BNL - Blue Star Helium

[Agentm]

The sp seems to be in a fairly solid downward trend. Has anyone got an insight as to why? I would have thought that the prospect of positive news re interset in acerage, would have created upward pressure

the flow rates are real poor rayw

the company pumped up huge ip numbers, then refused to publish 3 monthlys.. so holders were expecting 800 or 1000 bopd where as the wells were actually producing some 350 or less and then declining rapidly.

there is yet to be a commercial well there, the wells will take years to pay themselves off.

if azz is lucky they will be able to drill enough to get a decent price per acre, and maybe salvage some cash back to the holders,,

not sure how the investors at .80 and the cap raising holders in the same region at .80 and recently at .60 are feeling, but my view is that each month the sp is falling away more and more.. its about .37 right now only a short while after a .60 cent cap raising,, pretty scary stuff..

someone told me on another forum to short the share at .80 when i criticised the less than realistic flow rates they put out on the asx as compared to the real flow rates at the rrc.. was great advice really..

most of the small cap oilers have been concerned how badly the investors in the inflated cap raisings would take their losses, and whether it would have a follow on to the other small cap oilers, luckily the others have got their cap raisings off in good time.. but i fail to see where the save will be for azz at this point myself..

 

[Slipperz]

The sp seems to be in a fairly solid downward trend. Has anyone got an insight as to why? I would have thought that the prospect of positive news re interset in acerage, would have created upward pressure

You would think so wouldn't you.

I guess a lot of holders are just taking a loss from buying up in the 70's and 60's and exiting their positions.

Looks like a few stop losses went today but at least the sellers have lightened up by a million or so.

AZZ is a big red line in my portfolio but I'm still in there.

My guess is a major is shopping the acreages and they have the cash to drill and the time to get the ROI . Even now AZZ is pumping nearly 1mm a month on five wells that cost 25 mm. So it's a two year payback.

For a major with deep pockets they'll just keep backing the tankers up for two years until it's cash .

The way the SP is tanking a complete takeover is on the cards.

How much are they willing to pay I wonder?

 

[rayw]

Thanks Agentm and Slipperz. I appreciate your insight into these small oilers. Have followed both of you across a number of small caps...AUT & ADI and appreciate your input. Finding it hard to take the hit on AZZ, will probably wait for an announcement on the acerage hoping for a kick up in sp to reduce the pain.

 

[whelan]

I have been hit rather hard by this one rayw and like you are waiting eagerly for some positive news.I,m not prepared to take a loss yet,still living in hope.

 

[Agentm]

no probs rayw

my views are just my own, and always dyor..

i never believed the ips that azz posted (and many on the HC threads really went to town on the ip's)

when adi posted ip's they posted huge disclaimers to never expect those figures to be the sustained flow rates, and to wait for the 60 and 90 day flow rates before judging a well..

azz would not disclose the 60 and 90 rates, only in their quarterlies.

i posted them on HC for many to see that the rates were not anything like the ip rates, and it demonstrated the lack of flow these oil regions have. i received a backlash for doing so.. but imho the rrc figures are beyond reproach..

eog is using lift as i pointed out many times, so when your investing into the oil regions of the eagleford, expect low rates of return, high costs, and you have to be capitalised..

it doesnt mean the economics are not entirely bad, it just means that when a region like this is getting $2500 an acre for leasing atm, and on short leases of 3 years, you have to have real deep pockets, and be real clever in securing the acreages, or face some staggering cost overruns.

many small caps in the eagleford have bitten off more than they can chew, thats for sure..

if your wells are not going to pay back in months, and then take years to pay back, then your also in deep trouble if your running on empty with capital.

another issue that is facing all the eagleford players is the recent activity of really chocking back the wells. many have to do this.. and that increase the pay back threshold from months to years.. so again any small cap without funds must be thinking hard on how they can achieve a return,, the modelling is changing, and challenging, and if you throw in to the equation the threat of oil prices going lower and lower, eventually the model is no longer economic.

azz have not nailed fast completions yet, and imho they are struggling with the fracs. still in a very early learning curve, by putting all their eggs into one basket and signing onto one driller, they are restricting themselves also in terms of not allowing the opportunity for better drillers to be used in the leases..

my view on azz is they are very much in trouble in terms of making a profit in the play, with high costs, increasing lease costs and very slow returns from the wells. that becomes very problematic for investors to be enthused, and imho the results of that is being reflected in the sp right now.

i agree that a buy out of the leases is probably the earliest and best possible way to get any good return for the investment. but when your backs up against the wall you have little time and latitude in negotiations..

all imho and dyor..

 

[rayw]

Thanks Agent. Spot on with the 60/90 day flow rates and the drilling capability. In my opinion Hillcorp are the making of the AUT/EKA/AWE play, but I guess their acerage is a lot sweeter as well. I thought the ADI board were very clear with their announcements and its not that AZZ are not, perhaps there isn't as much detail and one needs to look deeper. A lesson to be learnt. The next month or 2 are going to be an interesting ride with AZZ. Thanks again.

 

[Slipperz]

no probs rayw

my views are just my own, and always dyor..

i never believed the ips that azz posted (and many on the HC threads really went to town on the ip's)

when adi posted ip's they posted huge disclaimers to never expect those figures to be the sustained flow rates, and to wait for the 60 and 90 day flow rates before judging a well..

azz would not disclose the 60 and 90 rates, only in their quarterlies.

i posted them on HC for many to see that the rates were not anything like the ip rates, and it demonstrated the lack of flow these oil regions have. i received a backlash for doing so.. but imho the rrc figures are beyond reproach..

eog is using lift as i pointed out many times, so when your investing into the oil regions of the eagleford, expect low rates of return, high costs, and you have to be capitalised..

it doesnt mean the economics are not entirely bad, it just means that when a region like this is getting $2500 an acre for leasing atm, and on short leases of 3 years, you have to have real deep pockets, and be real clever in securing the acreages, or face some staggering cost overruns.

many small caps in the eagleford have bitten off more than they can chew, thats for sure..

if your wells are not going to pay back in months, and then take years to pay back, then your also in deep trouble if your running on empty with capital.

another issue that is facing all the eagleford players is the recent activity of really chocking back the wells. many have to do this.. and that increase the pay back threshold from months to years.. so again any small cap without funds must be thinking hard on how they can achieve a return,, the modelling is changing, and challenging, and if you throw in to the equation the threat of oil prices going lower and lower, eventually the model is no longer economic.

azz have not nailed fast completions yet, and imho they are struggling with the fracs. still in a very early learning curve, by putting all their eggs into one basket and signing onto one driller, they are restricting themselves also in terms of not allowing the opportunity for better drillers to be used in the leases..

my view on azz is they are very much in trouble in terms of making a profit in the play, with high costs, increasing lease costs and very slow returns from the wells. that becomes very problematic for investors to be enthused, and imho the results of that is being reflected in the sp right now.

i agree that a buy out of the leases is probably the earliest and best possible way to get any good return for the investment. but when your backs up against the wall you have little time and latitude in negotiations..

all imho and dyor..

Struggling with the fracs is an understatement IMHO. I think that is the essence of the problem here.

The oil is there it's just not flowing fast enough to the wellhead to be economically attractive to a small operator.

However enough wells are in production to sustain a 40 day drill completion rate FD7 is on track for geotechnical wirelogging info to help the frac crews and in the background someone has a bid in on the acreages and/or the entire company.

Trading halts can happen any day of the week...these guys are possibly creating one as we speak http://www.tudorpickering.com/

 

[Slipperz]

New top twenty


As of the 29/07/2010


Twenty Largest
Shareholders Number of
Shares % of Issued
Shares
1 Citicorp Nominees PL 36,771,958 12.28%
2 HSBC Nominees Aust Ltd 35,777,511 11.95%
3 National Nominees Ltd 12,417,709 4.15%
4 Yandal Investments Ltd 12,200,000 4.08%
5 J P Morgan Nominees Aust Ltd 11,104,960 3.71%
6 James Cruickshank 9,173,333 3.06%
7 Link Traders Aust PL 6,143,864 2.05%
8 Collin A Mackellar 4,675,000 1.56%
9 ANZ Nominees Ltd 4,438,430 1.48%
10 Rodney Alexander Shea 4,073,000 1.36%
11 Essential Faith PL 3,537,500 1.18%
12 Tangled Blue Investments PL 2,861,255 0.96%
13 Mark Clohessy 2,715,000 0.91%
14 Johjam PL 2,490,000 0.83%
15 Merrill Lynch Aust Nominees PL 2,367,298 0.79%
16 Takhar Jaswinder 1,902,009 0.63%
17 Ingrid Miriam Seton 1,830,000 0.61%
18 Howard McLaughlin 1,775,500 0.59%
19 Vivienne F MacMahon 1,600,000 0.53%
20 Jonathan B Kerr-Sheppar 1,570,000 0.52%
Totals 159,424,327 53.23%

AS AT 25 AUGUST 2010

Twenty Largest
Shareholders Number of
Shares % of Issued
Shares
1 Citicorp Nominees PL 35,732,498 11.94%
- 1,039,460 Shares

2 HSBC Nominees Aust Ltd 33,694,597 11.26%
- 2,082,914 Shares

3 Yandal Investments Ltd
12,200,000 4.08%

4 James Cruickshank
9,173,333 3.06%

5 National Nominees Ltd
8,697,387 2.91%
- 3,720,322 Shares

6 Brispot Nominees PL
4,997,000 1.67%

7 Link Enterprises International
4,795,864 1.60%
- 1,348,000 Shares

8 ANZ Nominees Ltd
4,708,490 1.57%
+ 270,060 Shares

9 Collin A MacKellar
4,675,000 1.56%

10 Rodney Alexander Shea 4,073,000 1.36%

11 Essential Faith PL 3,537,500 1.18%

12 JP Morgan Nominees Aust Ltd
3,468,808 1.16%
- 7,636,152 Shares

13 B L & V R D Williams
3,000,000 1.00%

14 Tangled Blue Investments PL
2,861,255 0.96%

15 Mark Clohessy
2,715,000 0.91%

16 Johjam PL
2,490,000 0.83%

17 Merrill Lynch Aust Nominees PL
2,357,224 0.79%
-10,074 Shares
18 Takhar Jaswinder
2,236,384 0.75%
+ 334,375 Shares

19 Ingrid Miriam Seton
1,830,000 0.61%

20 Howard McLaughlin
1,775,500 0.59%

Totals 149,018,840 49.79%
- 10,407,487 Shares

Depth seems to have reversed and a nice 15% kick up today, i think we have seen the bottom.

What happens next?

Management have taken a good step in wirelogging the entire shale and obtaining porosity and resistance data before they frac FD5 6 and 7.

The question is will they do so before the acreage offer is finalised? I guess they can't wait forever it's three wells of revenue waiting to be tapped.

Bit of a chess game .... who's going to make the next move

 

[Slipperz]

Whoa! We're up and running now.

2 million buyers to 36 cents make 40 look pretty comfortable buying.

Glad to see the relentless selling has finally finished. The big boys are reweighted.

And now we wait for the news......

 

[Slipperz]

looks like someone thinks the news is going to be good. That's one big buyer right there!

 

[Agentm]

slipperz

i think you need to calm down a tad on this one..

the bid was pulled just as quick as it went up..

i have seen huge bids pulled on these oilers..

re the wirelines on the well, thats just normal in all operations, you dont frac a well blind.

just sit back and wait for the bid price from the buyer, if they get that over the line then its a huge save for azz, if it fails, then its time for it to find a new low.

imho it will possibly be better than the recent prices we see atm..

i have disclosed plenty of times why i wouldnt buy this share, but for those holding imho theres even money it may hold its present value or get a little more..

biggest concern is how long the oil price remains contrived and out of contact with fundamentals, and whether they can get any sort of commercial flow out of at least one completion, the rock there is obviously far to complex for them to make success of it, but with all of the regions, once you crack it, then you get a reward..

 

[Slipperz]

slipperz

i think you need to calm down a tad on this one..

the bid was pulled just as quick as it went up..

i have seen huge bids pulled on these oilers..

re the wirelines on the well, thats just normal in all operations, you dont frac a well blind.

just sit back and wait for the bid price from the buyer, if they get that over the line then its a huge save for azz, if it fails, then its time for it to find a new low.

imho it will possibly be better than the recent prices we see atm..

i have disclosed plenty of times why i wouldnt buy this share, but for those holding imho theres even money it may hold its present value or get a little more..

biggest concern is how long the oil price remains contrived and out of contact with fundamentals, and whether they can get any sort of commercial flow out of at least one completion, the rock there is obviously far to complex for them to make success of it, but with all of the regions, once you crack it, then you get a reward..

Calm down ? I'm on my fourth espresso already and the markets open in a hour :

There's money to be made here !

Your comments however are duly noted.

here's hoping they can get it right

 

[Agentm]

Calm down ? I'm on my fourth espresso already and the markets open in a hour :

There's money to be made here !

Your comments however are duly noted.

here's hoping they can get it right

lol

there is a lot of issued shares in the wrong zone atm.. and i hope that the millions that are out of the money actually get back in if any decent offer arrives, or the outcome for azz holders will be disastrous..

best of luck with your holdings there.. (still 95% in cash atm myself for obvious reasons)

 

[Slipperz]

Speaking of cash I thought I'd crunch a few numbers from the production report in the latest quarterly.

Now seeing as FD3 and 4 are still to report 90 day production figures ( which btw must be due out soon) I thought I'd use FD2 aka first the worst.



Feel free to corrrect me if i'm wrong here but here's my take on our first well..

7 x 525 x 75 = $275 625
7 x 464 x 75 = $243 600
14 x 387 x 75 = $406 350

First month production earns $925 575 payback


30 x 305 x 75 = $686 250 for the second month

30 x 260 x 75 = $585 000 for the third month.


One quarter of IP gives a payback of $2 196 825 from a well cost of around five million leaving $2 803 175 to payback at a rate of say 250 barrels a day or $18 750 a day.

2 803 175/ 18 750 is 149.95 days or almost exactly 5 months.

So FD2 our worst and least productive well is turning a profit in 8 months.

 

[Slipperz]

Haven't seen this data posted anywhere so thought i'd post it up. Amazingly low well completion rate in July.

Are they all on summer holiday?

I thought it was a drilling frenzy on the eagleford

http://www.p2energysolutions.com/newsroom/tobin-trends/2010/august/shale-play-well-data/eagle-ford-shale

Nice to see AZZ quietly ticking upwards again today.

Hopefully this weeks news will be good......

 

[rcm617]

Speaking of cash I thought I'd crunch a few numbers from the production report in the latest quarterly.

Now seeing as FD3 and 4 are still to report 90 day production figures ( which btw must be due out soon) I thought I'd use FD2 aka first the worst.
View attachment 38735


Feel free to corrrect me if i'm wrong here but here's my take on our first well..

7 x 525 x 75 = $275 625
7 x 464 x 75 = $243 600
14 x 387 x 75 = $406 350

First month production earns $925 575 payback


30 x 305 x 75 = $686 250 for the second month

30 x 260 x 75 = $585 000 for the third month.


One quarter of IP gives a payback of $2 196 825 from a well cost of around five million leaving $2 803 175 to payback at a rate of say 250 barrels a day or $18 750 a day.

2 803 175/ 18 750 is 149.95 days or almost exactly 5 months.

So FD2 our worst and least productive well is turning a profit in 8 months.

Payback in the first 90 days
90*260*75 = $1,755,000
If you take the first 60 days production from the first ninety days production, it will give you production of 170 bopd for the third month, so optimistically an average of 150bopd for the rest of the first year.
275*150*75 = $3,093,750

Total for year = $4,848750

 

[Slipperz]

Payback in the first 90 days
90*260*75 = $1,755,000
If you take the first 60 days production from the first ninety days production, it will give you production of 170 bopd for the third month, so optimistically an average of 150bopd for the rest of the first year.
275*150*75 = $3,093,750

Total for year = $4,848750

LOL Couldn't see the forest for the trees with that effort could I.

Not my best research effort but I kinda had a feeling I was going a bit high there with my numbers.

Nice little run this afternoon, with the POO heading North there's only one way for the price to go I guess.

 

[Fishbones]

AZZ Antares Energy

Hi everyone,
Can anyone tell me what am I missing re: AZZ

*their market cap is approx 120 mil.
*they sold one of its tenaments for 200mil. ( AZZ entitled to 180 mil)so cash in the bank at approx 60c a share and azz is trading at around 39c ie at the discount of 21c per share or approx 60%.....this is exlcuding thair other oil producing assets
*azz is undergoing 20 mil share buy back

AM I MISSING SOMETHING HERE ???

 

[curryinahurry]

Re: AZZ Antares Energy

Hi everyone,
Can anyone tell me what am I missing re: AZZ

*their market cap is approx 120 mil.
*they sold one of its tenaments for 200mil. ( AZZ entitled to 180 mil)so cash in the bank at approx 60c a share and azz is trading at around 39c ie at the discount of 21c per share or approx 60%.....this is exlcuding thair other oil producing assets
*azz is undergoing 20 mil share buy back

AM I MISSING SOMETHING HERE ???

AZZ share of cash is around $156m. They may also have a tax liability on the sale in the US unless they acquire similar assets & get roll over relief. However AZZ would also have a tax liability in Australia. Not sure how much - depends on the cost base of the assets sold.
You are right AZZ is undervalued at the moment specially taking into account that they curently hold a quality tenament (albeit much much smaller than what was sold) and the share buy back supports "undervalued" theory.
The market is cautious and will only react positively on the quality (and stage of advancement) of assets that will be acquired in the "near" future.
Just by the by AZZ's poor quality of information releases also does not help. I've been a very long holder and will continue to hold,
Please dyor as this is not investment advise.

 

[docmob]

Re: AZZ Antares Energy

All,

Australians should pay careful attention to the US Foreign Investment in Real Property Tax Act 1980 ( http://en.wikipedia.org/wiki/Foreign_Investment_in_Real_Property_Tax_Act ) This tax stands outside the US-Australia tax treaty and requires that when an Australian company sells its US oil and gas interests, a punitive tax be paid to the US Internal Revenue Service. The FIRPTA tax is typically 10% of the purchase price and this sum can not be set off under the tax treaty.

The tax was intiially put in place to prevent foreign companies with a US subsidiary which ownsfarmland from selling that land at a gain by selling the shares in the offshore company to another foreign interest

The tax is enlivened and should be withheld from the foreign shareholders when a US buyer buys the real property interests (defined by the US Internal Revenue Code) include oil and gas wells, and mines.

It is worth taking 10% off the top of the value of any ASX resource company with more than 50% of its assets in the United States, because when a US buyer makes the purchase they are bound to withhold 10% of the purchase price.

Best,

Docmob