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http://seekingalpha.com/article/3248665-petroamerica-oil-is-a-steal-no-matter-how-you-slice-it
Flogging a dead cow: a profile of Andes Energia Many eyes are on Argentina this year. In October, the country will put an end to 12 years of one-family rule, latterly overseen by the increasingly unpopular and health-troubled Cristina Fernández de Kirchner, who took over from her husband and presidential predecessor Néstor in 2007. Election polls are currently tilting towards Daniel Scioli, president of the Justicialist Party and the current governor of Buenos Aires. Sergio Massa and Mauricio Macri, of the Renewal Front and the Republican Proposal parties respectively, are also in contention. But whoever wins, many expect the next candidate to be less populist and reflexive, more business-friendly and eager to repair the country's image as a litigation-embroiled pariah of capital markets, unsafe for foreign investment. Such a change would further explain why Argentina has attracted so much attention from natural resources companies and their investors. Long home to a developed oil industry, the majors have been closely watching developments in the Neuquén Basin, where some - including Chevron - have claimed that the region's enormous Vaca Muerta shale formation could gift Argentina energy independence. The Vaca Muerta (literally, 'dead cow') is the only oil-producing shale outside the US, and - depending on who you ask - the second or third largest shale resource anywhere. The US Department of Energy estimates that the shale contains as much as 27bn barrels of oil and 800 trillion cubic feet of gas, and a recent Goldman Sachs report compared the resource potential with the Bakken formation either side of the US-Canada border. Past oil production has left a solid infrastructure legacy, and land currently fetches up to $10,000 an acre. As you might expect, this has led to a gold rush in the past two years, and explains the presence of Shell (RSDA), Total (Fr: FP), Petrobras (Bra: PETR4), ExxonMobil (US: XOM) and Chevron (US: CVX) in the region. Last month, Russian behemoth Gazprom (Ru: GAZP) signed a deal to develop shale and oil and gas assets in the region with state-owned YPF (US: YPF), which by default has the largest acreage of any major. One of the lesser-known names in Vaca Muerta is Andes Energia (AEN), a company jointly listed on Aim and the Buenos Aires stock exchange and headed by Repsol's former business development director, Alejandro Jotayan. It is touted as London's only 'pure-play' on the shale, and although it has a market capitalisation of £172m, it boasts more than 500m barrels of certified resources, and 6.2m net acres in Argentina - including 250,000 in the Vaca Muerta, over 90 per cent of which is in the proven oil window. This, management says, gives Andes the largest acreage position in the shale of any independent company, although four of its six licences are still shared with YPF. That sounds impressive.
I agree Agamemnon , must just be there location as Argentina & Columbia is not the best place to do business. but worth a small punt. atb
How do such stonking results, astute management & impressive future prospects go seemingly unnoticed... http://www.investegate.co.uk/andes-energia-plc--aen-/rns/final-results-for-the-year-ended-31-december-2014/201505210700318491N/....Once the herd wakes up this ought to seriously rerate.
you need to register now. when i first looked you could see the whole article sorry.
Although this article is about a different company (i hold shares). The story is the same for Andes. Sorry if you think this is off topic. http://seekingalpha.com/article/3144836-madalena-energy-sits-in-the-sweet-spot-of-massive-shale-resources
With today's correction IMO the break out of the downwards channel tried last week is being tested and we could go either way. Time will tell.
I think that this chart looks very strong and that we are moving/breaking out of a downwards channel which started with the peak of 70p on 10.2.14, a bit of time will be needed and positive developments in Argentina plus oil price. All in all my personal opinion is that the movement back up has started, but time will tell.
I mentioned below I take broker ratings as a pure indication as they always move as deemed appropriate, in this respect I have just noticed that the lowest out there from Macquarie was 27p on 15.4.15 (even if thes tock is one of their picks of the year) and now after only 2 weeks (and related price change) it has, as at 28.4.15, gone to 34p.... the other 3 brokers still have targets of 72, 80 and 82. As usual time will tell, but 2015 is an election year in Argentina and things will change.
I had a look at the new corporate presentation available at www.andesenergiaplc.com.ar and find very intersting the Forward Plan towards the end and the Vaca Muerta section confirming that their plan is: Farm-out to major partner to start a massive development ! Incidentally a few pages before there is a clear summary of who are the big players that have recently farmed into Vaca Muerta, namely Petronas, Exxon, Chevron, Shell etc. I wouldn't be surprised if some of these players look at the AEN asset base today on the back of the recent oil price slump, as they all know that this years' low will represent multi year price lows.
IMO I think that this is a sign that interest is building and we will see another spike in the share price soon.
Volume almost double previous daily record trade of 2.2m shame it didnt move the price. Maybe tomorrow. This normally moves a lot on little trade, today being an exception.
The system now shows a buy of 4,000,000 shares at 28, thus could be very interesting. In addition please note that the company confirmed that the most recent corporate presentation is available at www.andesenergiaplc.com.ar (will now look at it)
The Andes webpage does not show any updated broker reports, but I have noticed that GMP Securities seem to indicate an updated buy rating on 26.4.2015 with a target price of 82p and was wondering if anybody had been able to read their report and comment on it. Macquarie indicate a TP of 27 (not sure if this is correct as from previous posts they seem to have AEN as top pick), Westhouse of 80 and RFM of 72 Although I take these targets are pure indications, as they seem to change depending on the share movements, I find it interesting that most of them show a target price which is between the 70s pence highs seen in 2013 and 2012 and the low 80s seen in early 2012 (I don't count the short term spike to 145.during feb 2012). I wouldn't be surprised if we move in that direction over the next few months leading to the autumn elections in Argentina and possible bottoming oil price completed by then. Clearly the election outcome and oil price environment will dictate were we got from these cheap valuations levels and how fast, but from my experience it is best to buy these illiquid shares well in advance of key factors as they can move very quickly, but time will tell if I'm correct.
see Macquarie sales team comment: ANDES ENERGIA - Small cap pick of the year I am more convinced that this is a stock that could generate some very large returns this year given their position in the World Class Vaca Muerta Shale in Argentina. The first thing to point out is that THIS IS NOT ANOTHER POLAND. The Vaca Muerta is the world's third largest shale oil resource and the only producing shale oil outside of the USA - it is primed for development: flat, accessible plentiful water, no animals, vegetation, cities or community issues to meander, intrastructure in place, excellent geology (of course) and it has already been proved up and is producing - and Andes has +6million acres of the stuff which is enormous. Why invest now? Activity is gearing up - 400 wells were drilled between 2011 and 2014 and yet 500 wells are being drilled this year alone. Large Industry players continue to make their move - many were caught sleeping in the US and ended up buying their way into the shale and they don't want to miss out this time. Recent investors include Shell, Petrobras, Total, Exxon, Chevron, Wintershall with more wanting access - however nearly all the land has already been licensed... Political situation is improving - with the 'pro business' government being the front runner to win the elections in Aug this year, arguably never has there been a better time to invest in the country. ASSETS - Andes have 6 licences, 4 discoveries, 2 producing wells in the shale. IMPORTANTLY they have optionality as they hold 2 blocks 100%, 1 block with 40% WI and the other three remaining blocks 20%-27% WI with YPF their partner. Their blocks are surrounded by existing infrastructure, services companies and pipelines and geologically it looks excellent. ECONOMICS - ROI are around 15% today but this is expected to rapidly increase as costs continue to drop hard. The shale is naturally over pressured so opex is only ~$10/bbl. The shale is still in its relative infancy wrt Horizontal drilling, but that is the opportunity that Andes has - economics are good now, so with Horizontal drilling, it is expected to be significantly improved. CAN COSTS FALL? - absolutely. The country has been producing oil for over 100 years so technical knowledge is high. Competition is increasing as more and more Services companies expand their operations, unused equipment and rigs are coming down from the US, timing per well is reducing rapidly and the number of fracs per well is also increasing. NEXT STEPS - Andes has a stable production base of around 2,500 bbl/d (from Conventional production in Colombia and Argentina) to pay for G&A, business development and to provide the company a base with which to grow their operations. Given the scale of the resource that they have, the company plans to enter a series of farm-outs to accelerate the work program. Sure it is small cap but the company will have a valuation materially larger than it is today.
And imo in short time? Closing on all time high of 72p. Rising oil prices has helped?
As people know AEN has a joint venture with YPF (and in torn Soros has invested in YPF) and it's interesting to see what happened yesterday which clearly shown an appetite to invest in YPF and conversly the Vaca Muerta: Argentina's state energy company YPF expanded its planned bond sale to $1.5 billion from $500 million, the company said on Thursday in a letter to local market regulators. Results of the 10-year debt sale are expected to be announced later on Thursday. Reuters' IFR reported the issue was launched at 8.625 percent, down from price talk of 8.75 percent. "There was a lot of demand, about $4 billion, which is why the company decided to widen the offer," a local market source, who asked not to be named, told Reuters. YPF needs to raise cash to invest in its vast but barely tapped Vaca Muerta shale oil and gas formation in order to reverse Argentina's energy sector trade deficit that is pressuring foreign reserves. (Full Story) In February YPF sold $500 million of bonds, a third less than it had offered as many bids were for higher yields than it would accept. Since then investor sentiment has improved as the October presidential election draws closer. The next government is expected to be more market friendly than that of outgoing leader Cristina Fernandez, whose government's sweeping currency and trade controls are cited by economists as factors weighing on the economy. She is barred by law from seeking a third term in October.
If you have a look at my post here from 16 March I'm of the opinion that from a technical perspective the share price has in the past always rallied from the 17p lows. If you couple this with the fundamentals of a solid company, elections in Argentina which could change the landscape, broker ratings with target prices up to 90p and limited share liquidity, plus other reasons unknown to me, I would suspect that this is just the beginning. Have also a look at the posts on Malcy's blog on AEN and see what he mentioned in the past. Bear in mind that Soros has invested a lot in YPF and they are also involved with AEN, so maybe this cheap Vaca Muerta AIM listed play is also attracting other institutional investors or competitors. Let's just sit back and enjoy as I think that things are just starting to get interesting.
Anyone why such a rise today?
Very pleased with the price action today.
For those folks who want to see some other Latin American producers that operate right next to Andes' Colombian properties: Petroamerica Oil (PTA.V in Toronto, PTAXF in the US listing) with four different producing oilfields in Colombia and 4,600 bopd in Q1 2015 currently has Enterprise Value at US$60 million. PTA.V is Debt Free as of April 2015. Zero Debt. According to the latest news, PTA.V pays the CAD notes (US$28 million) this week (19 April) and once these notes are paid, Petroamerica will hold a remaining cash of US$38 Million, including the restricted cash. Excluding the restricted cash, Petroamerica will hold US$27 million CASH after paying the CAD notes. http://www.petroamericaoilcorp.com/main/includes/media/pdf/2015-01-12%20Corporate%20Presentation.pdf http://finance.yahoo.com/news/petroamerica-announces-2014-fourth-quarter-033800557.html
New Argentina http://www.ashmoregroup.com/sites/default/files/article-docs/EV%20Mar%202015%20New%20Argentina%202.pdf
As expected we are moving slowly and nicely upwards from 17-18p; just sit back and enjoy the bounce from these multi year low levels.