latest well 350' of gas zones so far!

Yesterday’s weekly drill report offered a tantalising glimpse into what a bonanza the deep gas prospect in Lavaca County might deliver to the company.

Last week’s report announced a 30’ gas filled sand at 9500’ with 16% porosity, but that apparently was only the entrée. This latest report notes three further gas zones at 10,407’-10,455’ (48’), at 10,660’-10,900’ (240’), and at 10,980’-10,010’ (30’). These latest three zones comprise a whopping 318’ of gas filled sands, for an all up total of nigh on 350’!

What’s more, the primary objective Matula sand exhibited extremely strong shows and as a result well control measures have been implemented. That smacks to me of sensible caution to ensure the operators control what will turn out to be a very high (and very commercial) gas flow

The well is still drilling ahead (cautiously in view of the extremely strong gas shows encountered so far) to target depth at 11,300’. So maybe there are even more gas filled sands to tap into!

Logging is due to begin at the end of this week, so AMU shareholders might get a big serving of Christmas cheer before too long.

AMU’s last two successful wells in this area are producing at somewhere between 1.5 to 2.0 mmcfg a day (with associated production of about 35 bopd) – enough to deliver AMU A$750,000 in profit from each for its 25% working interest in these wells.

But those wells intersected gas filled sands that were meagre in comparison to those reported in the Byczynski #1 well. For example, Scheinemann South #1 encountered 84’ of gross pay and 48’ of net with over 18% porosity. What then are the implications for production of reported gas zones that look to be over four times the size of those in Scheinemann #1.

A quick scry of some of the web sites of other companies operating in this neck of the woods will show some of the wells targeting the Midcox formation can deliver very hefty flows indeed – North Star for example has one pumping out around 4 mmcfg a day. If Byczynski produced at that magnitude, it could easily drop around A$2 million in profits to AMU each year – and these wells typically produce for decades.

Let me leave you with one snippet. The latest annual report from AMU notes that in addition to the two successful wells now producing from the Halletsville South in Lavaca County, that ground offers the prospect of 12 to 15 further production wells. If each of these were only as profitable as the first two, this patch of dirt alone could soon be generating annual profits for AMU of around A$7.5 million, and doing so for decades to come.

Don’t tell me this company’s price has limited upside – I just don’t believe it.