the next bow or pes??, page-12

Hi EL

We once again share an interest in a company, COI.

My first foray into CSG did not end well. I bought some BOW in the middle of 2008 at an average of 40 cents and watched it struggle and go down, eventually I sold out at a loss. I have no understanding (except that there is money to be made in this area) on CSG, and bought because Stockanalysis said it was then the cheapest CSG story and had upside potential of $2. I sold out after viewing the September 2008 quarter report which showed they were eating up funds very quickly and would at the rate they going only had perhsps 6 or so months left (I think it was only $4-7 million). I was concerned about the need to spend massive amounts to prove up a reserve and the dilution that would have (in addtion to issues of the global financial crises).

I did not keep up with the evolving BOW story and was not aware of the new capital raising. What has amazed me is how BOW could get all that gas attributed to it with what to me seems like minimal expenditure and proving up of reserves. Had I known it was that simple I would have bought more and kept them.

Anyway, I am now trying to understand the CSG industry, which is why I asked so many questions.

If there are any websites that expalin the economics of the industry and how it is valued I would appreciate any asistance from you (or anyone reading this). I did find one presentation which set out some figures but I could not understand them.

I do not know the conversion factor between cubic feet of gass and petajoules. Or what factor is used to convert gas into barrels of oil equivlent. Any advice on this would be appreciated.

Stockanalysis has generally been cautious about CSG, taking the view there is a bit of a bubble in this industry. One key message that comes through from them is that not all the projects will get up. So it is essential to align the company you invest in with the likely winner/s. Peter Strachan also said that there is likely to be an over-supply in the gas market in the Asia/Pacific region, given all the projects in Australia and elsewhere. This view was today repeated in an article in the Business Australian.

I am still pretty negative about the sharemarket and have stayed mostly in cash, but am eyeing some possibilities with CSG being one of them. My main investments are in smaller goldies, a very few KZL, some small oil/gas plays and now a spec paltinum (NKP).

I have recently got some ESG and WCL. I have no idea how to value them. I bought ESG because it has plenty of cash and someone from the gas industy said (privately) they would be worth about $1.50. I bought WCL because of Stockanalysis view that it was the cheapest CSG story. Not very scientific is it?

Congratualtions on holding both AOE and BOW. Stockanalysis has become quite positive on AOE following its latest postive drilling result, but suggested that at 91 cents one should be wary of buying BOW. I guess that was before yesterday's announcement from BOW. I can not get myself to buy into BOW as it is just too hot, and if the markets turned badly it could plummet.

As regards COI, Stockanalysis had it as a spec buy at 28 cents on 25 March. The new management is quite impressive, given what they achieved in their past corporate lives. They got 55% of the new COI shares for $8 million cash (not sure what the value of the NZ tenements is). Maybe some of them are interested in offloading some of their new COI shares and are bidding up the share price now to give it a higher value while the CSG story is hot. In this way they could recoup their money and still have a large slice of COI. I really have no idea if there is any substance to this, it is just a distant possibility. What do you think?

What do you think of the quality and location of COI's QLD tenements, given your detailed study of the area. Is there some simple way to get to understand the pros and cons of the various CSG tenements in QLD of the various players? Is there a newsletter specialising in this field.

Good luck with your investments.

I have lots of questions. Feel free to disregard them.

loki