AMU continues to deliver the goods - but still the market...

AMU continues to deliver the goods - but still the market appears to either not understand their business or doesn't believe their prospects.

The news released today should be cause enough for investors to revisit this stock and reappraise the sense of buying in.

Why might this be so? For starters, lets take today’s announcements about the Lago well and proposed Red Creek step-outs.

First, electric log evaluations of the Fort #21 well on the Lago Prospect - in which AMU have an 11.25% interest - show 24 feet of net gas sands with what appears to be excellent porosity. Additionally, strong gas shows were intersected deeper in the well, and these are to be tested at a later date. Fracturing and production testing are planned from July 12 following completion.

Don't you just thrill to those words 'production testing' and 'following completion'! To me it conjures up visions of lots of gas being sold through the local Henry Hub at those satisfyingly high prices. Surely this is set to add some significant dollars to AMU's already solid revenue stream. And what's more, wells in this area have a very rewarding (ie long) life. Check out the Texas Rail Road Commission website for more info, but I am sure a 20 year life would not be out of the question. Spells to me plenty of dollars reaching into the future and a nice high NPV to be sure.

The announcement's comment that 'Further step-out wells may be drilled to develop this significant discovery' also points to a bit of excitement being present in the AMU camp. No doubt the more conservative will wait and see what the fracturing and production testing will deliver. But a highly positive outcome seems likely.

(to be continued)