At these levels AMU certainly does look excellent value.
Production test results on the second of their sucessful deep gas wells on the Halletsville South prospect are due any day now. On the basis of the flow rate of the first successful gas well, AMU is looking at annual revenues of just over US$1 million for each of these (or around A$1.5m). Plenty of profit potential there!
AMU have also announced a 10-well drilling program for Raccoon Bend - the first of 5 back to back wells being due to spud within the next couple of weeks. AMU expects this drill program to double the field's current production of 550 bopd. With their 50% net revenue interest in this field, their share of that extra production would mean a very tidy addition of some 275 bopd (looked at another way this represents a 25+% increase in daily production). At current nice high WTI prices and current exchange rate, this would add well over A$400,000 a month to revenue, and a big chunk of that would have to be profit.
More gas wells are planned for Halletsville South (previously AMU have stated they were going to drill 10-15 wells I think). Chances of more success to add to their two from two to date must be high.
And on top of their profitable oil and gas business they have recently announced they have been awarded a A$7.15 million grant to help build their first biodiesel plant at Adelaide. Given this should deliver to AMU annual profits of A$5 million or more, and it is the first of a planned 5 plants, there is plenty of upside from this direction too.
In my view, AMU is looking excellent buying at these levels.
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