solid interim result

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Amadeus Energy – Solid interim result
19/05/2006 By: egoli

Amadeus Energy Limited (AMU) reported a solid 1H result, up strongly year-on-year. EBITDA for the half jumped 112% over the previous corresponding period to $13.2 million while NPAT rose 38% to $6.6 million, up from $4.7 million in December 2004.

Most items were in line apart from a higher than expected amortisation rate incurred as a result of recent acquisitions.

HY06 sales rose 147% to $US15.3 million $21.1 million due to a 59% jump in net oil sales (217mbbs) and a 345% jump in gas sales (0.4Bcf).

Importantly production and revenue is net of all government and landowner royalty payments.

EBITDA jumped 112% to $13.2 million, NPAT rose 38% to $6.6 million, but stripping out a $2.2 million profit in on sell down of Australian Renewable Fuels saw profit up 156%.

Operating cash flow more than doubled to a healthy $8.6 million, which excluded $3 million in liftings included in the profit.

As at 31 December the Balance Sheet had $13.7 million cash and $100.1 million debt for net debt to net debt plus equity of 52%.

The latest independent engineering (bank) valuation for the group was US$196 million (A$269 million) versus the June 2005 value of US$81 million.

Three acquisitions totalling US$81 million plus a US$34 million jump in underlying value net of depletion were behind the jump.

Tight labour and rig availability throughout the US E&P industry has delayed some drill programs.

Addressing this situation AMU and its joint venture partners have put in place an 18 well back-to-back program on its Lavacca County Leases targeting a mixture of lower risk step out and new field targets.

1H Result Comment

The half was favourably impacted by successful exploration from Raco0n Bend, Red Bluff and Lavacca properties, impact of acquisitions (Shackleford and Ford East from 1st July and the much larger Kansas properties from 1st October), favourable prices for both oil and gas with current oil in addition to AMU receiving a US$1.5/bbl premium to WTI price and a slight decrease in the A$.

Offsetting this was a one-off employee benefit charge of $0.5m (AIFRS accounting), provision for deferred taxation of $1.6 million versus zero tax the previous period, and a high amortisation charge of $4 million up from $1.3 million.

A key take out from the 1H result was the latest independent engineering (bank) valuation for the group of A$269 million, which compares with the June 2005 value of A$107 million.

On a corporate level AMU has net debt of A$87 million thus independent valuation for Oil & Gas less debt places a value under AMU oil and gas properties of 98cps.

During the period AMU spent US$81 million (funded with A$23 million in equity the remainder debt) acquiring properties, thus the bank’s underlying value appears to have jumped by US$34 million net of depletion.

March Quarter

Oil production rose 91% over the previous corresponding period to 137,000/bbls while gas production jumped to 0.3bcf.

This sees year to date production of 351kbbls oil and 0.72Bcf of gas.

At current rates this should see AMU on target to achieve 490kbls & 1.15Bcf for FY06 thereby continuing the strong growth trend.

Exploration

AMU exploration can be typically broken up into two categories.

The first is typically “bread and butter” wells which are either production enhancement, development/step out, or shallow low cost targets and known collectively in the industry as stripper wells.

AMU typically drills around 30 a year. This will pick up in 2007 once the Kansas properties are fully reviewed as the intention is to enhance Kansas production via lower cost polymer treatment.