for amadeus supporters, page-4

Hi jocam9

the oil production figures were indeed down on the previous quarter, and some explaination of why would have been welcome. But AMU's recent drilling success and the hefty number of wells they have planned for the balance of 2005 should still see total production for FY2004-05 up substantially on last year.

On the gas front, it is early days yet. And while AMU has a long way to go before it can match PSA's impressive daily production, at least AMU is moving in the right direction. If the results of their Lavaca County drilling to date are any indication (4 completions from 5 wells, with the latest gas well - Byczynski #1 looking like it could deliver multi-million cubic feet a day flows), their gas production will ramp up very quickly.

On the biodiesel front, I think you will find the technology ARF/AMU have used for their plants is hardly untried. Energea have used it in a number of plants. The one closest to AMU is a 40,000 tonne per annum plant in Spain, but Energea has also used it in others, sucha as a 250,000 tonne plant in the UK. (See http://www.energea.at/en_info.html).

The Energea technology offers major capital and operating cost advantages over other technology. In addition it runs on a continuous feed basis rather than a batch feed, which also offers major operating advantages. Together with the 100% guarantee offered by Energea that their plant will work , I would say ARF/AMU have picked the best of the best for their business. They have also tied up an exclusive licence agreement for Australia and the immediate region I believe.

Finally, your comment that biodiesel has not been sold here in Australia is just not true. There has been a small biodiesel plant in Adelaide for some years (run by the Farmers Federation I believe) which has been selling fuel locally.

More generally, biodiesel consumption in Europe is in the billions of litres per annum. And don't forget ARF/AMU has already signed an offtake agreement with a European trading house to take the entire production of their first 3 biodiesel plants (at AMU's discretion) - such is the level of demand in Europe!

What's more, that offtake is at prices above those used in the feasibility study - so if ARF/AMU avail themselves of that market, plant profitability will be above initial forecasts. However, the company has stated that it reckons it can get even higher prices here in Australia. That fall-back export market though, provides a very handy bargaining chip for the company in negotiating supply and price offtakes here in Oz.

All up, I think your scepticism on the value of AMU's biodiesel business is misplaced. I do however agree with your view that your opinion (or mine) is irrelevant and it is what the market thinks that will count in the end.

But in the end, I reckon the value of the biodiesel business will be clear and it will simply overwhelm the market's reluctance to accept biodiesel as a profitable venture. Time will tell.