Finally some informed and reasoned debate about a company that...

Finally some informed and reasoned debate about a company that deserves it…

Cash flow is fine… significant issues for co. and its in market backers – read dealers/analysts etc have included the following which largely have not been about the bit in the ground success rate but about things management should be controlling .

I.e.

ARW and the alleged wayward MD, who supposedly spent $16M on the US ops when the local ops weren’t even producing to spec, or to min QA req’s. (Using contaminated Tallow stuffed local ops for what 3 months?.. how did this happen?)
AMU not only spun out ARW but had/has board representation wrt ARW so should have been overseeing this “misdirection” of resources and priorities over the last 2 years not at the end. Fact is Butcher is now gone and the board/new management keep pointing to the “new” stringent attention to cost and ops control… and it took 2 years..?

Point is with ARW: fairly likely with a "green" fed election coming up, Adel producing on spec and with a reducing cost base (less canola etc), significant off take agreements being signed on an ongoing basis, new management, QA nailed and prospective plants in perhaps QLD (JV with TPI), NZ and perhaps even the US.. ARW may well become the jewel it was supposed to be. And one D Butcher insists he’s not a seller… finally some good news.

As far as AMU:

Rigs: AMU has allegedly repeatedly allowed it’s US operators to remove rigs that were supposedly running back to back drilling programs. Filed success has not been a problem, keeping rigs has. This purely and simply comes back to management.

D&A: Profit largely has been impacted by Amortisation, in part because not enough 2 and 3P haven’t been converted/included in 1P figures. MORE drilling would resolve this. Once again - keep the rigs, keep drilling, reduce D&A.
Out of this the P&L would look a hell of a lot more like it should be for the free cash flow all the existing wells are throwing off.

Significantly increased costs: A significant amount of these costs seemed to be about taking on more staff, feeding the US operators etc.. and yet actual drilling was til 6 weeks ago.. very, very slow.

Slow connections: Took the Co. 6 months to connect up the Hoffer well, which is a beauty, and why.. Supposedly because of 1 land owner. What good is a big find if you don’t connect it up?

Workovers: What happened to all the polymer workovers, how often has the weather interrupted either drilling and or workovers… and yet costs seem to keep escalating.. why?

There’s plenty more to debate about this Company, but in short… when AMU finally fires it will be something to watch… provided someone doesn’t take it out for the 20yr+ fields it owns. Remember in the US oil/gas inventories are only getting harder and more expensive to find. So this Co. may well be one to hold for years not months.