Aj Bell Share Discussion Threads

[mortie1] 05/11/2014 14:16

Natural Gas Prices

[mortie1] 04/11/2014 10:44

Children Weston Unit AC 4H 4/5/2014 25 3060 3048 1004 1514

[mortie1] 05/10/2014 09:42

Aurora Makes Eagle Ford Shale Acquisition
Highlights
 Aurora to acquire 100% working interest in approximately 2,700 net acres near to or adjacent to the Sugarkane Field
 Acquisition consideration US$117.5 million
 Aurora secures US$125 million bridge debt facility, in addition to the recent increase in the borrowing base of its senior secured revolving credit facility to $275 million
 Acquisition asset’s production rate 1,620 boe/d net of royalties, which adds an additional 12% to Aurora’s 2012 exit rate
 Increases Aurora's net acreage by 14% to over 21,800 net acres and significantly adds to the future net well inventory
 Aurora estimates that the acquisition adds 6.7 mmboe of 1P reserves after royalties and 14.0 mmboe of 2P reserves after royalties, effective March 1, 2013
 Acreage is located in the over-pressured, liquids-rich zone of Eagle Ford Shale trend, includes potential additional reserves in Austin Chalk and Pearsall formations
 Aurora to operate acreage, allowing for discretion on capital allocation and the pace of development
Aurora Oil & Gas Limited (ASX:AUT, TSX:AEF) ("Aurora") is pleased to announce that it has agreed to acquire a 100% operated working interest in approximately 2,700 net acres in South Texas for a consideration of US$117.5 million.
The assets include average December 2012 production of approximately 1,620 boe/d net of royalties from 11 wells and associated interests in field infrastructure and related assets. The production comprises 84% liquids (70% oil), and represents a 12% increase to Aurora’s 2012 exit production.
The assets consist of two consolidated blocks located within the liquids-rich zone of the Eagle Ford shale trend and are either adjacent to or very proximate to Aurora’s existing Sugarkane Field acreage as shown in the map below.

[mortie1] 08/9/2014 06:07

This is black. This is red This is blue This is black again.

[allenb100] 06/9/2014 10:38

Good luck showme.


Allen I know what I think about myself.that is all I care about.

[allenb100] 07/8/2014 10:40

JB,

The Culberson- Hughes lease is one of the "holes" shown on this map at the time of the AUT takeover. Labeled incorrectly as Cuthbert- Hughes on the map. So would not appear to be one of ours.

AUT map issued in takeover document


On the other hand, the latest Baytex map appears to have incorporated all the holes except two into the AMI, which must be good if correct.

I'm pretty confident the hole to the east is now also incorporated, as the the latest plat on the Hollman unit appeared to have incorporated part of that hole into the lease.


Baytex map from last presentation

[mortie1] 06/8/2014 12:58

I know few would agree with me on this, but I will try to give a compelling reason why MRO will not buy EME, apart from the obvious one that MRO didn't buy AUT so why would they buy EMEWe know from the webcast that the various projects have to compete for capital. They presumably measure the projects return in some way,probably IRR, but there could be others , including Payback time. I mention this as the slide from the May 2014, and earlier ones include payback in time using undiscounted cash flow.Say MRO have a choice for their capital:pay $100mm for EME, o rbuy 15 new wells (100mm / 6.5mm). It doesn't really matter how many net or gross, they are investing $100mm in new wells. We know the payback for the $100mm is either 1.6 years for condensate wells or two years for HGOR wells, so lets say 2 years..NB no other investment needed.,Now how long does it take to get back the $100mm from buying EME. Well, I don't have permission, so I hope crosseyed does mind me using his numbers.Adjusting crosseyed's undiscounted cash flow numbers for 2014 onward and adjusting for Admin Costs Loan Repayment and Interest, Option/Warrant receipts, we get the following Year 2014 2015 2016 2017 2018 2019 Cash Flow 5,857 13,706 18,218 22,104 25,624 23,672 ACC Cash Flow 5,857 19,563 37,781 59,885 85,509 109,181This also requires additional capital with ongoing development but as its the 3% we are interested in, it's ok.NB If the was no additional investment but relying on existing wells they would never get the $100mm back.As can be seen the $100mm is not repaid until middle of the 5th year and is dependent on additional investment compared to two years max if invested in news wells.I think they will stick to organic growth.

[mortie1] 27/6/2014 10:11

Let me show you something I find interesting.

MRO Market Cap $26,793mm EF acreage staed by MRO ~200,000, but stated by saf to be 211,000, saf seems to know these things, so lets go with his number


Using the laz principle of not bothering too much about detail or accuracy we have EME valuation
Using a share pr1ce of 18p ( i did it yesterday)

GBP0.18 x 295,000,000 shares(fully diluted)x 1.69( to convert to $'s)=$89,793,000

Adjust for acrage 89.793/720 X 211,000 = $26,298mm

Pretty similar numbers, but with MRO you get bakken, SCOOP and international plus

[allenb100] 27/3/2014 13:35

Hi Stew,

I was not suggesting that Baytex were over paying ( although I believe the price per acre is a record to date, as was MRO's when it bought Hilcorps's acreage).I was giving reasons why MRO would not trump their bid. I'm not saying that other companies may not seek to buy, although as time goes by, it looks increasingly unlikely.

I don't think whether or not MRO will seek to buy our acreage was considered in Cenko's valuation and as such is not relevant. I would presume that their forecast was based on eps and PE ratios.

[estseon] 27/3/2014 13:20

Counter-comment

1. MRO 2P reserves may have been 2bn boe at 31.12.12 but Libya, Angola and the North Sea 2P reserves need to be removed from the figure.

2. The receipt of interest in its North Sea Assets might enable it to finance the acquisition without disturbing its share repurchase programme.

3. The delay also allows it to see whether there is any third party competition - it is doubtful that it would countenance an auction.

4. It will be listening to its large shareholders - they might warm to low risk US producing assets as compared to exotic exploration projects in corrupt and politically less stable areas.

5. The Hilcorp purchase was analysed by brokers at the time and most of the purchase consideration was attributed to the AMIs. Indeed, MRO shed some of the other acreage subsequently. AUT's WI is around the 25% mark and, so, MRO's WI would be valued at less than 3x $2.6bn (watch the currency), or less than $7.8bn. AUT has its own additional acreage and 13% of S/L is held by AWE/EME.

6. They could hit and raise their production targets without having to worry about infrastructure investment. They could reduce their drilling plan for this year releasing some of the budgeted capex to an acquisition.

7. They acquire greater freedom to develop the acreage as they wish.

MRO may not bid for AUT but I am not convinced by your arguments and your figures do not fairly reflect the real situation. The AMIs consist of high grade acreage, virtually wholly held by production and served by comprehensive infrastructure. Not all acreages are equal. Further, production would soon start repaying the acquisition price even after funding new investment.

[allenb100] 27/3/2014 10:44

Three good reasons why MRO will not bid for AUT.

1) They had their chance under the pre-emtion clause in the JOA's for Longhorn and Ipanema to match Baytex's price and didn't. As there is a time limit they would now have to bid more and look stupid.

2) The price per acre of the AUT is approx USD105,000
This implies that MRO's 200,000 acres is worth $21bln. The MRO MCap is $24Bln. I think they would be sellers not buyers at this price.

3)Buying their own shares is equiv to buying 1P reserves at less than $11bbl, buying AUT is equiv to buying 2P reserves at more than $21Bbl. That's never going to fly.

The ops guys might want to buy AUT + SL interests from AWE and EME, but they will never get ot past the corporate guys in HO.

imo.

[mortie1] 25/3/2014 13:17

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[mortie1] 06/3/2014 03:12

This is my take on the new Kowalik wells
The map is the Plat for Kowalik 3 with K2 AC added.
The red line is Kowalik #1 between the first and last take points.
The brown shading is the area captured by K1 (238.2 acres) approx - not to scale, but close.
The blue lines are K3 & 4 EF that fall within the captured area.
The green line is K2 AC that falls within the captured area.

Wells K2,3&4 are 4,070ft between F & L TP approx 2100ft falls within the captured area. Say 50%.

Of the new wells EME should get 50% at 10.2% and 50% at 3%= 6.6% of each well

I will be very interested to see if we get and announcement when the wells are drilled

[mortie1] 21/2/2014 22:13

My take on the Marlene Olsen Wells 3,4,5,6,7 is this.

EME holds acreage in Marlene Olsen only by virtue of our participation in the #1 vertical well. Because of this we are entitled to any production arising from a defined area around that well, say 120 acres, although I'm not sure exactly how much.

As can be seen on the map the circle surrounding the #1 wells is penetrated by wells 3 to 7( #3extreme left to #4 extreme right.) EME has 0.85% of #3, which suggests 8.82% of the well bore lies within acreage secured of approx 685ft of the total length of 7,769ft By looking at the map, it can be seen that #3 will be our smallest %. #4,5,6 &7 will all be slightly more. Am open to ridicule if you have any better suggestions.

[mortie1] 10/2/2014 13:46

AllenB

Prudent or misleading
Prudent!
The only reson Marathon drilled Loghorn, Ipanema and Excelsior areas in the recent past was so the land is held by production.
and you know this how? MRO would require to drill an additional 66 wells on SL just to match the well density of Longhorn
As soon as this has been acheived they have switched their 2014 drilling campaign to the sweet acreage i.e.our acreage, currently drill permit applications would suggest this is where the chalks are at their best. I would like to think so, but it doesn't necessarily follow.

The reserves will be higher on our acreage.
A claim with no basis.
As for Axel Tree acreage no way will that have gone up 2.5 times in the last 12 months with little or no drilling history 5 wells drilled and in prodn since June 13

As for 15p your a mile out with eps of 2.4p to March 14 and 5p+ to March 15 not a chance You're mixing up the two things. My valuation is just a read across from what Baytex have offered AUT. The eps figures you quote are what will make it unacceptable to the majority on here

[mortie1] 09/2/2014 11:49

Ebillo,

I hope this helps.

AllenB or Cross
Can you explain why revenue was lower in the first half of 2014 compared to second half of 2013.
Good question! I think it is a combination of factors.
1) Production: Condensate prodn was slightly down - about 1,200 Bbls. Gas and presumably NGL's were up, but they are worth considerably less per Bbl.
2) Pricing: Condensate prices were firmer by about 0.8% Gas prices firmer by about 6% and NGL's weaker by about 8.7%
3) FX Rates. On avg the USD fell by about 5% between the two periods. This would result in an apparent decrease of Sales expressed in GBP's and is probably the biggest single factor.

Also why was Forex difference reclassed to cost of sales.

Treating unrealised FX gains/losses as COS is ludicrous and plainly wrong. The only possible explanation I can come up with is that the gain was of such magnitude it would effectively wipe out the general expenses and would look very stange.

This figure changed from a cost of £304k in 2013 to a profit of £438k in the first half of this year. How is it calculated and will the favourable element continue to the year end?

Normally FX gains and losses are calculated monthly. It involves revaluing balance sheet accounts using the FX rate at the month end. Accounts revalued would be Current Assets, Current Liabilities and Long Term Liabilities. Fixed assets and Equity accounts are not revalued. I suspect the cause of the gain for the period is mostly down to the revaluation of the Mq Loan - both short term and long term. As the loan is denominated in USD's and the dollar fell from 1.52 to 1.614 from March 31 to Sept 30 this result in the loan obligation stated in GBP's appear to be less on the BS. The offset is an apparent gain booked to the P&L. Of course, as the loan is repayable in USD's this gain will not be realised.

As crosseyed said the accounts should be stated in USD's. I mentioned this at the AGM and got a blank stare. The only reason to state the accounts in sterling is to add another layer of complexity making them more difficult to understand and compare with other companies.

As always your thoughts will be highly appreciated

[mortie1] 05/2/2014 17:55

New Reserve Report - Mine

I have been reviewing the latest reserve report(RR) from Aurora(AUT) and believe we now have enough information to be able to make a low case and a high case stab on what to expect from a RR for EME at Dec 31, 2013.

A low case could be based on all acres within the leased areas (Sugarloaf(SL), Longhorn(LH), Excelcior(EX), Ipanema(IP) and AUT operated(AO) being homogeneous. This will not be the case obviously, but I believe iit would be the worst possible case if it were true.

The best case, I believe, depends on certain assumptions, detailed below, which although not unreasonable, may not be true.

Low Case

AUT has 22,200 net acres and has 2p reserves of 165,300,000 BOE (Net, after Royalty), NPV10 $2,309,000,000

If all acres were the same, this would give EME at 720 net acres 2P 5,361,087 BOE(Net, after Royalty), with a NPV10 of $74,886,486. That's a bit less than 17p a share fully diluted.

According to AUT:
These figures include 40 acre spacing across all areas and 186 Austin Chalk Wells and would be developed over 5 years.

Comment. Obviously this is not very impressive. and its hardly surprising that the market were not impressed.

Let's hope (pray) that the SL acreage is better than an homogenized average. The first thing we can do is remove AUT's operated acreage from the equation.

In the acquisition RNS AUT stated 2P reserves of 14,000,000 BOE at March 31, 2013. No wells on this acreage were completed before the revised RR of June 30, 2013 so I think it's fair to assume the reserves will be the same on both dates.

AUT's operated acreage appears to be in the Oil zone, at least, that is how they catergorise the production in the 4th Qtr operations report. For this exercise I will assume the reserves will be on the same ratio as for the production for the split between Oil, NGL and Gas

[mortie1] 03/2/2014 11:02

10656 TURNBULL UNIT F STATW+ MARAE 7920 NO RPT 0 0 0
6H 16102 P230.6 320.00 342 0 0 TRK#27946, NEW 0 G A 5120 052713 255 255-31857

09596 TURNBULL UNIT A STATW+ MARAE COM5471T 1088 40590 8029 22812 8493 0
1H 16533 P153.5 80.00 2657 154# 199998 4312 G A 0 60 091813 1 255 255-31661
10H 17593 P101.0 80.00 3121 101@ 199998 TRK#59302, NEW 2828 F 0 60 101712 739 255 255-32687
11H 15437 P419.0 80.00 3238 DLQ FORM TRK#59368, NEW 0 F 0 60 101712 732 255 255-32638
16H 16372 P 41.0 80.00 2076 41@ 199998 TRK#58225, NEW 1148 F 0 60 100912 993 255 255-32665