AUT - Aurora Oil and Gas

anyone know why AUT is copping a pounding this morning? i thought all was good, then this report comes out and everyone jumps off the bandwagon. Are the results in the report lower than first anticipated? EKA is also getting dumped and these two babies have been nothing but good news for the last few months!!!

This hesitation in the market might be a great chance for you to top up your holding at a discount. It would be nice if it just kept sliding up a few cents everyday but unrealistic. To me, these pullbacks present opportunities to accrue.
Still seaching for other stocks with the goodies AUT has but struggling.

kyrondgm said:

anyone know why AUT is copping a pounding this morning?

Click to expand...

Hardly a "pounding". It's not even back to where it was 2 days ago. It can't rise 5%/day every day, you know.

EKA's situation is special, as the 1:6 allotment just arrived. You'd expect some profit-takers from that.

Kremmen said:

Hardly a "pounding". It's not even back to where it was 2 days ago. It can't rise 5%/day every day, you know.

EKA's situation is special, as the 1:6 allotment just arrived. You'd expect some profit-takers from that.

Click to expand...

No need to reassure them, I've been enjoying the bargains!

I think EKA's drop (understandable as you point out, and predictable enough for me to have been hovering, waiting to buy, which I did) has spooked AUT's holders a bit, causing a drop there too, which is easy to understand given their incredible rally lately - there must be a lot of holders sitting around just dying to lock some profit in, and I've enjoyed helping them do that today

Are they still a brilliant stock - yes
Did they sure up and de-risk much of thier acerage by converting some to reserves categorization rather then contingent resource - yes
Are they still drilling 24/7 adding value -yes
Are they still fraccing - yes
Are they funded to proceed - yes

Then what scared the sheep
The speculators where in looking for a quick shoot up to $1.50

My take on it is as soon as the speculators sell out we will see new growth.

This little pullback and consolidation is healthy imo.

You got to remember this is not about adding 50 wells over night, this stock is about continuously adding value via drilling and fraccing.

The reserves report will sink in. Its a good thing, it shows we have whats regarded as a fairly safe play. They will sure more of that up, with time. Until then theres a risk, and guess who gets rewarded for taking that risk ???

Yep thats right.

Speculator said:

AgentM

It is largely to your credit that i have been able to experience the joy of AUT and ADI like I have.

Always appreciating your input and seeing as u havent been around in the AUT thread for a while I was hoping for your current view on the SP of AUT, given the economic situation, the fundamentals, TA and recent valuations.

Thankyou

Regards Spec

Click to expand...

hey speculator

both adi and aut have done very well post the gfc..

i did real well with adi and also rode aut pre the last cap raising.

nice to see aut reach the equivalent price of the awe purchase of adi, i know plenty of holders whom would be pretty chuffed with these prices.

my view on the situation is pretty simple, at these prices the long term holders and the last cap raising holders would be pretty keen to take profit, and then run free carried from here. the valuations must look attractive to the next generation of investors, and the last batch have a great opportunity to exit with the volumes on the boards right now.. question is, will it stay or will it go? and if it goes, where will it go?

my broader view on the economic climate prevents me from investing with any real depth, my views on the sovereign debt crisis and on the hindenburg omen, and the lack of fundamentals on the oil prices in the US leads me to be fairly conservative and very bearish. watching kyle bass the other day and von greyerz last night really keeps reinforcing what i think is inevitable

if fundamentals in oil really came home to roost, and the 1.13 billion barrels of excess oil had its true effect on the oil price, then i would not be long in any oil stock in the usa. but while the hedge funds and others keep their influence on the oil price to where it is, its really on a knifes edge in my view.

all oil projects, be it offshore, onshore, shale chalks or whatever, they all have modelling that works in their own regions, and when you think of eagleford, it no longer is the cheap entry into shale it once was, i hear of staggering lease prices for the region now. so you need enormous capital, first rate operations, and the fundamentals of oil prices to be in the right zone, once they fall off the model goes to pieces.. and its time for mothballing once again. every investment has its upside and downside, and we saw what $250 - $350 an acre and less than $60 oil did for the jvp post the gfc.. imaging what $2500 an acre and a diminishing oil price does for the current modelling.. scary stuff.. if the oil was in the $90 region i would be pretty relaxed myself..

right now aut is not on my radar, nor eka, which i think must be due for some sort of restructure or takeover surely.. but there is a real thirst for aut atm, with great reporting, and plenty of buyers keen to get their fill.. good luck to them all i say

sitting back and researching other oilers and a few gold and copper companies right now..

cheers from the cautious bear.... and best of luck with aut...

An interesting read Agent and your totaly entitled to your view.

I share some of your concerns about a debt situation on a global scale.

I too believe there are cheaper shale opportunities elsewhere that will evolve into the next hot sposts. I see opportunities , particularly in the Bakken where amaerican oil just pulled of a 36 stage frac with IP of 3100boepd. Also in Niobrara, Barnett and Alapchae. All these are imo producing sensational early results on much lower acerage prices then the Eagleford. But from an investment point of view for some of them its too early as the infrastructure is not in situ.

But right now AUT has a long long way to run imo just in devloping the fantrastic asset it has acquired.

Yes the key risk is oil prices and a double dip would force many to go to mothballs, if they are unhedged. However right now oil futures are telling a different story to what we are reading in the media.

The supply demand situation is teatering on a knife edge of unsustainable demand if we have even a sluggish US recovery. With oil prices set to skyrocket by next year if this develops.

I see some short sighted, nervous profit takers, but not too many Lt holders pulling stumps and its probably good that we have some more consolidation and form a new resistance around the 1.10 mark or so.

LT holders id imagine would be exploring covering profits with buying 12mth Put options or similar.

I think right now we are seeing some traders exiting, before we go again on the back of our next set of well results.

Its true we are running on very high oil inventories and traditionally, with inventories at levels they are currently at we would see $45 oil. However, it appears the consensus that the paradigm has shifted and the pschie of the future traders recognises an unprecedented global oil shortage in less then 2 years "if" the US recovery begins.

Form my perspective I ask people this question - "if"?

If this situation arrises as many many of the most senior analysts and organisations seem to agree it is likely to occur and we have $150 oil in 2011/2012 and $300 oil in 2015, can you afford not to have exposure to energy stocks??

I also ask you hypothetically, show me a stock right now that has more growth potential and is as de-risked as AUT right now. Believe me ive spent the last few months looking, turning almost every stone and have come up with nothing that comes close.

Is the run of AUT over for another little while? After being down a few cents all day it crawled back to even under a negative ASX200 day. The buyers are still outweighing the sellers and if the DOW climbs tonight we might see another surge on Monday for AUT?

BrightGreenGlow said:

Is the run of AUT over for another little while? After being down a few cents all day it crawled back to even under a negative ASX200 day. The buyers are still outweighing the sellers and if the DOW climbs tonight we might see another surge on Monday for AUT?

Click to expand...

No it aint over, theres massive amounts of value to be added via continuous fraccing and drilling.

Its a mere pullback, becuase weve had a good run and for all sorts of reasons selling pressure has mounted. It will disipate in the near term imo.

Its a good thing , id much rather be in a stock thats growing underpinned by underlying asset growth and regular pullbacks then an overnight sensation that drops faster then you can get out.

The flow of good news has probably dried up for a little bit, even though AUT (through Hilcorp) will be drilling and fraccing the wells anyway.

With a couple of negative days on the ASX, more of the nervous nelly holders will have sold out to realise a quick profit.

Thought it did quite well today to hold steady in the face of a market that dropped 1.5% overall.

McCoy Pauley said:

The flow of good news has probably dried up for a little bit, even though AUT (through Hilcorp) will be drilling and fraccing the wells anyway.

With a couple of negative days on the ASX, more of the nervous nelly holders will have sold out to realise a quick profit.

Thought it did quite well today to hold steady in the face of a market that dropped 1.5% overall.

Click to expand...

It certainly was impressive! I was watching and considering buying some, but the newly-issued shares for EKA came at a good time, during the bad market movement, causing a sharp drop. Good buying opportunity in my eyes, I picked up a heap I'm sure there was some movement from AUT to EKA today and yesterday, and EKA's drop probably spooked some AUT holders into selling. I look forward to next week!

Id say we are comfortably towards the top of our trading band and due for a minor consolidation.

We are at the top of our bnd for good reason. We know we have an immense amount of LNG's, we know we can get them to surface and we know our operator is world class. This week the reserves upgrade converted some of that massive contingent resource to reserves, significantly de-risking a portion.

Those of us with knowledge of the play understand that as more wells are drilled and fracced elsewher on the acerage these reserve figures will rise. If hilcorp decided to run two wells close together and prove a lower well spacing at say 40 acres, it has the potential to double the reserves very quickly. Likewise a 20 acre spacing could easily quadrupple the reserves.

Ultimately though the value being added right now is more a result of two simple items. Welll flow data and the time taken between each new well result. I forseee us trading in this band till either the 3rd rig arrives or till anticipation of the third rig arrives.

From that point ie, early 2011, i forsee a new growth curve. All other factors being roughly equal.

Again - key risk is the oil price. Dont forget the US dollar alters that for us.



Given the current rate of growth with two wells since hilcorp took over, id estimate in my opinion $1.40 by Jan, all other factors being equal. And there aint many stocks at present that look like achieving this possible growth this comfortably. DYOR and seek expert advice.

The split in views between the different factions of economists seems to be worse than usual. The market will dither whilst they make up their minds, in my view.

If the consequence of an oil price crash is to force competitors to mothball development, the reverse swing as things recover will be more aggressive and will work to AUT's advantage. The JVPs are committed to the development and have cash for some time to come. Hilcorp's technology and performance seems to be ever improving.

So, whilst there is no short-term certainty, the longer-term looks reasonably secure. I'd be less comfortable with expensive off-shore development or developments having political risk.

Some of the holders have seen some pretty dire times in the past. The prospects now are hugely better. To me, the worst scenario appears to me to be potentially (if there is a crash) a missed buying opportunity.

Only hindsight will reveal the best strategy. Sure there is an ongoing sovereign debt issue but it looks deferred now for a year or so to the next crunch time, from what I have read. By then, things may be picking up and the fallout of a default by a relatively small country like Greece may be quite muted. The banks have a breathing space to provide. France seems to have significant exposures but it has a reasonably strong economy.

With the economies of China and India continuing to grow, and those of the far east doing similarly, the demand for energy is bound to increase. It takes time to bring on major new fields (this one is now referred to as "world class" by AUT) as we've seen with S/L.

So, fundamentally AUT seems sound but external events could easily cause dislocation of share price progression.

The top-slicers and other profit-takers are possibly reducing their risk and carry value. That also provides a reserve of investment money to exploit any buying opportunity. On balance, that looks to be a good thing to me. The troughs (if any) will be less severe.

Good luck and look after AUT while I'm away on holiday.

I am sure you've noticed it. but could this Also be the start of a new trend happening?

A big positive for the LT industry

Global Shale Gas Initiative

http://www.state.gov/r/pa/prs/ps/2010/08/146161.htm

Office of the Spokesman
Washington, DC

August 20, 2010


The U.S. Department of State’s Coordinator for International Energy Affairs, David L. Goldwyn, will host the first multilateral event under the Global Shale Gas Initiative (GSGI) on August 23 and 24. Seventeen different countries will send representatives to attend the GSGI Conference to discuss the importance of shale gas as a lower-carbon fuel option that can help reduce CO2 emissions while ensuring energy security and economic development in the 21st century. Mr. Goldwyn will brief the press on-camera, on-the-record on the GSGI conference at 12:45 p.m. on Tuesday, August 24 in the Carl T. Rowan Press Briefing Room (Room 2209) of the Department of State.

The GSGI uses government to government policy engagement to bring federal and state governments’ technical expertise, regulatory experience in ensuring the safety of water supplies and air quality, and diplomatic capabilities to bear in helping selected countries understand their shale gas potential and the responsibilities of governments.



Economic, Energy and Business Affairs Public Diplomacy Office
U.S. Department of State

AngusSmart said:

I am sure you've noticed it. but could this Also be the start of a new trend happening?

Click to expand...

Angus i hope im wrong, but i think not. I think that St trend youve identified is a correction in response to the post CR and SPP sp hangover, where due to increased selling the sp remained stagnet for too long. I think weve merely caught that up, plus ridden the wave of the Reserve report (which many dont seem to understand the significance of).

Ultimately the value of the company now is primarily detrermined by :

The pace of new wells and thier flows
The oil price and how that effects NVP and repayment of each well based on flows
M&A activity driving per acre valuations and per boe valuations.

But imo without a doubt if the oil price is relatively stable its the pace of our drilling and fraccing driving vlaue. We have two rigs, so it should be roughly around this channel.

When the third rig arrives = then there should imo be a notable change in trend.

Yeah for sure, it would be nice if it was starting a new trend after the report's good news! i thought perhaps it could have changed pace with the report since the news was quiet good. tho the trend has pretty much started at the beginning of august.

I hope that oil keeps trending upwards ever so slightly after the big drop in May.

Slipperz said:

I won't be at all surprised to see us back in the "morgan channel" soon.

It's really the effects of the CR that kept a lid on prices these past six weeks.

Ultimately though in one quarter AUT has gone from 65 to 92 cents.

Without the CR I daresay we'd be at 1.20 right now.

As you pointed out T3 and kowalik flow rates due soon which should propel us to the 1.20-130 mark then the reserves report which should drive us up towards the 1.60 mark as per the analyst reports.

Click to expand...

I'm going to quote myself here cos the charts are pointing to this very result. The "morgan channel" has been broken out of and it's back to the long term trend chart.



We're sitting pretty whack bang in the centre.

I see 1.00 as our new support level ( that's where my stop loss is anyways) we did hit it briefly on Monday after a few profit takers swooped in after Fridays late charge but I'm thinking it's fair to say the momentum is to the upside from here.

Hey condog, where do you get all this AUT and oil news? Do u just search it on Google mate?

BrightGreenGlow said:

Hey condog, where do you get all this AUT and oil news? Do u just search it on Google mate?

Click to expand...

I have a number of paid and free subscriptions and i do use various news channels to search for developments each day, primarily so i know whats going on. When i see something i think is relevatn to AUT holders i do a quick post. Hope it helps.

Theres plenty out there just using the free services (90% or more is available free) through google news if you simply search "eagle ford" or "eagle Ford Shale" "US gas" "Us Gas and oil" "Oil price" "oil prices" "oil futures"

Seeking Alpha has a lot, as does Wall street Journal and Oil and Gas Journal.


Ive updated the progress chart for AUT