Take a good look at Aurelian Oil & Gas. The company was founded in December 2002, and is focused on the re-emerging Central and Eastern European oil and gas markets. (The oldest producing oil province in the world).
Current projects span the region from Poland to Bulgaria, with production in Romania, a deep appraisal well drilled on a large structure in Poland in March 2007 to be developed with a further horizontal well to be drilled in 2010, together with exciting exploration prospects including projects in four countries, Romania (4 blocks), Slovakia (3 blocks), Bulgaria (2 blocks) and Poland (14 blocks). Aurelian operate all of these projects with the exception of Bulgaria.
The share-price tanked on Friday the 16th last week on news that Aurelian’s’ stabilised flow testing on Trzek-3 MFHW hadn’t gone as planned the gas recovery from the Trzek-3 appraisal well was lower than anticipated and could be between 4bcf-8bcf rather than the 16bcf-20bcf that the Company was expecting. The well is also producing higher levels of water than expected. On August 9th Arbuthnot Securities came out with a target price of 84p. Sam Wahab issued an upbeat note after the firm updated the market on its operations in Poland – on the Bieszczady and Siekierki fields. “With the recent uncertainty in the market, we feel Aurelian’s current price represents a strong buying opportunity and continue coverage with a “buy” recommendation and an 84p target,” he said. At the time of Arbuthnot’s note Aurelian were trading at 40.25p. (current price: 17.25 pence).
So whats changed here? Yes the Trzek3 is disappointing but that’s not the end of Trzek3 or the company! Far from it. Aurelian are currently re-assessing Trzek3 and more importantly they are still FLOW-TESTING. It’s my understanding that the water influx could have effected, and most probably has, gas flow. Aurelian are not a one trick pony. They have assets right across Central Europe and the company are very well-funded with a Board of Directors that are well thought of within their respective areas. They have traded over 90p in the last 12 months. The current share-price looks and feels as though it’s about to bounce back over the coming weeks.
Put them on your watchlist as a recovery play. If they manage to sort out the water at Trzek3 then they’ll rocket back. Indeed any kind of half-decent production at Trzek will almost certainly enhance their recovery. 40/50p Looks fair value. If they bring Trzek3 back on track then Arbuthnot’s 84p looks cheap!