production test adds $m+ to profit

AMU announced today the result of production testing on the second of its successful deep gas wells on its Halletsville South prospect - and what a bottler it is.

Each well should produce in the range of 1.5-2.0 million cubic feet of gas per day and, on current gas prices, AMU expects this to add between US$1.2-$1.8 million to their bottom line on an annualised basis!!

When you consider that these two wells represent 2 of 2 successes on this prospect, and AMU have identified sufficient targets to have flagged an estimated 12 to 15 new wells to drill on Halletsville South, the likely production and profit potential is mouth-watering.

On top of this juicy news they also announced that profit results for FY2003-04 are above expectations.

With their oil and gas production expanding in leaps and bounds, likely reserve upgrades that will surely deliver 1P and 2P reserves with a current market value easily in excess of US75m (A$105m) and a biodiesel business that must now be valued at a minimum of A$50+m, and a profit projection that is looking better all the time (see my previous posts), AMU is seriously undervalued at current prices.

How much longer before this is recognised and the price moves closer to fair value - not for long is my call.