AMU currently has a proportion of its gas production hedged at $8 and oil at $52/b (both US$) in a cap and collar arrangement. There had been some talk that they might hedge oil at $70/barrel (US$) but as far as I’m aware this was not done. Gas is trading in the $7.50-$8 range anyway so the checks from the bank will have slowed. Oil returns will be higher due to the fact that they receive a premium over an above the publicized day to day wti price.
A check of the amu vs oil price chart shows remarkably just how aligned the two are.. which is a little misleading allowing for app 50% proceeds now from gas production which is now entering the winter upswing.
Buyback is by and large on hold. Info from weekly drilling minimal but month on month quarter on quarter production and reserves continue to climb.
The sp has trended flat over the last 12 months, partly due to oil price coming back recently, also the lack of a rig for one of their big gas wildcats (now supposedly in the new year.. these are company makers by any stretch of the imagination) AND:
ARW.
Til ARW is fixed amu will be weighted down. Hopefully John Lilywhite is the man to kill off the OS expansion ambitions and get the 2 Australian facilities operating to spec continuously. Lilywhite is apparently making the right noises. Time will tell.
Expect some action if this is to happen.
If oil/gas move up as the US winter comes in, amu get a rig for their huge gas wildcats and ARW is refloated then amu will more obviously reflect it’s true value.
It must be the only PRODUCING oiler trading well under npv let alone not at a substantial premium.
Still good companies make money even when things fall against them.. expect if AMU trades at $1 for too long with its growing US reserves and ARW fixed one way or another then it will get taken out. Long life fields make it even more attractive.
My opinion only
DYOR.
AMU Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
