sugarloaf ami

AWE has a 10% WI in the Sugarloaf Field which it acquired when it took over ADI earlier this year. ADI paid $0.40 per share for ADI. This implies that they paid $63M for their 10% of the Sugarloaf field:

175M Shares @ $0.40 = $70M
Less Adjustments Cash, Yemen O/H etc $7M
Estimated Cost of Sugarloaf = $63M

(Source: Page 29 of ADI's Target Statement)

The Sugarloaf AMI comprises a lease area of over 23,700 acres (93 square kilometres (?km2?)). Therefore, AWE purchased its net 2,370 acres for $63M. That represents a price of $26,582 per acre.

Yesterday, AUT provided a presenation in connection with its purchase of an additional 5,100 acres in the area for $120M including an additional 1,300 acres in the Sugarloaf ADI. Their presentation is here :

http://www.auroraoag.com.au/IRM/Company/ShowPage.aspx?CPID=1441&EID=94298288&PageName=Updated Presentation Material

Slide 9 of that presentation gives some interesting current metrics on AWE's interest:

Although not the exact same fields as AWE's purchase, AUT 1. is paying $23,529 per acre for the additional acerage($120m/5,100 acres);
2. After the acquisition AUT will have 15,600 acres. With 409M shares on issue and trading at its current share price of $2.09, AUT will have a Market Capitalisation of $854M. With US90M cash this represents a valuation of $48,974 per acre;
3. AUT indicates that, post acquisition, the 3P NPV (pre tax) is $1,410 US$million. After adjusting for $90M cash, this represents $84,615 per acre.

Extrapolating to AWE's 2,370 net acres, this would imply that:
a. Based on AUT's current MC, AWE 10% interest would now be worth $116.7M ( i.e. 2,370 x $48,974); and
b. the 3P NPV (pre tax) would now be worth $200M;

Regards

SP