AWE on the Move

[Huang Chung]

Think there is a bit of a difference between a producer like AWE, with a suite of exploration and development opportunities, and an outright speccie explorer, where the exploration outcome for the company tends to be quite binary.

[tricha]

Think there is a bit of a difference between a producer like AWE, with a suite of exploration and development opportunities, and an outright speccie explorer, where the exploration outcome for the company tends to be quite binary.

I had them before when Tui was in full swing and they lost their way.

I bought back today on all the great news of late. Lets hope they do not lose their way again when the oil flow picks up.
Like TAP, it makes me wonder why a major does not snaffle them, at these extraordinary low prices.

Going forward they should be able to produce 5 million barrels a day for many, many years.
They have great reserves and their major project has been substantial de-risked.

A bargain!

[tricha]

I had them before when Tui was in full swing and they lost their way.

I bought back today on all the great news of late. Lets hope they do not lose their way again when the oil flow picks up.
Like TAP, it makes me wonder why a major does not snaffle them, at these extraordinary low prices.

Going forward they should be able to produce 5 million barrels a day for many, many years.
They have great reserves and their major project has been substantial de-risked.

A bargain!

I do have 1 concern and that is the shale gas, from my readings, it is a big Ponzi
scheme , except for a few sweet spots.
There is an article from Peter Strauns stockanalysis which high lights this as applying to AWE, ????

[Huang Chung]

I have a sneaking suspicion that you might be a bit right there Tricha.

I'm happy that AWE are primarily a conventional oil play, with a little unconventional 'spice' thrown in for good measure. One of the most telling things (the way I interpreted it at least) from yesterday's BRR presentation is the seemingly little emphasis on the unconventional Arrowsmith well in the Perth Basin. Bigger fish to fry elsewhere it seems.

[macduffy]

Macquaries have confirmed their "Outperform" on AWE with a DCF valuation of $2.91 and 12 month target SP of $2.50.

http://www.macquarie.com.au/dafiles/Internet/mgl/au/apps/retail-newsletter/docs/2013-08/AWE270813e.pdf?cid=&spMailingID=6836372&spUserID=NTgyMTcwODQ3OTES1&spJobID=85698978&spReportId=ODU2OTg5NzgS1

[soulman]

Macquaries have confirmed their "Outperform" on AWE with a DCF valuation of $2.91 and 12 month target SP of $2.50.

http://www.macquarie.com.au/dafiles/Internet/mgl/au/apps/retail-newsletter/docs/2013-08/AWE270813e.pdf?cid=&spMailingID=6836372&spUserID=NTgyMTcwODQ3OTES1&spJobID=85698978&spReportId=ODU2OTg5NzgS1

All this fuss and we have PPP trading at such a discount to valuation. I will read AWE tonight to form an opinion.

[tricha]

All this fuss and we have PPP trading at such a discount to valuation. I will read AWE tonight to form an opinion.

PPP would be in my opinion, be much better of, buying shares in other oilers that are undervalued.

the likes of WPL, AWE, TAP to to name a few and get rid of most costs ,risks and overheads.

I am interested to see your opinion Soulman, are they cheap or am I on the wrong boat?

[soulman]

PPP would be in my opinion, be much better of, buying shares in other oilers that are undervalued.

the likes of WPL, AWE, TAP to to name a few and get rid of most costs ,risks and overheads.

I am interested to see your opinion Soulman, are they cheap or am I on the wrong boat?

Hard to say Tricha. The same with DLS and BPT. Although I won't buy them compares to say PPP and SXY. As you can see, I preferred cashed up producers than the one with debt.

As with the last time I reco PAN as a dog back in early Sept 2012, the shares rally up from 45 cents to 63 cents in a month and then subsequently dip to 24.5 cents now. I almost look like a fool.

[tricha]

Hard to say Tricha. The same with DLS and BPT. Although I won't buy them compares to say PPP and SXY. As you can see, I preferred cashed up producers than the one with debt.

As with the last time I reco PAN as a dog back in early Sept 2012, the shares rally up from 45 cents to 63 cents in a month and then subsequently dip to 24.5 cents now. I almost look like a fool.

Well re-reading this, it looks good on paper Soulman. The good times will take a couple of years.
An extra 100 million US will be a huge help for the future, thanks to the Santos buy in. Santos also take control which is a good thing, as the have the expertise.
But then there is sovereign risk?


http://www.stocknessmonster.com/news-item?S=AWE&E=ASX&N=753581

[tricha]

Well re-reading this, it looks good on paper Soulman. The good times will take a couple of years.
An extra 100 million US will be a huge help for the future, thanks to the Santos buy in. Santos also take control which is a good thing, as the have the expertise.
But then there is sovereign risk?


http://www.stocknessmonster.com/news-item?S=AWE&E=ASX&N=753581

AWE are now at an even lower price, today was a good day to top up.
They have the oil.

[Corporate]

I have been buying AWE today because I believe it offers great long term value. Highlights in particular:

Very strong cash flow. In my view you have to ignore the PL and look at the cash flow statement, now and in the future. This is because the high depreciation rate masks the underlying PL performance and relates to historic cost overruns on Bassgas assets which are now being written down through non cash depreciation.

110 mmboe of 2p reserves + 95mmboe 2c reserves. Currently trading at around $6.5 per 2p reserve!

Plans to increase production from 5mmboe to 10mmboe in the next 3-5 years. Noting a distinct production shift from gas to high value liquids.

Sugarloaf production up 270% yoy

AAL project farmed out to STO on good terms and STO to operate. You can't underestimate the value of having someone like STOrunning the show.

Increase of TUI interest to 57.5% with exploration and appraisal about to commence.

Major land holder in the Perth basin. The are currently testing arrowsmith and progressing senecio (tight gas) to a development decision.

dYOR

[Corporate]

What a great quarterly!

Revenue up 14% to $89m

Production 18% to 1.54mmboe

Scenecio stage 1 development approved

Plan of development drafted for Lengo

Sugaloaf production up 15%

FID on Bass Gas for two development wells

TUI drilling this quarter

Operating cost down 9%

EBITDAX up 39%

[ELYOB]

The shale assets in Perth basin are a big drag on AWE ahead . AWE is not a major who can afford to play with an experiment. If they got rid of them , and use money elsewhere = ???? Shale is a potential disaster for AWE .

[Corporate]

The shale assets in Perth basin are a big drag on AWE ahead . AWE is not a major who can afford to play with an experiment. If they got rid of them , and use money elsewhere = ???? Shale is a potential disaster for AWE .

Sorry I can't agree with you.

AWE's exploration budget is $50m PA across the entire portfolio. The EBITDAX for this quarter alone was $59m!

Further, must of our interests in the Perth basin are sub 50% and because the permits are in close proximity to current infrastructure any discovery is going to be easily commercialised.

[macduffy]

From Morgan Stanley.

AWE Ltd: Quick Comment: Q1 results no surprises
AWE posted solid gains in production in Q1 2014. Production was up 18% qoq to 1.54 MMboe (Morgan Stanley estimate 1.48 MMboe). Sales revenue was A$89m, up 14% on the previous quarter. Production was driven by a full quarter of BassGas production following workovers at Yolla-3 and Yolla-4 in Q4 2013. Production was also higher at Casino/Henry and Sugarloaf. Quarterly production, sales revenue and EBITDAX were at the upper end of guidance YTD. Net debt is A$48m, comprised of cash of A$30m and drawn debt of A$78m. BassGas drilling/re-development has achieved FID subject to finding a suitable rig. Mobilisation costs can be high to bring a rig into the Bass Strait and preferably a “rig club” is formed to share mobilization costs. In other development news, the tight gas development in the Perth Basin has been approved with a vertical appraisal well to be drilled. The AAL project is progressing to plan. FID is planned for 1H 2014 calendar year with first oil expected in 2016 (unchanged). AWE is working with STO in transferring operatorship. In exploration news, the Arrowsmith-2 well has flowed at disappointing rates. The well flowed initially at 3.5 mmscf/d but subsequently dropped to an average rate of 315,000 scf/d. The JV is considering whether a horizontal well will be drilled over time. 3D seismic will be shot over the Arrowsmith area. In New Zealand, the Oi prospect will be drilled in late December. There were no other exploration wells drilled. We remain Underweight. AWE has a mix of late life assets. We would like to see more growth options - the AAL project in Indonesia appears to be the only project capable of moving the dial at this point.

[macduffy]

AWE in a trading halt pending an announcement re a possible merger proposal.

http://www.asx.com.au/asxpdf/20131213/pdf/42llh7h80j75v7.pdf

[The Big Ease]

probably the most boring company on my watchlist.
Porducing oil, dominates Perth basin...but just doesn't get any love.

Rumours of a merger with SXY are interesting. Much better for both & Australia than an international company taking them out as local investors can still benefit from the upside in Cooper/Perth basin developments.

More defensible size too and complicates the assessment by any potential larger suitors.
Let's see if it plays out that way. SXY not in a trading halt, so perhaps it isn't them.

[macduffy]

Yes, I doubt that SXY would initiate a "non-binding and conditional" merger proposal with a much bigger company. Now, if it were the other way around......?

We'll have to wait and see.

[macduffy]

Yes, I doubt that SXY would initiate a "non-binding and conditional" merger proposal with a much bigger company. Now, if it were the other way around......?

We'll have to wait and see.

And, actually, it is the other way round, now!

SXY's M/Cap has grown to $880m and AWE's fallen to $620m!

:blush:

[macduffy]

Yes, I doubt that SXY would initiate a "non-binding and conditional" merger proposal with a much bigger company. Now, if it were the other way around......?

We'll have to wait and see.

And, actually, it is the other way round, now!

SXY's M/Cap has grown to $880m and AWE's fallen to $620m!

:blush:

[macduffy]

Yes, it was SXY.

But now they have withdrawn their bid - AWE wasn't interested.

http://www.asx.com.au/asxpdf/20131216/pdf/42lmpcw5bb8z2k.pdf

[Toulouse - Luzern]

And, actually, it is the other way round, now!

SXY's M/Cap has grown to $880m and AWE's fallen to $620m!

:blush:

Intraday today:

SXY at 71.5 is $817 m and AWE at 125.5 is $653m

AWE high was 131

[macduffy]

Yes, at least SXY's bid appears to have put AWE into play! Good assets being recognised at long last!

:cool:

[tricha]

Yes, at least SXY's bid appears to have put AWE into play! Good assets being recognised at long last!

:cool:.

Still dirt cheap Mac Duffy, good things take time.

[The Big Ease]

Strange to see SXY dumped.
Is it because this is effectively an admission that it will require much more capital?
I thought it was pretty much self-sustaining already wrt oil generated funds to invest into shale.

Perhaps this AWE merger would have allowed them to really ramp up some acquisitions and Cooper development.
I do think it would have been a good idea.
The market just doesn't seem to rate the Perth Basin's growth potential, so using the cash from AWE's oil revenues to accelerate the Cooper --> +++value.
Sell off a few non-core assets.
Keep the Perth Basin plugging along.

With such close market caps it was always going to be a difficult one to get up.
Especially with the different growth profiles vs oil production.

[macduffy]

Still dirt cheap Mac Duffy, good things take time.

Yes, that seems to be AWE management's view, too. The terms of the merger would have handed SXY shareholders an overgenerous share of the merged entity, based as it was on a depressed AWE shareprice and an overbought (?) SXY SP. Perhaps AWE might look at things differently on another basis that left AWE shareholders with rather more than 47%.

[macduffy]

Macquaries agree. AWE is the "cheapest mid level energy stock" that they cover.

http://www.macquarie.com.au/dafiles/Internet/mgl/au/apps/retail-newsletter/docs/2013-12/AWE161213e.pdf?cid=&spMailingID=7595880&spUserID=NzgwMDI1MDk1NjIS1&spJobID=106299599&spReportId=MTA2Mjk5NTk5S0

[troyvdh]

Great posts guys.I am not a conspiracy theorist.But do I have a right to be somewhat cynical ...when a company (any company) exudes any sort of positive news like in this instance AWE...is it not the usual pattern for the SP to leap (as it did) then decline (like say AZS).

On reflection Im probably (despite being around a while) a victim/someone stupid enough to believe that insider information does not occur.

[airedale]

Is Senex likely to sharpen the pencil and come back with another offer.?

[tricha]

Is Senex likely to sharpen the pencil and come back with another offer.?

Not likely Airedale, but Santos might. Lets hope the share price moves up , before someone does.

[tsb]

Could be good

ASX Announcement
6 March 2014
Pateke-4H drilling update
AWE Limited (ASX: AWE) reports that as at 06:00 hou
rs (6.00am NZDT) today, the Pateke-4H
development well had been drilled to a total measur
ed depth of 4,110 metres and an inclination of 89
degrees. The primary objective, the Kapuni F sands,
has been penetrated on prognosis by the 12 ¼”
drilling assembly. Oil shows have been observed by
surface monitoring equipment and realtime
petrophysical measurements indicate the likely pres
ence of an oil bearing reservoir.
It is now planned to run and cement 9 5/8 inch casi
ng to a measured depth of 4100 metres, following
which drilling will continue through the reservoir
section to a projected total measured depth of 5,36
1
metres.
The Pateke-4H development well is in PMP 38158 and
AWE is the Operator. Located in the offshore
Taranaki Basin, New Zealand, PMP 38158 contains the
Tui, Amokura and Pateke fields and has been
producing since 2007.
Pateke-4H is targeting a mapped northern extension
of the currently producing Pateke field. The well i
s
being drilled in water depth of approximately 124m
with a planned total measured depth of 5,361m,
including a 1,272m horizontal section. If successfu
l, the well will be completed for subsequent tie-ba
ck to
the Tui FPSO (“Umuroa”) for production in 2015.

[Skol]

AWE moving up after an upgrade in Texas and drilling in the Taranaki Basin.

[Skol]

$1.75.

Up another 5% today, AWE on a roll, next target looks to be $2.

[troyvdh]

Gee I wonder ...I sold some at $4.46 once....again I wonder.

[troyvdh]

I note an existing holder has bought about 8m shares....its always hard reading these things.

Disc ..now hold 4k ...sold as above
Probably guilty of ramping...

[macduffy]

I note an existing holder has bought about 8m shares....its always hard reading these things.

Disc ..now hold 4k ...sold as above
Probably guilty of ramping...

The "existing holder" has an interest in theses shares as investment manager, not beneficial holder. As you note, there is no way of knowing who the beneficial owner/s is/are. There may be one - or many. A good sign, perhaps, in that someone, at least, has seen AWE to be good buying!

[macduffy]

From FN Arena.

UBS rates AWE as Upgrade to Buy from Neutral (1) - AWE has announced up to 1.2tcf of deeper gas potential at Senecio in the Perth Basin. The company will flow test by year-end and appraisal drill early in 2015. The broker has increased its risked valuation for the Perth Basin. This results in a target price increase to $2.05 from $1.95.
Combine this with a 5% fall in the AWE price since its result last month and the broker has upgraded to Buy.
Target price is $2.05 Current Price is $1.91 Difference: $0.14 If AWE meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).
The company's fiscal year ends in June. UBS forecasts a full year FY15 dividend of 0.00 cents and EPS of 9.00 cents .
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.22.
Market Sentiment: 0.8
How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 8.2, implying annual growth of - 31.2%.Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.Current consensus price target is $ 2.11, suggesting upside of 10.2%(ex-dividends).Current consensus EPS estimate suggests the PER is 23.2.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

[westerly]

Some years back AWE paid a dividend using the opportunity to give NZ shareholders imputation credits built up over the years. Hopefully at somestage as the profits accumulate this may happen again.

westerly

[macduffy]

We can always hope so, westerly, but it seems that AWE, like most oilies, has its sights set more firmly on exploration and growth than producing income for investors eg expenditure on exploration and development this current year is planned to roughly equate to expected income.

http://www.asx.com.au/asxpdf/20140910/pdf/42s44lpcn5vx4b.pdf

From memory, the special div a few years ago followed the sell down of a major chunk of AWE's interest in a Bass Strait field. We may have to wait for another such asset sale to free up the cash for another payout.

[babymonster]

Anyone know how's its HY report will likely to be?

[JBmurc]

Got a few AWE shares today .... analyst value 80c+ ....46.5c looks mightly cheap with forward production profile looking solid >> If oil price can break past the sideway trading range .....one could see AWE trend towards Valuation>>

stockanalysis --
In other developments, AWE finally looks set to break up from a 3-year slump that has
coincided with a period of oil price weakness. A move above 50 cents would signal a rise to
the 89-94 cent range. Results from testing at the Waitsia gas project, along with corporate
moves on the AAL oilfield may prove to be a catalyst in September.

[troyvdh]

giday fool....a few months back a Norwegian bank...bought more than a few...just saying.

disc...5000

[Schrodinger]

Strong feeling they will up the offer and it is also a lowball feeler. AWE will be higher than $1 once the new reserves start to generate cash. If they upped to $1.10-$1.20 now I might be interested.

[Schrodinger]

Nope bought a few years back and probably will sit the new raise out. Also overweight in oil =)

What is the price?

[troyvdh]

G fool...are you indicating that the opportunity to participate in the 50 cent offer....is over

[Schrodinger]

Still too low. Long term worth more than $2. Up the offer to $1.20 + then we talk =P

edit: Now the offer is $0.80 and climbing.

edit: Its from another player Mineral Resources. Need to read the announcements more!

Looks good for a bidding war.

[Ninefingers]

Board recommending the MIN offer. Would have preferred holding out for longer. Pitchforks are out over at HotCopper. I'm hoping there is something better waiting in the wings.

[troyvdh]

I agree ....fingers.Sadly events will occur beyond shareholders say so.

[fish]

I agree ....fingers.Sadly events will occur beyond shareholders say so.

Took my eye of the ball on this one-now 86cents-and I was too distracted and stopped looking at AWE sometime ago

[Ninefingers]

Anyone still holding this? With 3 weeks until the close of the 95c Mitsui offer I'm not sure if it is worth waiting any longer for another offer to show up.

[Soolaimon]

Anyone still holding this? With 3 weeks until the close of the 95c Mitsui offer I'm not sure if it is worth waiting any longer for another offer to show up.

I have taken the Mitsui offer and binned the other one that arrived a few days ago offering 73 cents. Why would they proceed with that?

[Ninefingers]

Doesn't look like the Mitsui offer is being very well recieved, only around 6% taken up so far and they've extended the deadline. Hopefully a sweetener is around the corner!