AUT - Aurora Oil and Gas

[Agentm]

Your comments are always welcome on any Share
I am a long term holder but took some profit
Thanks for the post
James

lol

unfortunately, thats not the case.. as you are all aware..

lots of great news comes my way from texas, but there is little desire to pass it on with the way things are..

glad to hear you appreciated the research over the many years..

plenty more shares in the making coming through..(keep an eye on txn in the future lots going on in the background)

cheers

 

[AngusSmart]

Thats a pretty old article Mr agent no dig at you or anything!

i am sure this went thru in june or august..

 

[rockhound308]

Two new well apps approved on TRRC today for hilcorp in Karnes

Georg (EF)
Foster Unit

two simultaneosu well apps, are they time managing better or is this the first sign of an accelleration in the program, ramping up for early 2011

Looks like Foster Unit is a new Ipanema well (east of Franke) but George(EF) is in the top corner of Karnes, probably not part of AUT's interest.

 

[condog]

lol

unfortunately, thats not the case.. as you are all aware..

lots of great news comes my way from texas, but there is little desire to pass it on with the way things are..

for those of the nicer long term posters and holders here that are not hostile towards the likes of me,

Agent we all appreciated your news

Our fallout started at post #570, where you tried to make me look silly, which if you now read you will see i was very right.

What we didnt appreciate was the huge and sudden change in sentiment for no apparent reason, that has subsequently proven to be very wrong.

I simply posted what most in here thought at the time, judging by thier supportive PM;s at the rime. So how bout dropping the snide comments quoted above, and post about the stock instead.

 

[condog]

There was a possibility that Ipenema may have had oil characteristics. Hence more expensive processing / lifitn / transportation and potentially lower flows.

I think the fact its flowing high pressure gas & condensate with excellent liquids was a very good thing and one which derisked that acerage somewhat.

 

[condog]

I think right now we are in a very very strong position. We have Euroz placing a $2.12 Valuation on AUT 2 days ago, we have a sp of $1.60 is with and EV of around 400M, we have $108 million cash, with not only our accellerated drilling program, but now to compound that we have an acredditive acqusition plan going to drive growth.

In the horrible event we attracted a TO offer it would be a minimum of 30%, being approx 40c per share minimum, taking us beyond the $2 mark.

We have hilcorp doing an amazing job, not only drilling and fraccing, but also in securing frac crews and rigs when many others are posting constant delays in getting equipment and personell on sight.

Oil prices are high and likely imo to stay there.

Plus we are literally days or weeks from being a CASH FLOW POSITIVE producer.

Theres a hell of a lot of positives on this stock and its imo just starting to rerate from high risk explorer to a moderate risk producer.

as such i have upped my PE to 16 in my projected cash flow models giving new valuations of:
End of 2010 $1.81 End of 2011 $4.56
Rational CVN has a long term PE of 16. AUT has significantly higher growth and projected higher growth, hence 16 should be an acceptable figure.

Disclaimer : Note these are only personal projections for discussion. do not rely on them or expcet them to come true. In the past i have been fairly accurate with them, but that in no way indicates they will be accurate in the future. Seek good expert advice and do your own research.

 

[condog]

My $4.56 valuation is entirely based on all factors being equal a $77 net oil price, $3.75 gas price, 40% tax and royalties.

This is simply my forward cash flow projection using the 2010 wells ati thier costs and flows, then the 40 2011 wells extrapolating the 2010 average flows. Ive used an average flow of 450bocpd and 1.5mmcfg
could be wrong but ive been spot on about 6 times now. Time will tell.

As you say though if oil price tanks, which imo is unlikely at this stage, terrorist strikes, US tanks etc all bets are off. Its only a guide if things proceed to plan and in line with the current environment.

Got to say i copped a lot of flack in some circles for predicting 75c when i did, then 1.59. I felt as if many thought i was mad, but ive done this long enought to have a reasonable idea how to do it.

I think a PE of 16 is reeasonable.

The $4.56 target sounds obscenely high, but when you factor in for most of this year we had a part time frac crew, delays, experimentation, 1-2 rigs at best and next year we are starting with 3 a full time frac crew then going to two frac crews and 4 rigs its feasable that we can have twice the growth of 2010. This year we went from 11c to 1.67 so far, with 6.5 weeeks to go for the year. I think its completely feasable we can expect all other factors being equal to more then double our sp when we go from 20 - 60 wells. Technically it should almost tripple, but declines will inhibit a true trippling. However reserves upgrades, acerage acquation and derisking could easily mean we significantly more then tripple. A double is around $3.30 a tripple is around $4.90

Even if you said AUT is now over valued which i dont agree. But lets assume it was and should be about $1.30. When we go from 20-60 wells for reasons outlined abouve we technically should approx tripple or more. Thats $3.90 in just over 12 months.

Using my cash flow model I have to reduce the PE to 13 to get a roughly 3.90 forecast. So its on the cards imo.


This is only opinion, could be very wrong. A lot of variables can and will change. DO NOT make investment decisions on this it is for discussion purposes only.

 

[justiceotp]

Hey Condog using your valuations for end of 2010 and 2011 what do you have it valued at for end of FY 10/11 (end of June 2011)

For the record I am a happy long term holder of AUT and also am a holder of EKA, SEA and SSN (Also had ADI)

 

[condog]

Hey Condog using your valuations for end of 2010 and 2011 what do you have it valued at for end of FY 10/11 (end of June 2011)

For the record I am a happy long term holder of AUT and also am a holder of EKA, SEA and SSN (Also had ADI)

Sorry , as AUt is setting its programs for calandar years i too have set up my cash flow projections to model clandar years.

However you could very roughly extrapolate that half the growth would be added by june 30 give or take about 20c imo.

 

[condog]

In response to a question about projected growth back in september:

Yeh approx 8-10c per month for 2010 imo then approx 12 - 15c per month in 2011, when the third rig turns up, based on, current growth and projected growth to mmet consensus forcasts.

I now think the remainder of 2010 8-12c month on average.

2011 10-20c per month with 3 rigs and 1 frac crew, and up to about 25c per month with a 4th rig and 2nd frac crew. The acerage acqusitions announcments and the reserves upgrade also has the potential to be price catlysts imo. Could be wrong so DYOR.

Note this is only a personal projection. Its based on opinion , not facts. It assumes all other factrs remain equal and they wont. Its for discussion purposes only, DO NOT ACT on this opinion. SEEK expert advice and DO YOUR OWN calculations and research.

 

[condog]

http://blogs.forbes.com/christopher...il-companies-to-invest-380-billion-this-year/
Report: Oil Companies To Invest $380 Billion This Year
Oil and gas companies will spend $380 billion finding and developing fields this year, according to a new report from analysts at Wood Mackenzie. This amount is $19 billion higher than in 2009 but still 10% lower than the historical high of 2008. The consultancy thinks spending levels could recover to 2008 levels by 2012 or 2013.

Leading growth areas in the U.S. are the Marcellus, Haynesville and Eagle Ford shale plays. The Marcellus will likely see capex triple to $11 billion a year. Worldwide, Australia is already enjoying record spending levels and should see capex triple by 2013. Iraq will be another area of massive growth in investment. The laggards include Canada and Russia.





http://fuelfix.com/energywatch/2010...ility-to-help-bring-eagle-ford-oil-to-market/

Enterprise Products Partners has purchased a 150-acre site in Southeast Houston to build a crude oil storage and shipping hub to feed oil from the Eagle Ford shale to Houston area refineries.
The terminal is being constructed to provide refiners in the Houston area with access to growing production from the Eagle Ford play in South Texas. It will be on a parcel of land near the Southeast corner of the intersection of Beltway 8 and SH 3…

Wait, isn’t the Eagle Ford supposed to be a natural gas play? Sort of.

There’s actually a fair amount of oil in those formations as well, so with natural gas prices low, companies are eager to pump up the oil output.

Crude will reach the terminal via Enterprise’s Rancho Pipeline, located approximately three miles northwest of the new terminal, and two, 24-inch diameter pipelines Enterprise plans to build. The terminal would then reach major refiners in Texas City, Pasadena/Deer Park, Baytown and the Houston Ship Channel via the Seaway Pipeline.


http://fuelfix.com/energywatch/2010...le-ford-pipeline-in-agreement-with-sm-energy/
Kinder Morgan is expanding its Eagle Ford Shale shipping pipeline in a 10-year deal with producer SM Energy Co.In May, Kinder Morgan and Houston-based Copano Energy announced that they were entering into a 50/50 joint venture to provide gathering, transportation and processing services to natural gas producers in the Eagle Ford Shale play.


http://fuelfix.com/energywatch/2010/07/02/enterprise-expanding-eagle-ford-pipeline/
Enterprise Product Partners said earlier this week that it’s expanding its natural gas and natural gas liquids pipeline system in South Texas and Mont Belvieu, Texas.The company will install 350 miles of pipeline, build a natural gas processing facility and add an NGL fractionator at its Mont Belvieu complex, Oil & Gas Journal said.
The work will be done by early 2012.


http://blogs.ft.com/energy-source/2...tural-gas-potential-us-government-is-missing/
China and India see what the US doesn’t - the potential of natural gas
This has been a busy week for US natural gas. It started off with the US signing an agreement to help India exploit its shale gas resources during President Barack Obama’s visit to that country. The agreement mirrored one the US had signed with China some time back to also help that country make the most of its shale.

These are both striking agreements because they demonstrate that other countries see tremendous potential in natural gas. And yet the US government has failed to appreciate the expertise and experience that launched the global shale gas scramble is in its own backyard. The US gas boom has generated so much capacity in America that prices have collapsed.

http://www.chron.com/disp/story.mpl/business/energy/7287329.html
Chevron joining shale spree
evron Corp.'s $4.3 billion deal Tuesday to acquire Atlas Energy finds yet another major oil company betting big that huge deposits of natural gas found in U.S. shale rock formations will be a key part of the global energy mix in coming years.

.......

In recent months, BP, Shell and other Western oil companies have acquired smaller companies or formed joint ventures to gain entry into U.S. shale plays including the Barnett and Eagle Ford Shales in Texas, the Haynesville Shale in Louisiana and the Marcellus.

 

[condog]

OCTOBER 26, 2010, 7:26 P.M. ET.
KKR Looking Across The 'Big Six' Of Shale .
Kohlberg Kravis Roberts & Co. announced another shale-gas investment, this time bringing a pair of advisers the firm has worked with on some of its successes in the space.

The firm is teaming up with a pair of former Jefferies Randall & Dewey bankers on a joint venture to pursue exploration and production companies in large unconventional-resource plays in North America.

Claire Scobee Farley and David Rockecharlie are the bankers behind RPM Energy LLC, KKR's partner in RPM Energy Partners LP. Farley was co-president of Jefferies Randall until August 2008; Rockecharlie was co-head of the firm until June 2010. Farley and Rockecharlie officially launched RPM--named after the abbreviation for "revolutions per minute"--in September, after working since early summer with KKR.

"We told them of our observation that the capital markets--public and private--would have a hard time funding all of the drilling that would be necessary; that it would be a great opportunity to get invested in a number of projects," Farley said.

Besides the large acreage opportunities--where being ahead of strategics is the name of the game--KKR and RPM believe there is value to be offered to small-to-medium sized drillers, according to Marc Lipschultz, global head of KKR's energy and infrastructure business.

"We think we can be a special partner to them in terms of capital, plus the skill and knowledge of Claire and David, plus the capabilities of KKR in building businesses," Lipschultz said.

KKR has already scored big in 2010 on shale, selling its stake in Marcellus Shale natural gas explorer East Resources Inc. as part of a $4.7 billion acquisition by Royal Dutch Shell PLC. Jefferies advised East Resources on that deal as well as KKR on its $400 million investment this year in a joint venture with Hilcorp Energy Co. to develop the Eagle Ford Shale in South Texas. Earlier this year, the firm also invested in E&P company Premier Natural Resources LLC.

RPM Energy Partners will look to invest in the "Big Six" of shale plays: the Barnett, Marcellus, Haynesville, Woodford, Fayetteville and Eagle Ford shales. In addition the company will look at the Bakken Shale and other unconventional resource plays, assets that may involve horizontal or fracture drilling.

"We're looking for assets that have some liquids, or pure dry gas plays where we can do drilling at a more moderate pace so we don't put loads of capital to work at low [natural gas] prices," Farley said. Rockecharlie added the company was looking for good geology that would be likely to result in declining costs and increasing recoveries per well over time.

RPM Energy Partners would like to be in three to five resource plays a year from now, worth anywhere from $100 million to $200 million and higher.



http://online.wsj.com/article/BT-CO-20101026-721788.html

 

[Assasin]

Thanks for these Condog,

Re: AUT - Aurora Oil and Gas

--------------------------------------------------------------------------------
http://blogs.forbes.com/christopherh...ion-this-year/
Report: Oil Companies To Invest $380 Billion This Year
Oil and gas companies will spend $380 billion finding and developing fields this year, according to a new report from analysts at Wood Mackenzie. This amount is $19 billion higher than in 2009 but still 10% lower than the historical high of 2008. The consultancy thinks spending levels could recover to 2008 levels by 2012 or 2013.

Leading growth areas in the U.S. are the Marcellus, Haynesville and Eagle Ford shale plays. The Marcellus will likely see capex triple to $11 billion a year. Worldwide, Australia is already enjoying record spending levels and should see capex triple by 2013. Iraq will be another area of massive growth in investment. The laggards include Canada and Russia.


http://fuelfix.com/energywatch/2010/...ith-sm-energy/
Kinder Morgan is expanding its Eagle Ford Shale shipping pipeline in a 10-year deal with producer SM Energy Co.In May, Kinder Morgan and Houston-based Copano Energy announced that they were entering into a 50/50 joint venture to provide gathering, transportation and processing services to natural gas

I've been trying to get my head around all of the development that's going on around this area and the time frames we are talking about (10years) , then considering the market caps of all the players in the region like AUT, EKA, TXN, SEA etc how easy would it be for a oil major to come along and sweep the floor with a takeover.
Putting all the valuations together of the minor players, plus a premium, it would be chicken feed to a major.
I would certainly not like to see that happen especially in the next 12 months but what can anyone do about it?
This is just a concern I have, all opinion only.
Cheers,

Good to see your still purring along Noika.

 

[condog]

AUT looking good on the charts as well. A 125% trend line for the 12 months. This trend shoul steepen upon arrival of a 3rd and 4th rig imo. A steeper trend for the last 4 months. Right now its snapped back up through its previous resistance and the bollengers will tighen while its holding its current level, Which could?? trigger a move sharp higher late in the week to early next week imo.

From a fundamental perspective we are awaiting IP, 30day results, new spuds and most importantly CASH FLOW news. Theres also the news on acerage acquisition which will hopefully begin to flow sooner rather then later.

 

[condog]

New well app - Yosko Unit

Thats 3 well apps on 11/11/10
Definitely seems like a new trend, previously 2 wells approved close together which was recently Kennedy 2H and Sienkiewics Unit, but never 3.

If the well apps are indicative of the anticipated drilling pace, then we are about to see an accelleration imo.

 

[condog]

Mainstream Media and Investing Public Just Awakening to Enormous Value of Unconventional Oil Assets

I had a discussion a couple of weeks ago with a gentleman who was evaluating a company that I consider to be an excellent investment opportunity. The company has spent the last 3 years locking up large acreage positions in unconventional oil plays. This fellow when valuing the company only considered the current booked reserves of the company, despite the fact that this company has only booked reserves on about 15% of its acreage. In other words no value was assigned to almost 500,000 acres that have no booked reserves, but acreage that could be sold today for $5,000 to $10,000 per acre.

That doesn’t make any sense to me, as the success rate by the company in question in drilling out their acreage over the past 3 years has been 99%. These are large resource plays, with virtually no geological risk.

I believe that the investing public today is just starting to awaken to the fact that there is a lot production that is going to be coming from unconventional oil plays in the next 10 years and that the companies that have locked up these resource plays have a large amount of value hidden in currently undeveloped landholdings.

There is no company that gets less respect for its highly valuable undeveloped acres than Chesapeake Energy. Both in unconventional oil and gas plays. In the past 3 years Chesapeake has entered into the following joint venture transactions:

Sold a 20% interest in their Haynesville undeveloped leases for $3.16 billion.

Sold a 25% interest in their Fayetteville undeveloped leases for $1.90 billion.

Sold a 32% interest in their Marcellus undeveloped leases for $3.37 billion

Sold a 25% interest in their Barnett undeveloped leases for $2.25 billion

Sold a 33% interest in their Eagle Ford undeveloped leases for $2.16 billion

Add those up and they received proceeds of $12.84 billion. If you calculate the implied value of the portion that CHK has retained the total is $36.6 billion.

CHK has a $31 billion enterprise value. The value of just the undeveloped acreage is more than this. CHK is the largest natural gas producer in the United States, so the obviously have sizable developed reserves as well. .........


.....Karnes County lies at the heart of the Eagle Ford Shale, a thick layer of dense, oil-and-gas-bearing rock that sits between 5,000 and 11,500 feet beneath the surface. The formation stretches across more than nine counties, but Karnes, population 15,000, has the most rigs drilling for oil: 13 in October, according to RigData, a company that publishes land rig counts.

.....

Read the rest at:
http://www.gurufocus.com/news.php?id=114043


Energy Sector Outlook Positive for Investors

Trends in the energy sector remain positive. We think current conditions and trends have created one of the best investment environments for us in years:
Last month the International Energy Agency (IEA) raised its 2010 global oil demand forecast upward, to 86.9 million barrels per day from 86.6 million barrels per day. This will be an increase of 2.0 million barrels per day over year earlier levels.

......Analyst Forecasts - The Financial Times had an article last week that noted Goldman Sachs does not think $100 a barrel oil is “as unlikely as it sounds.” Goldman predicts oil will break into triple digits by the end of 2011. The forecast is based on higher than expected global demand, inventory declines, and a reduction in global spare productive capacity.......





http://www.marketoracle.co.uk/Article24272.html

 

[mir]

from Patersons

we continue to highlight the ongoing growth and value in the Eagle Ford shale with lower risk exposure to AUT likely to yield ~50% upside over the coming 12-months

 

[condog]

from Patersons

we continue to highlight the ongoing growth and value in the Eagle Ford shale with lower risk exposure to AUT likely to yield ~50% upside over the coming 12-months

Hi MIR

Thats very very conservative. I for one would sell if thats all we could get. Going from 20-60 wells, turning our 3P into 1 and 2P and securing additional acerage will surely yeald much better growth then 50%.

Not shooting the messenger MIr, i appreciate you posting every bit of info, but not sure i agree with Pattersons on this one.

 

[mir]

condog
i agree, we all know Patersons are not up to speed with AUT but thought I'd post it anyway.

 

[condog]

condog
i agree, we all know Patersons are not up to speed with AUT but thought I'd post it anyway.

yeh it just does not add up.
If your derisking a company and acerage, converting 3P to 1 and 2P, acquiring acerage at a discount and going from 20-60wells in 12 months, a 50% increase would be pathetic. Too much risk and capex for too little a return. Pattersons have lost the plot it seems.