the future

Looking at the announcements over the past couple of days it is easy to see why they do not want to pay a dividend at the moment: they are spending every cent of cash flow on exploration. I can live with that given they are being so successful.

It is also easy to get an initial feel for what cash flow for the 6 months to June 2008 might be:

* Current price of oil is well above the average achieved (approx 35% higher). If we assume a 20% average increase - which is still less than US$90 per barrel, the we already have another $5 million in cash (assuming no exchange rate change);
* If Hermes #1 is similar to Hoffer #1 and is in production 4 months that will be another $1 million
* The White Eagle drilling has been successful. And other successes would not have impacted the full half to Dec 2007. Assume a mere $1 million from all this.

Adding the above to the $15 million "base case" from 1st half we are looking at MINIMUM cash flow of $22 million. And this would be sustainable. Annualise it to $44 million and easy to see how cheap AMU is.

A very very rough calculation, and probably conservative, but shows that even at $1 this stock would be trading at less than 5 times cash flow.

I wonder whether that clicked with someone yesterday, or what triggered the buying. Was definitely someone with a few dollars interested in the stock as I assume, rightly or wrongly, that the multiple bids for 100k shares, and the purchase on close, are all the same person.

MJS