AMU released its Q3 report today, with a mixed bag of news.The...

AMU released its Q3 report today, with a mixed bag of news.

The good news is that quarterly sales are up (US$3.6m from the Dec 1/4ly of US$3.2m), AMU is unhedged in the face of high oil and gas prices, and gas production has kicking up strongly.

Not so good news is that while oil production year on year to 31 March 2005 - net to AMU - is up almost 22,000 barrels, Q3 production is actually down on the same period last year (71,420 barrels as against 73,068).

However, the reported production for oil and gas does not include a number of recent successes (Wilson #25, Wilson #26, Gerdes #1, Byczynski and Butschek). Allowing for production from these wells (especially Byczynski which is currently producing 3.9mmcfgd and 200 bopd) would probably bring Q3 oil production up to or above the previous year, and will add substantially to gas production.

I guess the extent to which AMU's recent string of oil and gas successes are transforming its oil and gas production will only be apparent in the next quarterly.

I would expect before then that AMU's scheduled drilling on Red Creek, Raccoon Bend and Lavaca County will have delivered more of the same success rate it has enjoyed to date. All of which should see oil and gas production for FY2004-05 reach levels significantly above FY2003-04. With oil and gas prices likely to hand around current levels at least until then, it looks like second half operating profits will be even better than the record first half profits.