AMU's investor presentation (released with its announcement late last week) notes their attributable reserves have increased almost 50% and are now just over 13 million barrels of oil.
Last year Shaws put out an excellent analysis of the company which valued AMU’s then 1P reserves at US10 bblo and its 2P reserves at US$8. Those sums were based on the value of observed market transactions in the US for 1 & 2P reserves, rather than based on conservative bank valuations.
But the world demand-supply equation has moved on significantly since then and today industry pundits are now looking to a longer term average oil price at a good US$5.00 to $8.00 a barrel higher than when Shaws did that report.
So what does this mean for the value of reserves AMU is sitting on?
Just using the estimates of reserve values put forward by Shaws last year would mean AMU’s 2.76mmbblo of 1P reserves are worth about US$27 million (which is what their bank has in fact valued them at) and their 10.3mmbblo of 2P reserves are worth about US$82 million. That gives a hefty total value for their reserves of US$109 million or A$153 million – pretty slick for a company with a market cap of about A$60 million (or around A$75 million if all the outstanding options are included).
However, if we use a still conservative but slightly higher price than that used by Shaws last year to reflect the new view of future long term prices, this number gets impressively bigger.
You can plug in your own view of what that adjusted number should be, but using, say, US$12 for 1P and $10 for 2P the total racks up to US$32 million and US$101 million respectively for a total of US$133 million or A$187 million!
And don’t forget this is all before AMU embarks on this financial year’s drilling program which should see more reserves added to its bank and production from existing wells allows it to convert more reserves into the proven producing category.
AMU Price at posting:
0.0¢ Sentiment: None Disclosure: Held
