Ailing Aed Recruits Macquarie Bank In Search For Funding
Sydney Morning Herald
Friday January 11, 2008
THE struggling oil producer AED Oil, which owns 100 per cent of the Puffin field off Western Australia, may bring in a joint-venture partner to help raise cash.
The company has appointed Macquarie Bank to conduct a strategic review following approaches by "a number of Australian and international parties" interested in its assets. It is understood it is not within Macquarie's mandate to consider offers for the entire company.The Puffin north-east field, initially expected to produce up to 30,000 barrels a day, has produced only 6000 to 10,000 barrels a day over the past month. AED yesterday said an independent expert had found drilling and completion issues were likely to have hampered production. The company expects an expensive drilling program will lift production to a peak of 20,000 barrels a day by the middle of the year. AED, headed by the former investment banker David Dix, has been criticised by some investors for its lack of operating experience and a lack of oversight, given it controls 100 per cent of its project in an industry known for joint ventures. It is unclear whether AED will consider relinquishing the operatorship of Puffin north-east or its development projects at Puffin south-west and the Talbot field as part of the Macquarie review.AED said the lower-than-expected cashflows from Puffin north-east had forced it to look for additional sources of funding. Macquarie has not yet completed its assessment of the amount of funding needed. AED shares, which reached a record high of $11.40 when it started production in October, closed 25c higher at $4.45 yesterday.The share price plunge in the past few months, as oil prices have soared to new records, has put it in the spotlight for potential predators, a situation the company now is scrambling to avoid. Until mid-October, AED was one of the top-performing stocks of 2007. But it was punished by its failure to deliver on promised production schedules. Its sudden reversal of fortune then put it in line to earn the mantle of the worst-performing stock for 2007. But it was overtaken in the final weeks of the year by the Centro Properties meltdown.
© 2008 Sydney Morning Herald
