From previuos post on 27/08;Some observations:- Accelerating...

From previuos post on 27/08;

Some observations:
- Accelerating production (July production at 740 boe/d) (expecting 800+ for August)
- Unhedged against USD (revenue generated in USD and converted back to AUD)
- Part of US energy independence
- WTI Oil at $106
- Lending facility currently being reviewed by Board of Directors (hopefully finalised by September)
- Target of 1,000 boe/d by EOY
- $6M in cash
- De-risked opportunity
- Potential take-over target

Month Average BOE/day
January 469
February 434
March 543
April 630
May 560
Jun 622
July 740

Now, the next growth phase...what I woud like to see

- August Production at 865 (tick)
- September ??? (expecting around 930-950)
- 1,000 boe/d averaged in October (???)

Forecast;

Want to see a $20M lending facility. What to do with the money?

Increase drilling rigs to 3.
Rig 1 (current)
Rig 2 (debt funded)
Rig 3 (debt funded)

Rig 1 = 20 wells drilled in 1 yr. At average of 50boe/d. = producing 1,000boe/d. = breaking even. Able to achieve this growth in 1 yr (2 wells per month x 12mths = 24 wells)(I understand there is a time lag of 4 mths between drilling and producing)

This would mean

Rig 2 & 3 could be funded to drill about 33 wells (20M / 600K) and by that time they would be generating about 1,650boe/d using an average of 50boe/d and would have been generating substantial revenue.

I'm expecting Rig 1 to be breaking even at present, if not adding revenue in October, which will only add to the revenue stream for AOK going forward.

I think increase in acreage is something AOK can look at (see Dis post on purchasing RFE land. Good match) but shouldn't be their top priority.

I don't think we should be participating in anymore horizontals with Range. They gave us a great initial increase in production, but not the sustainable LT averages the verticals wells are producing. Steady production is key. Forget about Kansas and focus on Snake River project.

My guess is we have about $3-3.5M in cash and that won't last very long.

I would like to see AOK producing 3,000boe/d by Dec 2014. It's a big goal, but I think with an aggressive growth strategy, its def possible.

Its time to leverage this stock and go for gold!

(please correct me on the numbers if need be)