ATS australis oil & gas limited

7.14%

0.8¢

Great insight. All I can add is that a partner may be easier to...

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Alejandro1

1,143 Posts.

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15/11/20

01:30

Post #: 48879956
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Originally posted by Minim Cove: ↑

This is my opinion only.
ATS will require at least six maybe ten consecutive successful wells to be drilled to total depth 7-7500 ft and lateral length of 7-7500 ft with at least 20 fracking stages operating effectively in each well to optimise production (that is the TMS). At US$60-70/barrel they will have to keep each well under A$10-12 mill in total capital cost to make the economics work. After achieving this they would have proven the concept and proven to hold a very valuable saleable asset. That is my understanding of the data.

Therefore I believe they will need to raise somewhere between A$60 and A$120 mill to give themselves a chance. At their current cashflow/profitability I believe they will struggle to implement this proof of concept drilling operation (mark 2) without substantial support.

I do not think the banks are likely to engage with ATS in providing these funds in this market.
Another option would be embark on another capital raising. This is highly unlikely given the fact that nearly a billion shares are already on issue and at 3-4 cents it becomes very untidy (dilution would be huge).
The only option is to engage a partner in some form. This is also difficult given ATS have a market capital value of only A$35 mill and they require between 2 and 3 times this sum to prove the concept. Why would you come in as a partner with that kind of money when you can buy the entire company for A$35 mill. There seems no logic. When you look at it like this you get the gist of the difficult position ATS are in.

It is alright to say that they have sound cash flow, modest hedging and profits however I believe this will only allow them to conservatively hold their leases and retain the status quo for a few years. Oil production depletion is also a problem going forward whilst securing further good hedging positions could also be challenging.

From my point of view all they can do perhaps is to chip away at engaging a partner for a well or two at a time and in exchange relinquish some of their ownership. Not desirable but the best of a bad bunch of options I believe. The other option is to hold on as long as they can and perhaps the oil price may take off (this will stagnate the companies price until such time) or a third party drills nearby and has consistent success (time and likelihood would be against them).

I believe ATS's underwhelming drilling operational performance 18 months ago which depleted their cash on hand at the time and of course affected their forward anticipated production along with the oil price plunge (covid/bad luck) were the catalyst for this predicament.

I know I am getting more technical and drilling down on the economics here however I believe it is necessary in beginning to understand the real challenges here.

I stress these are my opinions only. Do your own research. I would like to see some more substantive comments justifying the pros and cons of people's opinions on this stock without purely reciting the companies position. From my understanding the TMS resource has never been easy to economically extract.

Expand

Great insight. All I can add is that a partner may be easier to acquire than you may think. Yes the company may be worth only 35M at the moment but as the situation improves people will start to trade this stock for a higher price seeing the market cap increase also. It is very well possible to seek a partner for a 120M investment when the market cap reaches 100M for example.

I do believe ATS have taken this into consideration.

ATS Price at posting: 3.6¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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(20min delay)
Last 0.8¢		Change 0.001(7.14%)		Mkt cap ! $9.885M

Open	High	Low	Value	Volume
0.7¢	0.8¢	0.7¢	$4.809K	681.7K

Buyers (Bids)

No.	Vol.	Price($)
21	15173483	0.7¢

Sellers (Offers)

Price($)	Vol.	No.
0.8¢	2616928	3

View Market Depth

No.	Vol.	Price($)
20	15173464	0.007
9	7676324	0.006
6	2890000	0.005
4	3025000	0.004
3	3620000	0.003

Price($)	Vol.	No.
0.008	1619142	2
0.009	754571	4
0.010	702100	4
0.011	1523888	2
0.012	675000	1

Last trade - 15.00pm 27/06/2025 (20 minute delay)

ATS (ASX) Chart

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