AMU 0.00% 21.0¢ amadeus energy limited

key takeouts

  1. 3,849 Posts.
    Above discussion all very valid points but what exactly are the KEY takeouts here?

    -Reserves (in the ground) growing strongly
    -Gas production continues to grow strongly in a high margin locale
    -Oil production continues to grow (albeit more slowly allowing for increased (higher margin) gas in the production mix)

    -POO North of $100US.
    -2007 OIL Ave: 74.19 Current approaching $100 (yes I know about the cap and collar!)
    -2007 Gas Ave: $7.34 Current $9.30
    -LONG TERM POO being factored in by market/Analysts and Co's (read prospective aquirers): $80-$90US/bbl – this is TWICE what it was just 2 years ago
    -Increased growth/wildcat spend
    -Increased developmental spend
    -Well success rate 70-80%.

    NOTE: Therefore the value of these assets WILL continue to grow as long as the Co. continues to increase replacement spend in the current mix of wildcat to developmental

    Another words everything going in the right direction as far as growing oil/gas in the ground IN THE US, HELD IN LONG TERM FIELDS.

    Otherwise:
    -Revenue growing strongly
    -Free cashflow growing strongly
    -ARW now written down totally (besides it still having inherent capital value of what, say $50M)
    -Debt reducing, Interest cover almost 5 times

    So strip out ARW, and factor in ongoing reduction in D&A, interest and the only other factor is the mark to market on Hedging etc. Which is largely irrelevant in light of the above

    So with the P1/P2 statement due this should see the D&A come down further again and the book value of the assets significantly increase.

    THIS IS THE KEY. If you continue to grow reserves in the ground the value of the Co even if only on a corporate basis must increase.

    DYOR
 
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