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Examin Aminex

tournesol
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Examin Aminex

#22101

Postby tournesol » January 11th, 2017, 12:00 pm

Aminex is drilling an appraisal well and its shares are displaying distinct signs of life. Since late November the share price has risen from 1.75p to 2.35p - an increase of 34%.

Aminex has broken the hearts of many LTBH investors over the years. But it now has commercial gas production in Tanzania with some promising upside from the current appraisal and further exploration. If the appraisal comes good the stock could start redeeming itself.

Having sold out years and years ago at a decent profit I re-entered in a very small way last Autumn. Am now in two minds - take (small scale) profits or average up?

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Re: Examin Aminex

#22778

Postby JonnyT » January 13th, 2017, 10:29 am

Personally I'm sitting on my hands until nearer NT-3 results at least.

NT-2 should be a shoe-in but then again this is Aminex and NT-3 is five times larger BUT much riskier. I think we could see 4p prior to NT-3 results and over 10p with a good result if you are prepared to take on the drill risk.

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Re: Examin Aminex

#23516

Postby tony9i9i9i » January 16th, 2017, 3:06 pm

I'm nearly only 50% down on this one, one of my better oily stocks lol, it would be nice if keeping this dog turns out to be worth while.

T9i.

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Re: Examin Aminex

#23705

Postby thebuffoon » January 17th, 2017, 10:52 am

I liked the 'nearly' Tony!

Buffy

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Re: Examin Aminex

#23866

Postby Rhomboid1 » January 17th, 2017, 6:21 pm

I've a smallish residual position that I've held since forever Embarrassing but I thought I'd sold it in all accounts years ago , I'm holding it for educational purposes and so far it's paid its way :D

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Re: Examin Aminex

#29380

Postby tony9i9i9i » February 6th, 2017, 2:26 pm

This one's bouncing again today, up around 20%, following a drilling report RNS this morning, I've had a couple of Price Monitoring RNS emails as well, I think these occur when volumes are higher than trend, but I've not seen them in the middle of the day before.

Another MF old favourite/rotten dog VOG.l, is also up around 20% today, I haven't seen any news for this.

Perhaps my old dogs will return a meaningful bit of cash after all! Here's hoping.

T9i.

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Re: Examin Aminex

#31158

Postby JonnyT » February 13th, 2017, 10:10 am

Up over 20% today. I managed to sell a few at 5.81p and think this is frothy without material news now. Watch it go above 8p this week now!

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Re: Examin Aminex

#31188

Postby yyuryyub » February 13th, 2017, 11:15 am

So up another c.20% this morning on no new news (that I'm aware of).

What is this?

(1) Froth and speculation
(2) There are people who think they know more about the drill results than we do
(3) Genuine re-rating from a fairly low valuation
(4) Stakebuilding by institutions or a potential buyer
(5) Just a dream and I will wake up back at tuppence a share all too soon

yyuryyub

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Re: Examin Aminex

#31229

Postby pompeygazza » February 13th, 2017, 2:17 pm

no news, you sure?

http://www.aminex-plc.com/

drilling news on the 6th feb, looks very good.

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Re: Examin Aminex

#31250

Postby yyuryyub » February 13th, 2017, 3:27 pm

The RNS for Ntorya-2 was 7am on the 6th Feb, so doesn't count as properly new news for a big rise on Monday 13th. But I suppose it takes a while for interpretation and buy/sell decisions to work through, or perhaps one of the Sunday papers was bullish.

I wonder how Zubair (Ara Petroleum) aim to play this, given their very large holding as "cornerstone investor".

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Re: Examin Aminex

#31299

Postby PeterGray » February 13th, 2017, 6:05 pm

At the moment I'd still put it down to slow response to the RNS. I think it's too early for any testing results to have leaked.

I don't think the market response is all that surprising. AEX has been seen by many as uninvestible for several years. They've (very) slowly been plugging away and getting the ducks lined up, in a very difficult environment. There's been a steady trickle of positive, but not knockout, news over the past few months, and then last week they produced a result that's worthy of notice. And that news is only the start of more newsflow to follow - some of which could prove to be very significant. It also coincides with a period where a number of small oilies are beginning to look interesting to people in a way they haven't to many in recent years.

So while I think some of the response reflects some over-enthusiasm, and even a degree of misinterpretation of the results by some, (enough for me to have taken a small part of the table today, and also as the size of the rise has left me looking overexposed), I also think that the positives in the AEX story, that are real, are beginning to get noticed. How much that extends beyond PIs yet I'm not clear.

I won't be surprised at a pull back, but I also expect the sp to go higher before the N-3 result - and it could go much higher with success there.

Peter

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Re: Examin Aminex

#31359

Postby nigelpm » February 13th, 2017, 10:13 pm

As I mentioned over at the other place £180m buys you a lot of exposure to E&P.

Without material news I suspect this has gone too far.

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Re: Examin Aminex

#32026

Postby tournesol » February 16th, 2017, 12:38 pm

I do not agree that this is excessively ahead of events at all.

I've read a couple of recent(ish) analyst reports and played with their valuation models.

The critical starting assumptions/estimations provided by the analysts before I started playing around were:-

K north unrisked value = $26 million and CoS = 90%

N discovery unrisked = $36 million and CoS = 60%

N updip unrisked = $400 million and CoS = 30%

(all figures rounded)

The other assets are peanuts by comparison with the above.

Stick the above in a spreadsheet and you get a risked valuation = 3.9 pence/share


Increase the CoS of N discovery (ie reflect the success of the appraisal well) to 90% and you get a risked valuation = 4.1 pence/share.

Increase the size of the N discovery to a value of $50 million to reflect the better than expected results and you get a valuation = 4.4 pence per share.

Increase the CoS of the N updip to 40% and you get a valuation = 5.2 pence/share.

Increase the size of the N updip to 500 million and you get a valuation = 6.1 pence/share

Now I'm not saying that the uprated assumptions I mention above are accurate but they do not seem to me to stupidly optimistic at this time. If the recent drilling makes the prospects for the N updip both larger and more probable then the current rerating is a rational response.

I am not technically qualified to express an opinion on whether or not the N updip has been derisked to any extent or whether it now looks bigger than before but it seems to me that that is the view which is driving the share price beyond 4 pence. It might be wrong, but it does not sound unreasonable.

An unreasonable optimist might be looking for a much higher price.

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Re: Examin Aminex

#32028

Postby tournesol » February 16th, 2017, 12:42 pm

Sorry hit send before I'd finished.

If we get a good result at the N updip drilling (ie a move from a CoS = 30% to CoS = 90%) then we hit 9.5 pence and if the N updip comes in bigger/more valuable than expected then it goes beyond 11p

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Re: Examin Aminex

#32032

Postby PeterGray » February 16th, 2017, 12:54 pm

Hi T,

And thanks for the valuations estimates

I do not agree that this is excessively ahead of events at all.

I certainly wouldn't argue it's excessively overvalued. I did feel that at over 5.5 a couple of days ago, after a very steep rise, it was ahead of things and since I was very overweight I trimmed a bit. We're still not back to 5.5p (quite). Nigel obviously feels stronger about valuation, and has apparently sold out. I can understand that view could be taken after such a rapid rerating, though I suspect my investment horizons are rather different to his.

As for the valuation, I'm not sure that yours is very different from the market's at present? I'm with you up to the 5.2p. I'm not sure there's evidence at present to support a significant increase in the N updip size?

Of course, you could reasonably point out that there are plenty of other prospects in Ruvuma if they can get funding to drill them this year, or get another extension - so there's room for plenty of upside on that valuation.

Taking a longer view I see plenty of value still to come here, and I'll be waiting for it. But there clearly remains a real possibility of problems with testing, or even disappointing results - though I'd put that as a lower probability than technical issues. However, either of those would hit the sp short term. A lot of money has moved into AEX in a short time, mostly from people who take a much shorter view on the markets than I do, and some of that could disappear very quickly if the news flow doesn't remain good.

Peter

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Re: Examin Aminex

#32033

Postby PeterGray » February 16th, 2017, 12:57 pm

Posted before reading your addendum.

No argument - if N-3 comes in well the price should be over 10p - with room for upside.

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Re: Examin Aminex

#33133

Postby tournesol » February 20th, 2017, 3:45 pm

Well this is a very quiet discussion, subdued even.

At the start of this thread I observed that AEX had risen from 1.75p in late November to the majestic heights of 2.35p by 11 Jan.

Here we are 5 weeks later and the AEX share price has climbed so vertiginously that holders are now suffering nose bleeds. The share price a minute ago was 5.5p.

That's a rise of 214% since late November and 134% since 11 Jan.

Having bought in at 1.75p ish and having subsequently doubled up twice, I'm more than pleased with the way things are going. I'm showing a profit of 125% overall which is comfortably ahead of my target for my overall portfolio and also ahead of my upside ambition for speculative high risk punts. (Typically I look for an upside potential of 100% to provide enough incentive to take on high risk stocks.)

So where to now? The appraisal well at Ntorya-2 has, we all know, succeeded. It has surpassed pre-drill expectations - thicker payzone and higher pressure than expected.. We will hear before the end of Feb more details of the appraisal results. What this will hopefully tell us is that the Ntorya discovery is bigger and more valuable than previously estimated. It seems unlikely to me that the immediate uplift in asset value will be great enough on its own to justify the present share price. The real question is what are the implications for the imminent drilling of Ntorya-3?

N-3 is designed to test the reservoir at an updip location which might increase the value of the field by an order of magnitude. Do the appraisal results make N-3 more likely to succeed? Do they imply that N-3 might come in bigger than previously expected?

Since I think the current share price is now somewhat ahead of events I have to attribute some of the present share price to an increase in the value being expected at N-3 - ie the market is implicitly increasing the chances of success attributed to N-3 or is increasing the size of the unrisked resource - OR both. The picture should hopefully become somewhat clearer next week when we get a statement about N-2.

My thought is that the analysis of N-2 might provide a catalyst for further share price strength - maybe 8p or even 10p? Actual success at N-3 could see the share price rise very significantly from there.

For these reasons I am holding and awaiting the next announcement when I will rethink my position.

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Re: Examin Aminex

#33177

Postby PeterGray » February 20th, 2017, 5:33 pm

If you find this board a little quiet you could try ADVFN or even LSE :-)

The price is ahead of where I expected it to be prior to drilling, and as I've said I've taken a few off the table as a result. However, I made that guesstimate on the back of several years of the general perception of AEX being that it was an uninvestible money pit. That's a view I haven't shared (in general), and I've taken the opportunity to back up the truck at various offers, and in the market, at low prices over the past few years. In terms of use of funds I would have clearly done better to have followed your approach and been out for most of that time and to have got back in when the funding and timetable for N-2 became clearer - but knowing me I might well have not got back in!

However, in terms of where the price now is, and where it might go, I think the N-2 result has led at least some people to change their perceptions, along with a general shift in sentiment towards O&G. I think that, along with the N-2 result being apparently seen as unexpectedly good by management, explains why my expectations were too low.

The next news is the N-2 well test results. Clearly, if they disappoint (for technical or whatever reasons) we'll see a significant pull back. I'd rate that as fairly unlikely. More likely they will indicate a larger commercial resource than expected at this point, and as you say - that could well push the SP up further. I'd have thought that AEX currently have 75% of at least 250bcf of GIIP in Ruvuma, with significant potential upside, with quite a bit more on success at N-3.

As for the implications for N-3? On the interpretation presented in recent AEX presentations it could be argued that the impact of the N-2 results is small. The suggestion seems to be (so far) that N-3 is targeting 2 targets - a different branch of the fan presumably hit by N-2 and an interval that may have been present at L-1, but not expected at N-2. If true then the positives from N-2 would seem to be further proof of an active petroleum system in Ruvuma, and potentially further confirmation of good quality reservoir rock in the area - which might extend to N-3 (but might not). Not insignificant, but not massive - I think you assumed about a 10% increase in COS in your earlier valuation, which sounds about right.

However, some people clearly think that N-2 has not simply hit the modelled intervals. I'm not at all sure I agree, but it's possible that the test results could suggest a different outcome, which could impact on N-3. I'd be inclined to discount that at present. But if the N-2 test results are good and the changes in sentiment I mentioned above are taken into account I could easily see further rises to 10p or more prior to the results of N-3 becoming available. I'm assuming at the moment that N-3 will be drilled asap, as planned - though clearly that could be influenced by the N-2 test results. As you say good success at N-3 would push it up potentially significantly further.

I will, almost, certainly wait out the result of N-3 - but with AEX close to 30% of my portfolio at present I can see a fair bit of further topslicing being needed if it plays out anything like as I hope.

Peter

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Re: Examin Aminex

#33208

Postby Rhomboid1 » February 20th, 2017, 6:44 pm

Fascinating discussion, Peter you are a braver man than I with 30% in AEX, but then again I've got 18% in HUR so I might be in no position to comment. My concern here would surround country risk, Tanzania is perceived as low risk by African standards but I remember the same being said re Syria & Gulfsands .

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Re: Examin Aminex

#33290

Postby tournesol » February 20th, 2017, 11:33 pm

Hi Peter

30%?

Gosh!

Golly Gosh!

My AEX holding is just 3% of my portfolio. Which allows me to be pretty relaxed about holding it. Think I'd be less relaxed if it were 10 times the size.

T


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