AMU 0.00% 21.0¢ amadeus energy limited

another oil producer

  1. 396 Posts.
    AMU announced on Monday 21st that the step-out well Rash Barrett No.2 (in which AMU have a 60% working interest) was successful and is being completed for production. That production is expected to start next week!

    Based on their previous Red Creek and Rash Barrett successes, I would expect AMU's share of production to be in the 30 to 50 bopd range (some 11,000 to 18,250 barrels per annum).

    That 30 to 50 bopd doesn't sound like much against the big boy's multi-thousand bopd flow rates, but lets put it into perspective. Using the assumptions of WTI oil at US$30 a barrel and an exchange rate of 0.65, it translates to the equivalent of annual revenues of some A$500,000 to A$840,000.

    Lets not forget too that this is per well. And that AMU is only just starting to drive their Red Creek asset.

    This latest success makes 4 out of 4 on the exciting Red Creek prospect, and is a ringing endorsement of the AMU team's capabilities in identifying the sweet spots on their ground there.

    Another step-out well in the Rash Barrett field was due to spud 21 July (Oklahoma time), so should be on the way down already. Is 5 from 5 on the cards?

    The nice thing about these Red Creek wells - aside from the fact that they keep hitting commercial oil - is that they are so shallow (TD on the last was 2600 feet). This means relatively low costs and short payback times when oil is found. And on top of that, these wells have very long lives - in the order of 20 years. That means the profits from the A$500,000 to A$840,000 revenue per annum for each well will keep swellling AMU's bank account for decades!

    And more good cheer for AMU shareholders should arrive any day soon when the company announces the production rate for the gas producer brought in a week or so ago.

    All this extra oil and gas is making the latest production update listed on the AMU website (and showing very impressive increases to end June 2003) look a bit conservative already.

    With ample scope for lots more Red Creek wells and potential step-outs from the latest gas bonanza, AMU looks set for a very profitable future.

    Still to come is the emerging bio-diesels story too. More on that down the track.

    (Yes I hold and am biased).

 
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