint development opportunities with operators besides building on its own a substantial upstream business in North America.''

RIL is competing with other oil and gas majors in the US for shale assets and has made shale acquisitions in the US worth $3.242 billion since April 2010.

Loooks like RIL are back in the market for another big acquisition and with plenty of dough.

condog · 7 October 2010

In relation to the plains deal it shows the move to onshore due to tighter and more expensive regulations which ive been predicting since the first week of the BP spill.

The oil and gas explorer had said in August it would shift away from offshore properties to onshore fields because of the new wave of regulations expected following the oil spill in the Gulf of Mexico.

"We continue to have positive feelings about that and it just reflects the quality assets and also the strength of the oil curve that is driving that process," Plains executives said on a conference call.

Eagleford is a major taget now for the off shore drillers.

The Eagle Ford purchase, which totals about 60,000 net acres of areas in south Texas believed to hold oil and gas condensate, is expected to have a net resource potential between 140 million and 175 million barrels of oil equivalent.

Pretty similar acerage to AUT gross acerage as a comparison.

PRODUCTION TARGETS

"As long as oil is above $60, we are going to continue to drill this acreage aggressively," Chief Executive Jim Flores said on the call

Click to expand...

Interesting to note thier economics B/even point.

Click to expand...

Click to expand...

Click to expand...

Sharejon · 7 October 2010

IMO, I'd very much like to see some more news from AUT/EKA.

Whatever happened to the days when news was fortnightly (or even more frequent) reports on wells were released?

Fantastic research their Condog.

condog · 8 October 2010

Sharejon said:
IMO, I'd very much like to see some more news from AUT/EKA.

Whatever happened to the days when news was fortnightly (or even more frequent) reports on wells were released?

Fantastic research their Condog.

Theres frac crew delays all over the eagle ford at present, and combine that with the slow downs provided by the 3 phase fracs which plenty are doing, compounds the issue. The important thing is in my projections they are still on track. They where so far ahead 2 months ago that they will still meet there Dec 2010 target of 20 wells imo.

Hows this for a fire cracker, hot off the press 1 minute ago. This will spark even more investment pressure to come onshore in a very big way imo. And it may well spark another strong run for oil futures.

EU energy chief plans deepwater drilling banPublished 11:29 PM, 7 Oct 2010 Last update 11:29 PM, 7 Oct 2010

--------------------------------------------------------------------------------

QUICK SUMMARY | FULL STORY | OIL

By Pete Harrison of Reuters

BRUSSELS - Europe's energy chief will next week reiterate his call for a temporary ban on new deepwater drilling for oil until a probe is completed into the causes of BP's spill in the Gulf of Mexico, a draft document shows.

Mr Oettinger is expected to say that Europe's myriad regulations for offshore exploration are too fragmented to cope with an industry that is drilling further and further offshore in deep, rough waters as "easy oil" runs out.

It observes there are more than 1,000 installations in the northeast Atlantic, over 100 in the Mediterranean and plans for new exploration off the coasts of Cyprus and Malta.

"Licensing stands out as the first key tool to ensure the safety of new drillings in complex environments," says the draft proposal, which would need the approval of the European Union's parliament and its 27 member countries before taking effect.

"The licensing regime needs to be backed up by an unequivocal liability regime," it adds.

During licensing, companies would have to prove the 'safety case' for each operation and demonstrate the company's ability to prevent and deal with crises.

They might also have to prove their financial ability to handle the consequences of unforeseen events, possibly via insurance schemes or risk-coverage instruments.

The Commission will also look at bringing drilling ships under the same rules as offshore drilling rigs.

More costs, more delays, more uncertainty, more risk for offshore drillers = money redirected to onshore plays.

Makes it sweet for AUT to be sitting in the sweet spot of the sweetest sweetspot in US onshore shale.

elsewhere on the US offshore drilling ban

New offshore drilling rules coming Thursday
The Associated Press

Thursday, Oct. 7, 2010 | 12:15 a.m.

The Obama administration is set to release new rules for offshore oil drillers as it prepares to lift a ban on deepwater drilling.

Interior Secretary Ken Salazar is expected to announce the new rules, including some that address workplace safety, at a speech on Thursday.

The rules are likely to include many of the recommendations made in a report Salazar released in May, including requirements that rigs certify that they have working blowout preventers and standards for cementing wells. The well and blowout preventer failed in the massive BP spill in the Gulf of Mexico.

Salazar has said new rules must be in place before the Interior Department lifts its temporary ban on exploratory drilling. The ban is set to expire Nov. 30, but officials have said they hope to end it early

from the Calgary Herald

But stringent rules around offshore drilling are affecting supply by wiping out some prospects, while making remaining offshore projects more expensive.

"Supply is definitely tighter because we had our opportunity set dwindle down," Rodberg said.

"Can Saudi Arabia turn on the taps to offset all the delayed offshore drilling? I doubt it. Nor would they necessarily want to get out of this pricing structure."

Barring a dramatic reduction in global economic growth, Rodberg sees strong oil prices as sustainable in the near term as countries put in place more moratoriums on drilling, affecting supply.

He sees equity markets opening, leading to more risk-taking on the belief of more money flowing into the investment space. But King also cautioned that as quickly as oil rallied, it can drop again, forecasting it will trade in a fairly broad range between $70 and $85 US per barrel.

Read more: http://www.calgaryherald.com/business/Crude+rise+expected+steam/3636708/story.html#ixzz11g8hekmE

estseon · 8 October 2010

Our friend Gunther has a few things to reconcile:

http://europa.eu/rapid/pressRelease...format=HTML&aged=0&language=EN&guiLanguage=en

30 September 2010

"The unpredictability of energy security, the volatility in energy prices and the delays in new technology and infrastructure investments call for decisive action"

"- Despite recent serious external supply crisis that acted as a wake up call as to Europe's vulnerability, there is still no common foreign approach towards partner supplier or transit countries" He's referring to the spats between Russia and its eastern block customers who are adverse to paying.

"I want to bring the consumer onto our side. We need to improve the implementation of the internal energy market and make sure that consumers get a good deal. We also need to reassure individuals that our energy systems are safe. Safety of oil and gas production and transport must be guaranteed. We must never have an accident like Deepwater Horizon here. "

He's not talking about banning off-shore. Besides, the UK would not tolerate it, Norway is beyond his reach and Italy never does what it is told to do anyway.

Besides which, he'll be blamed if the EU has shortages and it's not going to have a particularly significant effect on Texas.

On the other hand, China's projected energy demands will. Look at EVE's July 2010 presentation (it's into uranium) slide 7 - China will double consumption by 2015 and be at levels of consumption projected for the US 15 years later. If a small change in US demand is thought to have significant effects on global oil prices, what effect might China's energy demand have. They can't fill it all with coal (or uranium).

I read somewhere that BP rather slyly honoured its pledge to fund the $20bn fund by assigning its GoM revenues to that purpose - if Obama blocks BP's activities, he'll screw the compensation fund. Nice

Sdajii · 8 October 2010

Sharejon said:
IMO, I'd very much like to see some more news from AUT/EKA.

Whatever happened to the days when news was fortnightly (or even more frequent) reports on wells were released?

Fantastic research their Condog.

Nothing seems to have changed there, we have been getting updates about every week or two, it rarely goes much longer than that. It has been 15 days since the last update, so I'm guessing we'll get something today or early next week. It was more exciting when the first few wells were telling us lots of new information, but each new report gets more and more predictable and has less and less impact. Still, I'm hanging out for the next one, as it seems you are.

condog · 9 October 2010

Eagle Ford gas producers face shortage of fracking crews
Platts - ‎1 hour ago‎
Service companies cannot keep up with the boom in natural gas drilling in the Eagle Ford shale in South Texas, leading to a shortage of crews that perform ...

Mind you hilcorp so far have done a brilliant job of securing them in a timely manner.

Hopefully they will also do a brilliant job of securing thier full time crew for 2011 as promissed.

condog · 11 October 2010

Cnooc Ltd. will pay $1.08 billion for a one-third stake in Chesapeake Energy Corp.’s Eagle Ford shale project in Texas, in the biggest acquisition of a U.S. oil and gas asset by a Chinese company.

philly · 11 October 2010

condog said:
RIL fails to expand acreage in Texas Eagle Ford Shale field news
06 October 2010
Reliance Industries Ltd (RIL), the $45-billion Indian hydrocarbon giant, has failed to expand its acreage in Eagle Ford Shale field after talks collapsed with Chesapeake Energy Inc, the largest player in the Eagle Ford gas field in South Texas.

Loooks like RIL are back in the market for another big acquisition and with plenty of dough.

In the meantime on October 11 2010 Chesapeake sells Texas assets to China's CNOOC.
US gas company Chesapeake Energy said it had reached a deal with China's CNOOC to sell about a third of its interest in the Eagle Ford Shale project in South Texas for 1.08 billion US dollars.
CNOOC has agreed to fund 75 percent of Chesapeake's share of drilling and completion costs until an additional 1.08 billion US dollars has been paid, company officials said on Sunday. The deal is expected to be finalised by the end of the year.

Chesapeake is expected to continue managing the project, conducting all leasing, drilling, operation and marketing activities.

Chesapeake is currently operating 10 rigs in its Eagle Ford leasehold, but with the additional capital from CNOOC Limited, it anticipates increasing its drilling activity to approximately 12 operated rigs by year-end 2010 and approximately and approximately 40 rigs by the end of 2012.

"This transaction will provide the capital necessary to accelerate drilling of this large domestic oil and natural gas resource, resulting in a reduction of our country's oil imports over time, the creation of thousands of high-paying jobs in the US and in the payment of very significant local, state and federal taxes," said Chesapeake chief executive officer Aubrey McClendon.

So with all this international interest and activity in the Eagle Ford where does this leave AUT and EKA? I'm still smarting from the AWE takeover of ADI and would hate for a big international to gobble these 2 up for less than a fair value. Does anyone else share my concerns?

condog · 11 October 2010

philly said:
So with all this international interest and activity in the Eagle Ford where does this leave AUT and EKA? I'm still smarting from the AWE takeover of ADI and would hate for a big international to gobble these 2 up for less than a fair value. Does anyone else share my concerns?

I definitely share your concern, as most should.

We have a company with fantastic growth propects, funded program, world class acerage and world class operator.

Why would you want to offload that for a quick 50% highly taxed premium at the expense of imo fantastic growth for the forseeable future.

Wont be selling mine in a hurry i can tell ya.

philly · 11 October 2010

condog said:
I definitely share your concern, as most should.

We have a company with fantastic growth propects, funded program, world class acerage and world class operator.

Why would you want to offload that for a quick 50% highly taxed premium at the expense of imo fantastic growth for the forseeable future.

Wont be selling mine in a hurry i can tell ya.

Hey condog, I agree.
I didn't want to sell ADI for the same reasons but in the end I had no choice.
I'm just worried that the same scenario could happen with AUT although I would hope that the AUT board would be more aligned with the share holders and not give in to any predator as easily.
My aim ATM is to hold AUT for another 12 months and enjoy the ride.
I guess that after the ADI takeover I'm a bit gun shy but I'll just have to wait and see what happens. Cheers

AUT - Aurora Oil and Gas

Sdaji

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