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Advantage Oil & Gas Ltd. Message Board

  • cardj02 cardj02 Dec 14, 2007 10:31 PM Flag

    AAV now a growth stock


    Positives in the report
    1. Increasing production 2007 averaged 29,346 boe/d (2008 range of 32,000 � 34,000 boe/d)
    2. Higher range of costs estimates lowered was $12.50 - $13.50 (2008 range $12.50 - $13.30)
    3. Royalty range lowered was 19% to 20% (2008 range 17% - 19%)
    4. 38% of the portfolio is now oil compared to a range of 31% to 34% in 2006.
    5. Potential for large reserve increases.
    6. Increased reinvestment in the business. Growth creates value not dividends, so in the long run this will be better for more stock appreciation.
    7. Tax pool
    Negatives in the report
    1. Dividend lowered from .15 to .12 cents per months; however, still at a healthy 14% yield
    Positive market conditions
    1. In third quarter natural gas averaged $6.35 and oil was $68.51 on their financial statements. I am forecasting this average will be $7 for NG and $85 for oil in Q1 of 2008.
    2. Company is on target to have $522 million is revenue for 2007.
    3. Based on my average prices for NG and oil with their production forecast I predict quarterly revenue will increase to $167.8 (28%) to 178.3 (36.3%) million (671.2 to 713.2 million per year). This is based on their 62% NG/38% oil ratio.

    The increasing reserves/production along with some now saying natural gas is going to take off in 2008 makes this stock even more of a buyout candidate. Remember a buyer isn�t buying the stock for a divided, but for the potential for increasing production which creates more shareholder value.
    Any price declines on Monday will be an opportunity to buy more because the stock has come well off its highs of $15.11 (Div. yield then 11%)
    In my opinion AAV is acting like it is shifting to a growth company.

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