Can Australis Oil & Gas Replicate Aurora Success Story after IPO?
The company has a 50% interest in an onshore acreage in the USA and prospective oil and gas exploration concession rights in western Portugal.
The Australis IPO has raised $30m and the copany listed on the ASX with the ticker code ATS.ASX on 25th July 2016. What is the medium-term outlook for this Paert-based exploration company?
Australis Oil and Gas Limited is an Australian company focused on the development of oil and gas exploration assets. The company has a 50% interest in an onshore acreage in the USA and prospective oil and gas exploration concession rights in western Portugal. The company aims to build a portfolio of oil and gas assets via strategic acquisitions.
Australis has secured exploration assets and aims to build a high quality portfolio via countercyclical acquisitions. Drivers are appraisal upside and successful, cost effective stimulation of existing and future assets. Management has a strong track record in developing and realising value from oil and gas projects after selling Aurora Oil and Gas for $2.6bn in 2011. The company is well funded with $35m in cash.
However, Australis is reliant on external capital to fund exploration activities and there is no guarantee planned exploration programs will successfully delineate resources or reserves. Oil prices have deteriorated significantly since 2014 and further contractions would negatively impact future earnings and the value of Australis’ assets.
Australis offers speculative exposure to the oil and gas industry. While exploration risks are elevated, management pursues a countercyclical acquisition strategy at the bottom end of the industry cycle, which could provide value to shareholders if successful executed.
Company: Australis Oil & Gas Ltd
ASX Code: ATS
Shares on Offer: 120m
Listing Price: $0.25
Market Capitalisation: $85.4m
Listing Date: July 25
This article was first published in The Australian.
Author: Simon Herrmann
Aug 02, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.