I see that AMU's latest weekly drilling report indicated their Hoffer #1 well is delivering initial flow rates of between 2 to 4 million cubic feet of gas a day. AMU have a 50% working interest in this one (which I estimate would deliever a net revenue interest of about 40%).
On my rough figuring, a flow rate of 2 mmcfgd would deliver an operating surplus to the company of about A$1.5 million every 12 months at current Henry Hub gas prices of around US$6 mcfg. Crank in your own view of what the well's production will stabilise at, and where you think local gas prices might rise to, and that number could be much higher. However you look at it though, this well is another little cash cow for AMU. The company made no mention of any associated condensate or oil production, but I would be suprised if there was none. (I suspect that it is merely too early to have determined this from the testing done to date).
But the good news doesn't stop there. As AMU noted, success at Hoffer "has significantly upgraded several other prospects in the immediate area", adding further to the inherent value of AMU.
In addition, today's drill report noted that the Morgans Bluff #17 well has reached target depth and logging has commenced. For this oil development well, that suggests to me that there are hydrocarbons there and the logging is a precursor to completion as a producer. (although this is probably more my wishful thinking at this stage, and next week's drill report should confirm any success). AMU has a 70% working interest in this well, so if it turns out to be a producer it will deliver a tidy addition to their attributable production and revenue/profit.
All up, an excellent result that appears to be relative unappreciated by the market. AMU just keeps on building intrinsic value.
Add to My Watchlist
What is My Watchlist?