This is the perfect time to start a new thread with the aptly titled presentation from the AGM.
AOW has begun turning the corner and although it has been a slow process, these things take time to ensure everything is diligently attended to.
Where are we today?
We can see that AOW currently has 6 producing assets which have been acquired and settled upon being:
- Peak Energy - East Texas
- Anasazi
- Anasazi / CWS
- Lost Lake/ Goose Creek
- Magnolia
- Burnett
These assets are currently producing 300BOEPD (60% Gas; 40% Liquids) and are in the lowest cost quartile with production costs at $24/BBL.
These assets are also being worked on & improved and this cap-ex program is expected to deliver an additional 80BOEPD in additional production over the next 6 months.
The projected 2019 EBITDA on the existing suite of assets is USD $2.6m ($3.6m AUD)
Based on the current suite of assets, AOW is a cash flow positive business and once production / cash flow reports are issued, the market will IMO begin to stand up and take notice
Post Foothills Settlement
There is an additional asset which is nearing settlement (expected imminently) which will increase production by a further 150% from the current 300BOEPD levels up to 750BOEPD
This asset is also conventional and the production profile is 100% liquids with similarly low operating costs as the existing suite of assets which is in the US$25/bbl range.
The quality of the liquids from this acquisition is also premium and as such, it attracts a price premium to the NYMEX benchmark
The projected 2019 EBITDA for AOW including this foothills asset is USD $11m ($15m AUD) which is currently more than the entire listed market cap for this company.
Again, the market will ascribe value to this metric once the production reports begin to demonstrate that the production profile is travelling in a northerly manner as the company has been projecting.
Share Register
Typically in micro-caps, the share register can be a huge impediment in making a sustained, significant move higher in price as they're usually highly fragmented with sellers at many levels.
IMO the AOW register has been transformed over the last 6 months since the announcement of the latest acquisition targets.
There have been 2 significant shareholders join the register being:
- Defender Equities - 19.56%
- 23 Oxford St / Fend - 15.07%
Also, the top-40 shareholders now control 68% of the share register with the majority of these shareholders joining the party at similar levels (being sub-3c) which ensures everyone is on the same page and there is unlikely to be any significant overhead supply when the move higher cranks in to high gear.
Further to this - Defender Equities have provided additional support by way of a debt funding facility which AOW is using for working capital purposes. This demonstrates their belief in the turnaround story to become a cash cow in to the future once all the acquisitions are bedded down.
The Future
The future is an exciting one for me and IMO many other shareholders feel the same way.
The company has acquired real, quality, long life, cheap to run assets in the heart of Texas and are beginning to deliver on their strategy.
Their stated goal is to target 3000+ BOEPD by the end of CY2019 via acquiring similar assets and funding them with a mix of debt & equity.
This goal is no small feat and should it be achieved IMO it will attract the interest of many mid-tier oilers looking for an acquisition or a PE fund looking for a company which will be a cash cow for their investors.
The latest investor presentation shows the way and IMO they are indeed beginning to deliver on the strategy!
