share buy back announced, page-76

For FY07 average oil price received was US$93.63 and gas was $9.08. People seem to forget the spike to c. US$145 was very short lived. Average exchange rate for FY07 was $0.87.

Now lets say oil averages US$85 for FY08 and gas US$7 and the average exchange rate is 0.70. If production stays constant (and hopefully it will increase a little), then A$ revenue would be $74m or 10% ABOVE FY2007. Now I know costs are also in US$, but from a margin perspective AMU should still be in line or ahead of FY07.

$32m hedge cost will reverse out completely, but this is largely irrelevant.

I am not at all surprised by the share price fall given current market conditions. Solid US peers have fallen even more. [Check out WRES if you are interested in another bargain].

However, my view is AMU is very cheap for anyone who is patient, and we just need to ride this period out. Agree the buyback is supporting the share price, but in my view the company is buying back the shares at a bargain. Wyllie, Towner etc have strong incentive to realise shareholder value over time, but to expect a better share price performance in this environment is naive. Still hurts though.

Just my opinion
Monty