I'm new around here, and new to trading stocks for real. For the last year or so I've been playing the JSE (when I was over in South Africa), and more recently the ASX using a virtual portfolio.
Anyhow I've decided to make the jump into real shares and I'm learning pretty fast. This forum is awesome btw.
Anyhow I've done a lot of research into AED and I have to say the fundamentals for this company look pretty good in a $60+ oil environment.
On the conservative side, this company holds a definite (P90) 10.7 mil barrels in proven reserves in the Timor sea. They have progressively been upgrading estimates for the past year of exploration and should begin oil production from their first well in the next quarter. On top of this it looks like there is a good upside for increased reserves through exploration in this field.
At present reserves, they will be a producer from late 2006 - late 2008. Obviously if they find more oil...well...
They have also got full financing from Wespac and have hedged around 5% of their 2007 production at $70 per barrel (a decent hedging price imo).
Heres my math on what their reserves are worth. I'd love to know whether I'm on the right track with this or not from the oil experts around!
Current shares issued:
10 mil barrels @ $20 profit per barrel ($60-65 oil price range) = $200 mil
Approx. share value: around $1.80
14 mil barrels @ $20 profit per barrel = $280 mil
Approx share value: around $2.50
For the last few days AED has been trading significantly up, today it broke its altime high of $1.20. I bought in at 1.145 yesterday, but in a moment of madness sold at $1.19 (really dumb in hindsight, but hey I'm still learning to control emotions!).
Having run the numbers a few times, I'm convinced the share is worth at least $1.50 - of course my calculations could be horribly wrong!
I have taken a position at $1.23. It's been volatile today and may even fall a bit...but I think it could easily hit $1.50 when the first production starts in a few months...
Any thoughts from the masters?