trader,looks healthy on the upside. Of course, all that depends...

trader,

looks healthy on the upside. Of course, all that depends on the assumed NPVs of the wells. The $13million NPV is also suggested by AUT in their 2may11 presentation, slide 14. The presentation also indicates that 50% of revenues are generated within the first 2 years and, given the well declines and discounting, it is likely that the bulk of this NPV would be realised within the first 2 years of production.

So shouldn't we be seeing some benefit to the bottom line by now?

From quarterly reports, expenditures to date on acquisitions, development, production & admin are ~ $260million. Of this, ~$140million has been spent on development, OPEX & admin.

Total post royalty revenues to date are $60million. So cumulative “net operating cashflow” is some -$80million.

Given that they haven’t yet made a quarterly “net operating cashflow” profit (except 4Q 2011, when CAPEX was unusually low), it’s hard to see how they are going to turn this cumulative loss into a profit anytime soon.

These high NPV/well valuations just don’t make sense. The wells, on average, are likely to have lower NPVs and longer payback times than initially estimated.