Riding a strong oil price tailwind amid rising oil and gas production in the US, Perth-based Amadeus Energy Ltd is powering towards a record year.
Riding a strong oil price tailwind amid rising oil and gas production in the US, Perth-based Amadeus Energy Ltd is powering towards a record year.
The push was given further impetus this week when drilling of the company’s 30 per cent held Halletsville play in Texas hit a zone that could contain between four and six billion cubic feet of gas and 500,000 barrels of oil.
Last year’s production has already been exceeded in the three quarters to the end of March this year, despite excessive demand on drill rigs slowing budgeted exploration and expansion.
And it looks like the result could be further positively affected by Amadeus’ first joint venture well in the Grapeland field in Texas, which has the potential to contain up to 1.4 million barrels of oil.
The company is already sitting on an after-tax half-year profit up 38 per cent to $6.6 million, and the March 2006 quarter results indicate its share of gas production at around a billion cubic feet and close to 500,000 barrels of oil for the full year.
This follows Amadeus doubling gas production from 150,000 million cubic feet (Mcf) in 2004 to 300,000Mcf last year, with oil production up from 256,000 barrels to 283,000 in the same period from its Texas, southern Oklahoma and Kansas assets.
The 243-hectare Grapeland field was discovered in 1947 and rapidly developed with a total of 29 wells.
Amadeus’ latest drilling report says that, due to extremely poor production practices, internal lawsuits between its two previous partners, low past oil prices and lack of a gas market, the field was prematurely abandoned. Amadeus farmed into Grapeland in August last year.
Independent engineering studies have indicated the field had 12 million barrels of oil in place and, utilising a conservative 30 per cent recovery factor, should have produced about 3.6 million barrels.
Instead it only produced about 2.2 million barrels before being abandoned, leaving about 1.4 million barrels for recovery, the report says.
Amadeus has a 53.5 per cent interest in the first well, Pennington-2, which has reached just over 6,000 feet, intersected seven feet of net pay and is scheduled to be production tested before the end of the month.
Amadeus executive director Caroline Bentley told WA Business News the joint venture with local company Bomar Oil and Gas Inc planned a further 10 wells in the Grapeland field, depending on Pennington-2’s outcome.
Amadeus has remaining total US reserves of 14.3 million barrels and 9.8 billion cubic feet of gas.
The company also has a 27.6 per cent per cent stake in biofuels spin-off Australian Renewable Fuels Ltd, a $5 million investment now worth more than $60 million at AFR’s current share price near $2, up from $1.26 in early January.
The company recently opened its first 45 million-litres-a-year biodiesel plant at Largs Bay in South Australia, with a similar facility at Picton near Bunbury to be commissioned this month.
ARF has also announced its intention to build another plant in Brisbane and have five operating in Australia by the end of 2007 producing 220mL/year, almost 70 per cent of the federal government’s 350mL/year bio fuels target for 2010.
Each plant is expected to cost between $15 million and $25 million, and some may be considered for joint ventures.
ARF will also establish operations overseas, with a North American subsidiary that will be both a producer and supplier of biodiesel and biodiesel technology.
The subsidiary’s initial focus will be to establish a US base, then carry out feasibility studies for two large scale, probably 275mL/year, biodiesel plants.
In Europe, ARF has agreed to buy 25 per cent in Carbon Cycle Management AG to establish a 105mL/year biodiesel plant at a Danube port in Austria, to be operational in 2007.
CCM has completed a feasibility study and a project debt package for 87 per cent of the expected $36 million capital cost has been secured. The cash outlay for ARF’s stake in CCM will come from its recently completed $27 million placement.
Amadeus was established 10 years ago and listed a year later when oil was between $US10 and $12 a barrel. Its share price is currently around $1.30 from 95 cents in March.
