SkitzoBe careful - this post of yours is just factually...

Skitzo

Be careful - this post of yours is just factually incorrect. Amadeus hedging is a cap-collar of $55 to $85. So they are protected below $55 but it certainly isn't much protection above the current oil price. Earnings (excluding write-back of hedging loss) are going to be belted by the fall in oil and gas prices.

I sold out completely into the buyback at 43c, crystallising a signficant loss for a few reasons:

1. I think there is much better value in the market (both Australia and internationally)
2. The buyback has artificially supported the share price
3. If AMU stops buying back shares the price will free fall and liquidity will dry up
4. Cash should be used to pay down debt, not buy back shares in this climate
5. They are spreading their eggs in too many baskets - the latest farm in deal tipped me over the edge
6. Earnings will be massively impacted by the oil price, excluding writing back the previous hedging loss
7. Conversion of earnings into cash has been weak and not fully explained in the accounts.
8. Recent exploration has been mixed. They are spending too much money in high risk Louisiana exploration plays for my liking. This is high stakes high risk territory and should not be the focus for a company the size of AMU.

Don't get me wrong, I still like AMU and follow closely, but the risk reward tradeoff given the market and the price of other companies with oil at $50 and not looking like it will outperform in the near term a major concern for me.

I will look to buy back in once I see how their borrowing base has been recalculated, how they intend to roll the current debt and once markets stabilise and oil recovers. I don't need to get the lowest price, happy for someone else to do that, but in my opinion AMU will see 25c before it sees 50c.

Just my opinion
Monty