3-4 bagger, page-11

Thanks bitzer - you're right, very whippy - settle in for the roller coaster.

My view on the whole PNG energy thesis is that, some in-country issues aside, it is going to be a big theme for 2014/15. Firstly, China is moving from a capital formation phase to a capital utilisation phase = consumption of energy and food, other economies not showing signs of slowing down energy consumption (Japan nuclear restarts a risk, but that's got its own issues as we know). Energy is the regional resources market where I never hear anyone call into question the demand fundamentals. Its one of the few sectors with big growth potential for 2014. PNG gas is conventional, and near to market, so that limits risk from US supply. So, I believe there is an assured export market for the gas.

I think that, when PNG LNG comes online in 2H14/1H15, and again, some issues aside with another potential budget blow out or delay (but in a 20-30 year project that's irrelevant), investor interest will focus in on PNG because the companies involved (eg OSH, STO) will become cash cows (typical LNG cash flow profile). Focus will then shift to expansion (PNG LNG T3, T4), and other projects (eg Interoil, HZN(?)). Focus will then shift onto anyone with ground, and even better, resources, in PNG.

The preliminary work by the smaller co's like CMT, KPL, NGE, HZN (and there are a few private co's) in finding and defining resources, is setting up the fundamentals, and PNG LNG T1-T2 start and expansion prospects, in my view will trigger the rush/investor hype.

On another point, I see Talisman part of the recently announced Pandora JV - that's got to be encouraging for CMT, HZN and KPL given Talisman has been rationalising assets last year or so under a new CEO.....clearly identified PNG as a region of growth during a time of fiscal responsibility

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/new-talisman-ceo-targets-asset-sales/article4532184/