fut us summary & valuation...

FUT currently has a 38% share in the Tuscaloosa project in the US. The project is a re-entry of a well Shell historically drilled, discovered hydrocarbons, plugged and subsequently abandoned when the US gas market was underdeveloped in those days.

The initial well has a re-entry cost of $915,000 to target a zone potentially bearing 28bcf. If hydrocarbons are re-confirmed an overall Tuscaloosa reservoir of 1.26TCF of gas equivalent will be targeted in subsequent exploratory drilling of 10-15 wells. The confirmation of hydrocarbons will open up the entire field making the first well very important for the company.

What does this potentially mean for shareholders?

Share Price: 0.8c Cash: $7m Asset value: $16m Market Cap: $23m

Shares on issue: 2.8b

Potential share price value if this first well comes in for FUT in November and December 2009:

Potential share price value if the field comes in for FUT:

Potential of Tuscaloosa Reservoir

FUT Ownership: 50% of 1.26tcf

at USD $4.70 /mcf (gas in ground (Henry Hub 19 Oct 2009))

gives a value of USD $3.4 billion or AUD $1.21 per FUT share


Why the opportunity exists

The Tuscaloosa Trend was discovered in 1975 by Chevron. It has produced over 2.8 TCF of natural gas and 120 million barrels of condensate over the past 32 years (3.5tcfe). The Atocha project is located five miles north of BP's Port Hudson Field which is the best producing field in the trend. The Tuscaloosa sands can be tested up dip to the Brian No.1 well drilled by Shell in 1980. Petro physical analysis by several analysts has concluded that this well contains over 125 feet of calculated bypassed pay sand. Gas on the mud log also supports this, along with possibly indicating a gas/water contact. With the benefit of hindsight some 30 years later, a number of experts have indicated that if this well log were reproduced today, you would perforate and complete the well. The development strategy is to re-enter the Brian well No.1 well, test the bypassed pay sand and if successful, continue the ultimate development of the field.