Hey Estseon,I was wondering what you thought of the comments...

Hey Estseon,

I was wondering what you thought of the comments below, someone on another blog posted the following in regards to valuing AUT and while I'm researching into more of the things I thought I understood I'd love to hear your thoughts

Reserves and Valuation:
A very basic assessment metric is how much you are paying per barrel oil equivalent (BOE) of estimated 2P reserves when you buy an oil and gas stock.

Currently AUT has an enterprise value (market cap plus net debt) of $1223 million based on 416 million shares on issue.

Proved and Probable (2P) Reserves at 31 December were 22 MMBOE (million barrels oil equivalent) of which only 2.54% (560,065 barrels) was condensate, which is effectively priced as oil.

Therefore in buying AUT at the current price you are paying the equivalent of $1223/22 = $55.35/BOE.

However, 97.5% of the BOE is gas and NGL's which is priced at $24.84/BOE (at last Henry Hub gas price of $4.14/mmbtu). Sure there are a few adjsutments for NGL content above gas thermal spec, but lets not complicate the matter. The current market price of the stock imputes a value to the reserves of roughly twice the current undiscounted revenue of the 2P production over life (assuming no gas price rise). AUT on Investor Presentation Slide 14 footnote obliquely hint at the problem...BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.' To this I might at that it grossly overstates the value under prevailing oil and gas price relativities in the USA ($4.14/mmbtu gas is equivalent to $24.84/BOE gas versus current oil price $112/Barrel WTI)

Another way of looking at it is that the certifier of AUT's reserves estimate, NSAI, valued (10% pre-tax NPV) the 2P reserves at burner tip at $414.5 million or $18.75/BOE (pre-tax). This is more realistic, but still reasonably generous as it is based on on perfect project delivery and costings. On my estimates of production, schedule and capex (without including reserves downside) it is closer to $5/BOE atax.