Austin Exploration Expectations

Austin Exploration was chosen for a chart review after they announced a significant flow of crude oil in Colorado USA. This post looks at some technical observations of general interest. These comments are not intended to provide investment advice.

Company Profile

Austin Exploration Limited (AKK) is an oil and gas company focused on the acquisition, exploration, development and production of onshore oil in the United States and Australia.AKK has producing oil and gas wells in Colorado, Texas, Mississippi and Kentucky.

Southern Business Unit: The unit consists of two major projects being: (i) Birch Eagle Ford Project, the project is located in Burleson Count, Texas. AKK holds a 30% working interest (WI) in Birch prospect with an area of approx.5000 acres post farm-out agreements; and 27.6% WI in Yolanda Austin Chalk well. The project’s primary targets are Eagle Ford Shale and Austin Chalk with the secondary targets of Taylor Sands, Buda and Georgetown formations. The oil resource estimates for Birch prospect are 34MMBbl along with 76BSCF gas at P50. (ii)Mississippi project, the project is located in Adams County, Mississippi. AKK holds a 50% WI in the project with a revenue interest of 37.5%. The 2P net oil reserve within the project area is 27,834BBL. The total well production from Southern Business unit in FY2013 was 21,849BOE.

Colorado Business Unit: The key project within this unit is the Pathfinder Project,located in Fremont County, Colorado.AKK has an 85% WI with 65%NRI over the 11,560 acres property. The primary targets are Niobrara Shale & Pierre Shale formations. The reserve estimates to date are 21.76MMBbl and 24.52BSCF gas atP50. The total Oil and gas Produced was 11,981BOE during theFY2013.

Kentucky Business Unit: The business unit is multiple, shallow well program in Henderson County, Kentucky.AKK has a 50% JV interest of Kentucky Exploration LLC which is operating 4 oil fields, 20 leases and approx. 3000 acres. The Company’s primary targets are Jackson, Cyprus andMcCloskey formations with secondary targets being Palestine, Fort Payne, New Albany Shale andHardensburg.AKK has experienced production rates of25Bbl per day and set theultimate goal of40Bbl per day by the end of 2014.

Divestment: As of October 2013, AKK completed formal agreements with Tellus to sell the 50% interest of PEL 105 project which is located in 60km north of Moomba is SA. AKK will have a 14.9% ownership of Tellus.

 

Technical considerations

A potential recovery stock
A potential recovery stock.This is a weekly chart of AKK for the past two years. It features Multiple Moving Averages over candle-stick depiction of the price action. It shows a support level at 1 cent, and a resistance level at 3 cents. Also shown are Fibonacci retracement levels. Observations:
  • The share price has been in decline for the past two and a half years, from 3.9 cents to 0.9 cents.
  • The most recent cross-over of the MMA’s was in November/ December 2012 at about 2.5 cents.
  • The momentum of the decline has flattened in the past 6 months.
  • The last candlestick almost formed a bullish engulfing pattern on the previous candle.
  • The short-term averages have converged and have just started to point upwards, and to cross-over.
  • The longer term averages are becoming closer, but are still slanting downwards a little with no cross-overs.

Opinion

Having found support, there appears to be technical evidence suggestive of an emerging trend reversal. (2)

If wishing to open a long position, a preferred entry could be when the short-term averages have completed their cross-overs, are starting to diverge again, and have exceeded the present high of intra-day trading at 1.3 cents.

A reasonable stop/loss position could be set at 0.9 cents, or just under.

Milestone targets to be attained are at 1.6 cents, and then at 2 cents.

 



Categories: Chart Analyses, Technical Analysis

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