UPDATE 1-AED Oil eyeing acquisition opportunities

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PERTH, Nov 19 (Reuters) - Australia's AED Oil Ltd (AED.AX), which sold a majority stake of its oil fields to China's Sinopec Group this year, is looking for acquisitions to diversify its portfolio, the firm said on Wednesday.

AED said it had a strong balance sheet, holding about A$300 million ($195 million) in cash, and was looking for acquisitions in Australia and the region.

"We're in the position, I think, to join with others that may have short-term funding needs and short-term income opportunities," AED Chairman David Dix told reporters during a conference call.

AED, whose key assets are the Puffin and Talbot oil fields in the Timor Sea, said it had identified a string of exploration prospects with substantial upside.

Its Puffin-11 well found a 25-metre oil column and testing of the well has indicated an initial flow rate potential of about 10,000 barrels per day (bpd). The extent and size of the discovery are still being investigated, the firm said.

AED became an investor favourite last year after estimating up to 100 million barrels of recoverable oil at Puffin and Talbot, up from an earlier estimate of 40 million barrels.

But its stock later plummeted from a record A$11.40 as technical problems slashed output to just 6,000-10,000 bpd, well short of its initial forecast of 30,000 bpd, prompting the firm to sell a 60 percent stake in the two oil fields to Hong Kong-listed Sinopec Corp (0386.HK) for A$600 million.

The stock last traded at A$1.05. ($1=A$1.54) (Reporting by Fayen Wong, Editing by Mark Bendeich)