AMU - Amadeus Energy

[sfx]

The Speculator (David Haselhurst) has been doing a paper portfolio for over 30 years in The Bulletin magazine (mostly penny hopefuls he calls them). Monday is an internet update, and Wednesday the publication. He was covering Amadeus.

Ah that guy - thanks for the clarification. I thought Tradeking was referring to someone else on this forum.

I used to follow the column during the DotCom boom/bust. And now its the Commodities boom... His trading typifies things for me - you lose some and you win some. But in my case thus far, lose more often than winning...

So is this share a good buy at the current SP being 0.68cents? Whats everyone's thoughts over their new drilling target/prospect, considering their strike rate and track record etc?

 

[sfx]

I'll eat my shorts now. From my last post its nearly up 10cents. Not quite but nearly there. There's been a lot of interest as of late. Anyone know anything?!

 

[Muschu]

Price is now 50c. Tim Treadgold [who also writes for the Eureka Report] gave AMU quite a wrap in this morning's West Australian. In part:
"Disregarding its history, the outlook for Amadeus is remarkable when compared with its share price."
Treadgold is, imo, generally a very informed commentator.
Any thoughts out there?

 

[pointr]

We've held some for a year or two. they owe us around $0.80. They seem to do well with the drillbit, prices for their product are high, they have been looking for ways to realise value for their shareholders, etc, etc. Most of the ASX releases have sounded good to me yet the price goes nowhere? They had a lot of debt on the books but have reduced some of it. Mr Treadgold may have identified another winner I hope. AMU's turn is well overdue. We've made some good reurns from "tips/stories" in the financial press but sometimes it can take years for the good news to happen

 

[exgeo]

Correspondence with the company secretary regarding oil & gas hedging:
.....................................................................

Dear James,

The current status of our hedge contracts is as follows:

Gas hedges: None in place at the moment, all gas sales are at spot prices

Oil hedges: As of 31 May 2008 the oil hedge with a $90/BO cap expired.

Between 1 June to 31 Dec 2008 we have a hedge in place at 30,000 BO/month for between $55 - $85.30

Then for the 12 months starting 1 Jan 2009 the hedge in place is 24,000 BO/month for between $55 - $84.30.

We take all sales at spot prices and these proceeds are banked, then on the 23rd of the following month, the differential between the average spot month price and the caps above on the hedged barrels will be paid to the bank.

At the time we took out these hedges, oil prices were around $60/BO and nobody knew prices would hit the record highs we are currently experiencing and unfortunately these hedges are eating into our otherwise very strong cashflows in this period of high prices.

Kind regards,

CAROLINE L. BENTLEY
Exec Director/Company Secretary

 

[grace]

Pretty good quarterly out today. I have seen valuations for this one from 80cents to over a 94cents.

Shaw Stockbroking issued a forecast on June 5 predicting full year net profit of $17.8 mill for 07/08 (up $3.9 mill). ie earnings of 9.8c per shares.

At todays price of 55c, is on a low 5.7 times earnings!

HIGHLIGHTS
Oil and gas sales revenue up 23% on the previous quarter, to a record $US16.5 million.
Average oil price received up 20% on the previous quarter to $US108.36/BO.
Average gas price received up 27% on the previous quarter to $US11.06/MCF.
Oil production up 16% on the previous quarter to 123,164 Barrels.
Gas production up 7% on the previous quarter to 467,177 MCF.
Three exploration wells cased for production during the quarter.
Chief Operating Officer, Mr Mitchell Wells appointed on 29 April 2008.

Looking pretty cheap at the moment based on these figures.

 

[grace]

Here is The Speculators write up today on Amadeus. Figures for the year just gone should be good, as well as for 08/09 should oil prices stay firm.

A greatly undervalued oil stock

America’s Wells Fargo Bank must regard the Australian-listed Amadeus Energy (AMU.AX


AMADEUS ENERGY13 August,200813/08/2008 14:11 Sydney, Australia.
Price Change % Change
0.480 +0.015 +3.230%

Company overview
Real-time quote
AMU.AX , 0.480, +0.015, +3.230%) as one of its best paying customers.

From record revenues from operations spread over Texas, Kansas, Oklahoma and Louisiana, the company has been delighting Wells Fargo with hefty premiums from its price-hedged production, while, at the same time, still maintaining high returns to itself.

Yet Australian investors remain unimpressed, with Amadeus shares falling from a 12-month high of 90.5c to a recent low of 44c and this week trading at 46c. More puzzling, the company announced initial results from its latest well on Monday ”” the Wolf Cowling No 2 ”” with 237ft of gross oil and gas pay over four zones between 10,200ft and a bottom hole depth of 11,375ft.

“All four zones appear to have well developed porosity and permeability,” the company reported “with high hydrocarbon saturations, and each zone appears to have potential to support commercial production on an individual basis.”

Production testing begins next week with expectations that a multi-well productive trend could be present in which Amadeus has interests ranging from 27.75 percent to 44 percent.

Amadeus earlier announced record revenues in the June quarter of $US16.5 million (previous June quarter $US11.2m) from an average realised oil price of $US108.36 a barrel (previously $US59.24) and an average gas price of $US11.06/1000 cub ft ($US7.77).

Amadeus has a cap and collar hedging arrangement with its banker. For the six months to December, 2008, 180,000 barrels of production are guaranteed a minimum of $US55/barrel and a cap price of $85.30/barrel. So Wells Fargo (which advanced Amadeus a $US40 million draw-down facility for development two years ago) trousers the windfall premium above that.

The good news is that although the hedge covers about 73 percent of oil production through to December, in the 2009 calendar year it will reduce to about 60 percent of rising production with the balance of high oil price premiums accruing to Amadeus.

We added Amadeus Energy to the “Magazine Only” portfolio in July at 59c. On June 30, the company placed 27 million shares to Perth’s Wyllie Group Pty Ltd and associates at 55c taking issued capital 208.42 million shares. The canny management of that group doesn’t throw money away on reckless investments ”” and their new shares cannot be traded for they are escrowed until mid-2009.

Amadeus’s newest executive can see the share price is grossly undervalued. On August 8 the company awarded one million options exercisable at 90c by August, 2012, as part of a remuneration package for Ms Betty Dieter, newly-appointed president of the US subsidiary, Amadeus Petroleum Inc. Ms Dieter was formerly director of acquisitions for Fidelity Exploration and Production Co., a subsidiary of the New York-listed MDU Resources Group Inc (NYSE: MDU). In the past 8 years she has overseen $US1 billion in acquisitions.

 

[Trader Paul]

Hi folks,

AMU ... already off its recent lows and we are
expecting a positive cycle over the next couple
of trading days. to continue the rally ...

happy days

paul



=====

 

[pointr]

AMU is still crawling along. It has several positives coming, in my view for investors with more than a one month time frame.
1) It is commencing a buyback of 10% of its shares funded from production.
2) by late next year it will have closed out its hedge position which at present is a significant negative.
3) Its investment in ARW which has been written down to zero may have some value after all with ARW's recent biodeisel contract with FMG
4) Although constantly varying the Aus$, oil price, hedge equation has moved in its favour.
On its website there are quite a few articles of interest, the url below is worth a read, even for the first few paragraphs for the authors view of financial advisors if nothing else
http://www.amadeusenergy.com/media/33005/080503west_treadgold.pdf

 

[pointr]

Another HOT thread. Yesterday AMU released the results of corporate navel gazing, feels it is significantly undervalued in comparison to its reserve position. Its quite reasonable assumption in regards to its SP/reserves position is that at current prices it is better off buying back its shares and reducing debt than exploring for hydrocarbons. A guaranteed way of increasing reserves per share and value perhaps. I'm wondering how many other Energy companies of all sizes are doing similar, reducing exploration and development expenditure in light of the current prices being paid for product. If enough of them are doing this it should ensure eventually a supply driven price rise that will last much longer than the last market driven rise.

 

[Knobby22]

Another HOT thread. Yesterday AMU released the results of corporate navel gazing, feels it is significantly undervalued in comparison to its reserve position. Its quite reasonable assumption in regards to its SP/reserves position is that at current prices it is better off buying back its shares and reducing debt than exploring for hydrocarbons. A guaranteed way of increasing reserves per share and value perhaps. I'm wondering how many other Energy companies of all sizes are doing similar, reducing exploration and development expenditure in light of the current prices being paid for product. If enough of them are doing this it should ensure eventually a supply driven price rise that will last much longer than the last market driven rise.

Good points, I agree. They are severely out of favour at the moment. I can't see any downside from here. The falling $US will help, as will the lowering of debt and hopefully another buyback. The real trouble with this company for Australian investors is that we can't receive franked dividends.

 

[pointr]

Previous reply said "The problem with this one is no franked dividends". I'd be perfectly satisfied with massive capital gains. One of the constant issues about this company was its level of debt, they have reduced it and are reducing it further.

 

[Knobby22]

I don't know if there is anyone else is like me still stupidly owning some shares in this company.

It looks like we are going to get severely diluted just as its fortunes are changing. If you read the large shareholder who is very angry who believes the shares are worth 80c you can see its pretty serious. I rarely vote but have voted no to both resolutions today. Everyone else should also.
If we are lucky they might throw us some crumbs.

Now I know why the shares have been in holding pattern. Mongrels.

 

[pointr]

Ah well Knobby22, it appears from todays announcement that we shareholders are being offerred some 'crumbs' via a SPP at 0.26 / share. It would also appear from the board reshuffling and CVC getting a seat that there has been an outbreak of 'peace'. I'm well and truly in the red with AMU, but live in hope. Hopefully the new board and other changes will do some good. Things are never going to be too bright until US gas prices get up from the current lows. Can't anyone make LPG / LNG in the US and export it. There appears to be heaps of gas in the US when you take conventional,tight and shale bed into account. With their gathering infrastructure in place you would think export would be possible unless the Govt prohibits this as un-american

 

[Knobby22]

Hi pointr

Yes, I am much happier. Good to see CVC succeed. They actually rang me up to ensure I vote, which I did.

I am sure they will now be getting a cut of the raisings but at least we get the crumbs of the SPP. Now I feel that we are only getting mildly screwed, about the same as a bank shareholder.

What makes me particularly happy is the Geoffrey Towner will now only be an executive director. Someone told me, after the event, that the Towner family are well known for dubious behavior. Also it is good that that company that has been acting like a leach taking 15% of all the finds will be taken over and removed.

The shares are worth, even with the dilution, at least 40c. The company is now more transparent. The directors now should have the same aims of getting value for all shareholders. Gas is only going to get more scarce especially as the USA recovers.

In my view there is only one direction the shares will go from here. I am going to take up the SPP, which since my shareholding is now only worth $3000 which will have a big influence on my holding.

I have had a great six months with BAU, WPL, CFU, OKN, MOC and to a lesser extent CSL and ORG performing well. This share has been the sore thumb in my portfolio. I try to buy on value and this company should be worth a lot more. Let us see what happens.

 

[Wishful_thinking]

Some facts:
1) certainty (cost cutting, seeking sales / merger, etc...) now outweighs the uncertainty (fancing with exploration: who knows what's underthere). Wishful thinking: CVC would keep them on this pathway as they must have been in red on this one and keen to get into black;

2) cap raise: although existing shareholders do not get much, but the transaction now looks more like a 'money for money' one (existing shareholders give money to new ones). AMU itself does not lose much, although no money was made out of this cap raise, apart from bad publicity;

3) Mar ~ Jun upleg seems to be induced by that much quoted expert review and now the options suggested in the review more likely into action

4) Market cap now in a more interesting range

What is the market still waiting for ?

 

[Jikx]

What is the market still waiting for ?

Anyone have any insight as to the volatlity in the past 6 months? Is it's production crashing? Too much debt?

 

[Knucle]

AMU

This stock has recovered quickly to the lower prices that it was trading for during the capital raising. They have a bit part of their operation in the USA and may be benefiting a lot from the higher oil price in US dollar terms. I wish I had bought more of them about a week ago when shares were at 24cents. I wonder how high they will go. There are a lot more buyers than sellers.

 

[Knobby22]

Re: AMU

This stock has recovered quickly to the lower prices that it was trading for during the capital raising. They have a bit part of their operation in the USA and may be benefiting a lot from the higher oil price in US dollar terms. I wish I had bought more of them about a week ago when shares were at 24cents. I wonder how high they will go. There are a lot more buyers than sellers.

Always easy in hindsight,Knuckle. But you showed vision.
I didn't take up the SPP but bought more shares at 25c, when it dipped. Still not at break even unfortunately. Wish I had bought more

 

[Jikx]

Re: AMU

I didn't take up the SPP but bought more shares at 25c, when it dipped. Still not at break even unfortunately. Wish I had bought more

Buyers lament.. I knew I was onto a good thing, just didn't have the courage to put substantial $$ on the table. Though I wonder, why no ASX speeding ticket?