My guess for the relative lack of interest is AMU is such a small cap company it is just not on the radar of the big boys. As well, there was an unfortunate prediction a few years back now (late 90s) that AMU would soon grow to a 3000 bopd operation. That didn't happen at the time and may have permanently jaundiced some investors.
Regarding what the company might be doing to rectify its currently low share price, I think the management's attitude is 'lets grow the company and let the financials speak for themselves'. They certainly appear to have done that - and along the way have been very responsible in not chasing growth at all cost by buying overpriced oil leases.
Their business plan to date has been to bid sensibly for producing leases, get in and clean the wells up, improve the productivity of the existing operations and bank the resultant cash or pay off debt. So far they have done a good job of that and have grown the company from modest beginnings. The asset valuation from their bankers is testament to canny buying (and that valuation doesn't account for the later Red Creek acquisition).
The foray into Red Creek - an exploration play - was a departure from that model, but they got a very exciting (and productive based on the first two wells) prospect for a song.
Having said that, the management of AMU has in the past expressed its disappointed that the share price is at such a discount to its apparent net asset backing and relative to the cash that their operations are throwing off.
I think it was at the last AGM that shareholder voted their agreement to a share buy-back scheme. So that is an option Amadeus now has in hand if it choses to apply some of the bucket loads of cash their operations are pulling in to that end. However, I suspect it would be a more sensible use of funds to keep doing what they are doing - ie buying additional production at sensible prices and poking low cost wells into generally proven formations to add to their production base.
My own opinion is that AMU will just keep on increasing production (especially with Red Creek) and increasing earnings to the point that eventually the market will recognise the great little earner it is. On current production and sales it certainly looks seriously undervalued (mind you I'm biased as I have an interest in the company).
On top of that, if and when their biodiesel project takes off, this company will be raking in some serious dosh.
On current information it looks to me like a reasonable investment, but low liquidity means this is not the playground for day traders.
Good luck to all those that invest in Amadeus.
AMU Price at posting:
0.0¢ Sentiment: None Disclosure: Held
