is our debt to high ?, page-5

Not wholly on theme, Max, but possibly relevant to cash.

AUT submitted 2 further drilling applications for Heard ranch (JP Heard Bower 27 & 28) on 12 September.

It now has 13 drilling approvals: 7 in Heard Ranch, 5 in Axle Tree Ranch (split between Karnes and Live Oak) and the mystery drilling in Trinity.

I don't think that it would be asking too much to suggest to AUT that it was about time that they updated shareholders on the success or otherwise of its operations as operator.

One might assume that, if they have applied for permits to drill 5 further wells in Atascosa, the first 2 were reasonably successful. If so, why not say so?

The drilling as operator is a new venture that is material to cash usage: on the basis of their average WI, each well will consume 3x the cash that they have to contribute to an MRO well - in Atascosa (Excelsior) it is an even greater multiple. The 12 permit applications for wells with laterals is equivalent to about 40 MRO wells in cash contribution terms assuming that AUT can match MRO's efficiency.

The share price was trashed when they announced their aggressive programme for drilling as operator on 27 March. Since then they announced commencement of drilling on 3 June and it is now 4 October. Have they gone to sleep? They've had 4 months to drill, fracc and flow the wells.

As to your points, Max, my understanding is that even the slower flowing Atascosa wells should payback within a couple of years and the faster flowing Karnes condensate wells can be less than a year so the debt can be paid down pretty quickly unless the drilling programme is accelerated, which is what is happening through the self-operated drilling. The debt supporting the MRO operated wells (if isolated) is supposed to start being repaid (as is happening with Empyrean's borrowings) but there is the unknown over the self-operated wells and drilling programme.

IMO the drag-anchor on the share price is the self-operated activities and until the AUT board starts reporting on those activities, and reporting success, the market cannot properly assess risk.