Antares Energy (AZZ) - US gas + cash

[OneUp]

Antares Energy (AZZ)

Bit too flat tack right now to do anymore than give a brief outline and invite comment:

(1) AZZ has a market cap of a shade under $100m.
(2) They have net cash and receivables of over $70m, $54m of which comes from the recent sale of their Turkish assets.
(3) AZZ have valuable gas producing and exploration projects in the USA, where gas prices have doubled in recent months and supply is expected to remain tight for the forseeable future.
(4) Share buy back under way.
(5) Very strong insider buying.

Seems like a very safe investment, with considerable upside: management aim to turn AZZ into a company with a market cap of $500m (up 400%) within 2 years by expanding gas production in the US.

Thanks to Lizard for bringing this one to my attention. I bought some today.

Apologies to Yogi for not posting in his thread, but I am after fundamental analysis, not astrology.

[JBmurc]

:Dgreat mid-long term holding oneup brought a lot at 44c ;)a couple months back,is my largest holding in my portfilo very confident there company growth pospects will happen over the next couple years ,just check out the US gas price.

$1 sp is only months away.;)

others worth a look -STX
NWE
EPR
PSA
ADI

[nelehdine]

Check out AMU ... by far and away my largest holding. Great mgmt, great acreage, Oil prod up 120% in the next 12mths min ... Gas prod up 375% min next 12 minths !!! Ka-Chingo !!!

[OneUp]

Hi Nelly, just had a quick squiz at AMU and haven't got the whole picture, but they seem to have a fair amount of debt. AZZ with its enormous net cash position and cost concious approach to projects would seem to have somewhat less risk, as well as not needing to issue new equity (or be beholden to their bankers) to pursue projects. Thanks for the tip anyway, will have a further look at AMU when I get the time.

[nelehdine]

AMU have just spent US$100m in the last few weeks on 3 seperate acquisitions. Cash on a companies balance sheet is just plain STUPID. Make absolutely NO financial sense what-so-ever, especially for a producing oiler. BHP and RIO carry Billions and Billions in debt, why shouldn't the smaller companies on a smaller scale. AMU have just put some collar hedging strategies in place ( $52 and $90 for oil & $8 and $20 for gas ) Their banker, Wells Fargo are extremely comfortable with their levels of debt, so am I. Agressive quality management and strategy is one of the things that attracted me to invest in Amadeus ... no interest in lazy cash hoarding management !!

By the way ... shares up to 122 today, over 10% rise since I tipped them to you 2 days ago !!!

[OneUp]

Nelly, in the week since your posting on AMU it's fallen from $1.20 to $1.06 (-12%). AZZ has fallen a more modest 5.7%. AMU will probably outperform AZZ on the upside, but I like AZZ as a [u]low risk</u> exposure to US gas. To each his own.

The absolute floor on AZZ is the cash backing, which is not far south of its current share price. Should add that AZZ only got the cash windfall from the Turkish sale a couple of months ago, and contrary to the inference that they'll just be sitting on a cash mountain twiddling their thumbs the sale was intended to allow the funding of US activities without having to go into substantial debt. Management is looking at the best ways to make use of shareholder funds, seeing as they are shareholders themselves.

[nelehdine]

Yep AMU have had a tough week ... not the best week to be having an SPP at $1 ... falling oil, falling Dow, falling All Ords ...

[kura]

One up, doubt if you will get your ten bags out of AZZ, whereas my initial AMU purchase (approx 3 years ago) cost me 9 cents, several times in those 3 years I said to myself "Surely they can't keep going up" (but they did)

About the same time as purchasing AMU for 9 cents I got some AZZ (known then as AYO) for approx 50 cents.

While both are now in the same "patch" AZZ are the new boys in town, whereas AMU have the proven management & technical expertise to grow the company. I know which one I would prefer to invest in.

[OneUp]

Kura, not looking for 10 bags from AZZ mate. 50% in 6 months will be par for the course, with very little downside risk.

For both AZZ and AMU, I note that some analysts argue gas prices are currently far too cheap and expect them to rise significantly over the winter. One of the main reasons cited for the recent market drop is fears of inflation....but US inflation is largely being driven by rising gas prices...which is all good for producers & explorers.

Did a search on AMU on sharetrader and no one's really given a comprehensive analysis of why it's good looking forward. Any ideas how much $ it will make this year? (yes I'm being lazy ;))

[kura]

Sorry One Up, when it comes to being lazy, I think I beat you, (Don't know) I do however subscribe to a share newsletter (Stock Analysis Peter Strachan) and I have learnt to respect his opinions, think the last comment he made about AZZ was "fairly priced" (ie no great bargain) Unfortunately he has not opined regards AMU recently (and recent AMU asset purchases kind of significantly affect the company fundamentals)

PS: Peter Strachan took over the newsletter "Quentin Camerons Oil & Gas Bulletin" this bulletin was what I originally subscribed to, Quentin Cameron retired a few years ago (in his 70's with failing eyesight) in one of the last of his bulletins, Quentin Cameron recommended AMU at 9 cents, and thought they had potential to get to $1 (Thank you Quentin !)

[bailej03]

Hey guys,

Not the place for it, but I'll just be a bast*rd and highlight it anyway. FAR, First Australian Resources is a small Perth based company following the same AMU model. Got a very exciting drill coming up for mid to late November, plus a decent base of producing US wells. Also lots of cash in the bank $9M and looking at a few more US properties. Imho, worth a look if you want to get in early on another potenital AMU.

Back on topic, and AZZ looks quite good to me too. Picked up a few more in the recent downturn.

[kura]

AZZ took a hit today, news re Ellis wells is not to promising, (Thought Ellis was supposed to be low risk)

Forgot to mention in my earlier post that exited AZZ in disgust at same time they announced sale of Turkish assets, as while $40 M (or whatever) is not to be sneezed at, they have sold a usefull cash flow (plus exploration potential) With Ellis not going to provide the readies for US exploration, it is going to have to come out of our cash reserves now.

Hey, I also like Kebabs & Turkish delights OK !

[clearasmud]

Azz is good buying imo atm. (45-45.5c)
Read their presentations.
directors have been buying recently.
so have I at 45c

[clearasmud]

Director recently bgt more at 47c
Now trading at 48-50c

[JBmurc]

took a small short term punt on AZZ eagle ford shale play results could well be massive....will be keeping a close eye in case I have to jump ship or top-up

[JBmurc]

worth a read from austock 24 july

http://www.gtp.com.au/antaresenergy/inewsfiles/2009%2007%2021%20Austock%20AZZ%20initiation.pdf



PLACEMENT & SHARE PURCHASE PLAN
The directors of Antares Energy Limited (ASX: AZZ, “Antares”) are pleased to advise
completion of a placement of 40,000,000 shares to raise $10,000,000 (Placement). The share
placement was undertaken by lead manager Patersons Securities Limited to a range of leading
institutions and sophisticated investors.
In keeping with the ‘Capital Raising’ page number 17 of the attached ‘Investor Update and
Capital Raising’, July 2009, presentation; Antares sought to issue 27,000,000 shares at 25
cents to raise $6,750,000. However, due to overwhelming demand for the offer, Antares
closed the book build process quickly allowing the issue of 40,000,000 shares at 25 cents to
raise $10,000,000 resulting in a significant scale back of applications.
The board wishes to thank Patersons Securities Limited for the exemplary professional manner
in which they assisted Antares to fund this purchase of additional Eagle Ford shale acreage
while introducing institutions of the highest calibre to the Antares share registry.
Additionally Patersons Securities Limited will act as lead manager to a Share Purchase Plan
(SPP). Under the SPP all eligible shareholders will have the opportunity to subscribe for up to
$15,000 worth of fully paid ordinary shares. New shares under the SPP will be offered at the
same price as the Placement, being 25 cents per share, a 18.5% discount to the volume
weighted average share price for the 5 trading days prior to 5 August 2009. No brokerage,
commission or other transaction costs apply to applicants for the shares issued under the SPP.
The SPP is proposed to be capped at 8,000,000 shares to raise up to $2,000,000.
The offer is open to all holders of fully paid ordinary shares registered on the Company’s share
register at the record date of 20 August 2009, with a registered address in Australia and New
Zealand.

will be taking up my $15,000 worth

[Crypto Crude]

hummm....
Oiler mentioned AZZ today...
thats the 2nd king pin to say AZZ in a week...
I need to have a further inspection...
I remember Serpie in AZZ when the stock was one dollar after he rode it up ( I think), I looked and saw no value... I was very surprised at a lofty price......
havnt seen AZZ since...
been abit of a ZZZZ'er...
hehehehhehehe....
post soon...
:cool:
.^sc

[Crypto Crude]

Oiler,
Ive just sat down for an hour and had a decent look at AZZ...
Im not excited about the company...AZZ is similar to what ive been saying about GDN...
But AZZ has more going for it than GDN, so no direction comparison in that respect....
First of all,
I have noticed some inconsistancys in the share price predictions (outlook) in some of the companys market releases...Developing/Producing the Shale zone at The Eagle Ford interval is not a company making project, even though it is potentially large in resource...
The revenue stream is drawn out for 15 years plus... If only those revenues could be drawn out in 2-3 years!... Its a major difference, and these sorts of revenues are not large enough to grow a strong cashflow positive company to support a market value of 63 million...
AZZ has run hard this year up about 500%...

This company is all about Eagle Ford shales testing program now...
horizontal well and fracture stimulation...
West Wharton and Oyster Creek provide little real production umff......
Looking at The Edwards Objective straight away I see a problem...
80 BCF target, its just not enough...
80BCF one well, YES...
but thats off 20 wells...

Eagle Ford Shale potential right now, but not the sort of attractive investment for me.... hype usually has a part to play initially so there could be trading opportunities....exposure to risk makes it not worth it overall, but who knows what will happen ....
Such a lofty current market valuation is being held up by a thread......
Ok...
I read in the latest company ann that this project Yellow Rose, and The Eagle Ford Shale target, could add $7.84 worth of value to the company....

http://www.stocknessmonster.com/news-item?S=AZZ&E=ASX&N=456713

The first thing I saw wrong was how there was no discounting which cripples those revenues drawn out in 10 years plus..... and that each well costs 5million US dollars to drill, where they state different drilling costs in the summary....
so on the High end estimates of the size of the resource 140 development wells would be required to get Gas in total of 288 BCF... so out of revenues of 1.4 Billion US... 140 well * $5M=700 Million US.
making the resource worth 700,000,000 over 20 years...
AZZ is sinking all its funds into this well (a few million left perhap?, I didnt have time to look at cash position exactly)...
Each one of these shale wells could recover 4-7 BCF...
so say 6BCF...
Therefore each well will earn 30million US dollars over its life time...
so a drips and drabs earner unless you get many development wells in, and I just cant see this company maintaining their current exposure in the project over the next few years as this is costly to get off the ground... There might be a time for this company... not yet though.....
Initial run will pull back (if there is one), because the market will eventually sink in the 6MMCF ann, and go ohhhh.... "thats not really that large"...
Boy,
I would like to see AZZ get 100 wells in there, :rolleyes:.... AZZ's partners budget for further development of Eagleford would be 120million US dollars next year...
How on Earth is AZZ going to be able to fund its position as a drips and drabs potential producer for at least the next two years.......
Im not excited for this company...

On another note Eagle Fold Shale came in 50 feet above estimates...
Hum...
And what,
When they flow tested The Edwards Objective it flowed at less than 2MMCF which is below the breakeven point for taking the project further.........
humm... by how much less than 2MMCF did Edwards flow at, can anyone tell me? It didnt say...
This might give a better indication on how Edwards might flow...
Discoveries and flow testing along the Edwards trend to date have been successful in the 8MMCF per day region, in La Salle County...
:cool:
.^sc

[JBmurc]

Great work shrewd some good indepth numbers showing the more negative side of AZZ future potential

Now why did the so called smart institutions and sophisticated investors just invest 10mill into AZZ??

have only a very small holding bought for a short term trade may well exit soon...

[Crypto Crude]

AZZ down 2c or 9% in one day since my post...
I dont know what TA says, but this is a sell....
:cool:
.^sc

[STRAT]

AZZ down 2c or 9% in one day since my post...
I dont know what TA says, but this is a sell....
:cool:
.^scIt says this was a sell in early June and nothing has changed since :eek:

[JBmurc]

sold my small spec amount for a small loss more CFE brought

[Crypto Crude]

With US gas prices so low, The Eagle Ford Shale gas is more a liability than anything...
They are going into this for the Condensate, and opps I didnt really mention condensate in my previous posts...
along trend, and across in the La Salle County Condensate flow rates had been a meager 300 Barrels of Condensate per day in the Eagle Ford Shale zones... along the trend Condensate flows have increased, so 500 BC per day at a max... could be around 400 BC per day......
Still risky business, and still not nearly enough Condensate to support a lofty market cap......
two days ago AZZ increased their exposure to this project...
Why would management make such bad investment decisions with Shareholders money?...
well, usually Management will take on negative NPV projects when they have no other options...

good sell JBmurc,
short term anything is possible, but this is a good long term call on the stock...SP already down from 28c to 25.5c...
Im happily watching...
who said you have to be invested to be excited about this industry... hehehe...very exciting...
:cool:
.^sc

[JBmurc]

With US gas prices so low, The Eagle Ford Shale gas is more a liability than anything...
They are going into this for the Condensate, and opps I didnt really mention condensate in my previous posts...
along trend, and across in the La Salle County Condensate flow rates had been a meager 300 Barrels of Condensate per day in the Eagle Ford Shale zones... along the trend Condensate flows have increased, so 500 BC per day at a max... could be around 400 BC per day......
Still risky business, and still not nearly enough Condensate to support a lofty market cap......
two days ago AZZ increased their exposure to this project...
Why would management make such bad investment decisions with Shareholders money?...
well, usually Management will take on negative NPV projects when they have no other options...

good sell JBmurc,
short term anything is possible, but this is a good long term call on the stock...SP already down from 28c to 25.5c...
Im happily watching...
who said you have to be invested to be excited about this industry... hehehe...very exciting...
:cool:
.^sc

-Yes the Gas market is very out of favour atm for good reason is why I sold a large chunk of my STX to invest into CUE not that I don't think STX could well outperform CUE in the shorterm just spread my risk holding 300k STX 200k CUE now (Will increase CUE to 300k next week )
As for AZZ am glad to be out ,been trying to play some high risk spec for short term gain not so good of late with 2%-4% of my portfilo cap value invested in these day-week trades IGC & VWMOA atm

[h2so4]

With US gas prices so low, The Eagle Ford Shale gas is more a liability than anything...
They are going into this for the Condensate, and opps I didnt really mention condensate in my previous posts...
along trend, and across in the La Salle County Condensate flow rates had been a meager 300 Barrels of Condensate per day in the Eagle Ford Shale zones... along the trend Condensate flows have increased, so 500 BC per day at a max... could be around 400 BC per day......
Still risky business, and still not nearly enough Condensate to support a lofty market cap......
two days ago AZZ increased their exposure to this project...
Why would management make such bad investment decisions with Shareholders money?...
well, usually Management will take on negative NPV projects when they have no other options...

good sell JBmurc,
short term anything is possible, but this is a good long term call on the stock...SP already down from 28c to 25.5c...
Im happily watching...
who said you have to be invested to be excited about this industry... hehehe...very exciting...
:cool:
.^sc

How about 90 bcfs and 790 bod?