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AED - AED Oil

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lewstherin

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Hi folks

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:
109 million

Conservative reserves:
10 mil barrels @ $20 profit per barrel ($60-65 oil price range) = $200 mil
Approx. share value: around $1.80

Optimistic reserves:
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?
 
This is a great story, has huge reserves of oil and like Lew said current oil environment should see EV of $20 - $25 per barrel minimum,


Only reason I haven't jumped on board is that there is alot of technical risk within the oil reservoirs, ie fault and seal risk/compartment seal risk etc etc,

So until these are clarified it remains a spec for me,

I must reiterate that it looks like a great medium term (6 month) stock and stands to be re-rated when they release new estimates and report
 
Yeah production testing results for their first well are due in the next few weeks.
If the results are positive, I think $1.50 is makeable.

Of course the stock has now dropped to around $1.21...profit taking methinks.
I am tempted to buy in again tomorrow if it drops below $1.20. To me though it looks like 1.19/1.20 will be a new support level based on buyer depth- the graphers may disagree...

Medium term I'm hoping to be smiling on this one.

Just a few other things that have me feeling really positive on AED:
- the licensing for production has been granted
- exploration on a new well earlier this year came up with around 8 metres of oil. AED's reserve position is being re-evaluated with official findings to be published later this year.
- the FPOS for production has been secured and will be available early 2007
- the oil field is in Australian waters so low political risk
- AED is 100% owner
- Low hedging at present
- Management are pros
- Interests held by Credit Suisse directly (5% shareholder) and Wespac indirectly through loans
 
AED is off to a good start today, up 8.23% on news that their first production well is nearing completion. No mention of any technical problems, which is good.
They have hedged some more of their 2007 production at $72/barrel - which I think is a fair rate to get.

Damn I wish I had stayed in at 1.145 instead of selling and getting back at 1.23!
 

Yep this type of stock will do that to you,to me it's a long term hold the small gain trading IMHO is not worth it as you found out my hope is to receive income from dividends

cheers laurie
 
After bouncing around the low $1.30s, AED is having a breakout today. Its dashed through the previous ceiling of 1.40 and is pushing 1.50 at the moment. This movement has happened without much fundamental changes - no news in the past week or two and oil hasn't spiked that much.
I'll be happy if this move results in a new support level around 1.40.

AED should be announcing production dates for their first well pretty soon, so maybe the punters have discovered that this stock is a little undervalued...
I'm in since $1.23 and plan to stay in for a while given the potential for further reserve increases, and of course the cashflow from production.
 
Took a while for people to wake up to this stock been on since .55c and I thought that was expensive! market depth show sellers are thining out may have to top up monday brokers are now on to this yet look at OEX price and what has it got to show for itself SFA

cheers laurie
 
just got in this morning at $1.85

might seem a bit expensive, however they have just improved flow rates to 15000-20000 bopd (thats nearly 2 million in revenue per day) - 500-700 million in revenue per year

a spec oil producer that is actually producing - its a nice change

should see a nice dividend next year


also their continued exploration is highly likely to add considerably to reserves.

have a read of their quarterly report


HIGHLIGHTS
Evaluation of Puffin-7
As foreshadowed in the March 2006 quarterly report, the June quarter has seen the Company progress to an exciting stage of the development of the Puffin Field.
Based on the drilling and subsequent evaluation of the Puffin-7 well, it appears that Puffin-7 reserves are likely to increase and production flow rates are likely to be between 18,000 to 20,000 bopd. Assays from Puffin-7 have confirmed that the crude oil is of a premium quality and is consistent with Tapis grade crudes.
Following the drilling and flow testing of Puffin-7 the Company is now focused on the evaluation of recent drilling results within the context of the Puffin Field as a whole. As part of this process, the Company is:
• progressing with a study of previous drilling results from the field in order to correlate that information with the recent results from the Puffin-7 development well and the Puffin-9
exploration well;
• remapping the field based on actual drilling results and previous seismic dataset;
• undertaking geoscience and engineering studies including a geochemical analysis to
establish oil source and migration paths within the field; and
• undertaking the reprocessing a 400 square kilometer section of the seismic dataset over
the Puffin Field.
Work in all these areas is significantly advanced and the Company expects to announce a revised reserves statement in the near future.

Initial results from the work have been very encouraging and indicate that the EUR (Estimated Ultimate Recovery) in all categories (P90, P50 and P10) of the Puffin-7 field are likely to significantly increase.

Based on pressure data and mapping interpretations, there are also now indications that Puffin-2 and Puffin-9 may be part of the same oil bearing structure, linking the UK1a sand reservoirs.
{KB's comment - this is massive as they are K's apart!!!}

New target
A new exploration target (the Woodlea Prospect) has also been identified in the region of Puffin-9.

Schedule
The Company has been able to take advantage of the current high oil prices by locking in its initial hedging program. The present market presents a number of challenges in terms of procurement and project implementation but the Company has faced these challenges with considerable success and is forging ahead toward a first oil date scheduled for the first quarter of 2007.

Summary of quarter highlights
In summary, the highlights of the June quarter are as follows.
Drilling and project development
• Completing the drilling programmes for the Puffin-7 and Puffin-9 wells.
• Flow testing the Puffin-7 well and confirming well performance.
• Confirming the previous EUR at the Puffin-7 reservoir with significant upside potential.
• Receiving Puffin-7 oil assay results confirming Tapis quality crude oil.
• Commencing the reprocessing of 3D seismic data for the Puffin Field and adjacent areas.
• Commencing a structural and geochemical review of all historic Puffin Field geoscience data.
• Progressing the conversion of the FPSO.
Exploration
• Commencing the evaluation and investigation of oil sourcing and migration for exploration
targets.
• Linking of Puffin-2 and Puffin-9 UK1a sands interpreted and investigated based on various
geological models.
• Investigating the new exploration target identified in region of Puffin-9.
• Investigating the extent of the Puffin-9 LK1a reservoir.
• Reinterpreting Puffin-3 and Puffin-4 drilling results based on geochemical and structural
information to determine the size of a possible accumulation to the north east of the Puffin-7
reservoir.
Project Financing
• There has been a drawdown of USD35 million with a remaining USD19 million draw down
available. Cash on hand is AUD13.7 million.
• Capital budgets are on track.
• The Company has hedged 1.2 million barrels at an average of over USD70 per barrel.
 
so if they have the potential to earn 500 - 700 million pa
and they are capitalised at 109 million
wouldn't an indicative sp be 5.50

today they closed at 1.89

the person who started this thread was on the money!

looks interesting

but oil prices are falling
 
Oil prices falling is only a temporary case. The trend for long term oil prices will be up as more demand comes online from China/India and supply falls as the large Saudi fields start pumping water.

Just wanted to make a point about AED. Puffin 7 (phase 1) won't come online until 2007 when they EXPECT to produce 15-20k bbls/day.

Being offshore, AED is likely to net more like AUD$20 per barrel. Producing 15k barrels per day gives earnings of $109.5 mill.

That's not to say they aren't undervalued, but I disagree with the extent to which you're suggesting.
 
Looks very speculative indeed. I doubt their forecasts and timing of development greatly
 
In terms of initial revenue valuation - I think we are all forgetting that AED are hedged for the first 1.2 million barrels at a minimum price of $70 ber barrel

couple that with a revised resource estimate (which has been stated as being significant) across a number of wells and I think we have a winner here.

I'm not saying that it will hit $5 right away - but I can seeing it hit $3 by christmas.
 
What I'm saying is they may receive $70 per barrel, but after costs, they'll net closer to $20.

Oil and gas is an expensive game, especially when you hope to pump oil out of the ground offshore.
 
$2.00 on the bid in pre-open - looking very bullish at the moment

I think people are realising the fact that when the company suggests that they will be increasing reserves 'significantly' (as stated in their report) they actually mean it!


interesting quote:

Based on pressure data and mapping interpretations, there are also now indications that Puffin-2 and Puffin-9 may be part of the same oil bearing structure, linking the UK1a sand reservoirs

this is very promising as these two wells are kms apart - this could seriously be huge!
 
up nearly 30% in the last week - very bullish at the moment

half a million shares on the bid at 2.15

looks as it is being snapped up by the instos
 
imajica said:
up nearly 30% in the last week - very bullish at the moment

half a million shares on the bid at 2.15

looks as it is being snapped up by the instos
Click to expand...

hey look at 2008 EPS forecast, how coem its so big!

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS -0.8 -7.2 0.8 363.4
DPS -- 0.0 10.0 50.0

EPS(c) PE Growth
Year Ending 30-06-06 -7.2 -- --
Year Ending 30-06-07 0.8 267.5 --

thx

MS
 
AED opened at $2.490 today, and at 11:41am announced that their oil fields had increased. I happened to be on the ASX website at the time when the announcement was made, and immediatly decided to pump all my money into this for a quick trade.

I logged onto Comsec saw the Market Depth and put in an 'At Market' trade request, however Comsec said that AED was under a trading halt and that i could only trade at Limit orders. This scared me, i looked on the ASX under recent company announcements and could not see any announcements saying AED was under a Trading Halt...
So i tried again and i almost put in an At Limit $2.56 buy order as two people were selling for that price. However i got scared that i may not be able to sell easily if the shares were halted.

Checking the price 20 mins later it had shot up over $3.00 and eventually reached a high of $3.420 on what looks to be a record volume.

So this has me very confused and angry! I missed out on a 30% price increase because I was scared of comsec telling me trading was halted.
Could someone please explain to me why it was saying it was Halted if it clearly wasnt? There is something that happened that i dont understand and id like to know what happened to prevent this in the future.

Thanks.
 
A trading halt can last from a couple of seconds to days.

It seems regular practice (if not normal) for there to be a short halt while an announcement is posted.
It seems like you got caught out by one of these.

I've got to have another search of the ASX site because although Ive noticed it happening I dont know what the reason is.
 

Man this stock has done very well in the past year.

thx

MS
 
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