I got lateral and asked some of the guys on the EPG forum what...

I got lateral and asked some of the guys on the EPG forum what they thought of the permits and the FUT JV - got a really good reply from ZADIG (knows his geology pretty well) I agree with his LT views on upside...


re: gardanne, st etienne, tuscany csms (ZADIG)
Reply to: #4551737 from Buy1hold Views: 20
Posted: 30/09/09 18:17 Stock Price (at time of posting): 19c Sentiment: None Disclosure: No Stock Held From: 83.156.xxx.xxx


All,

The prospects are not totally desperate. EPG let this permits go for several reasons:

- It has not the finances nor the personel to properly develop them. The proof lies in the fact that no drilling has been done either in Gardanne or in St Etienne (Tuscany is another matter, admin. is still in process).

- They are secondary targets compared to Gazonor, Lorraine or Jura.

- Last, but not least, EPG found no partner for the other permits...

The potential question is secondary in the JV process. Incredible as it may seem EPG would have JV'ed Gazonor if they had found a partner.

FUT is a late comer and got good conditions with EPG because it was desperate to find a JV for the Gardanne permit that was being renewed with the french authorities and it was vital for EPG's credibility to show a partner.

GARDANNE: formerly mined area is very populated and highly residential. The mines were not very gassy and the coal (low grade lignite) doesn't contain more then 5 m3/t coal. The mines are mostly flooded... So no CMM.

Most part of the permit anyway has not been mined. IMO there is some gas potential, but it is very speculative.
The coal beds are not very thick (<4 m) and not numerous. The rock is moreless porous limestone and the fuvelian is capped by clayey formation. The fuvelian formation could be gassy and porous enough to have captured the maturation gas of the lignite (could be 10-50 time the remaining gas in lignite). If FUT has some brainn this hypothesis will be tested at first drilling. If proved it can be a very interesting play, if not I do not believe in CBM there, too deep, too thin, too little adsorbed gas...

ST ETIENNE: The mines were very dangerous because very gassy but they are flooded. The work hypothesis there was that degassing pockets could be trapped in the mine works due to local specific mining process. Needless to say that it is equivalent to looking for a needle in a strawball unless you have very precise mineplans and/or incredible geophysiscs.

I had a look at the FUT forum, some enthusiams seem premature.
As an investor I would not buy FUT unless cheap but would keep it until the results of the drilling in Gardanne's play are known. FUT's people are very positive and although they have not much experience they seem at least to have estimated the developping costs correctly. This is a good point for them, EPG has not always been so wise.

As Buy1hold wrote, nothing will happen before 2010.

I must add that a research permit, such as held by EPG doesn't allow to commercialize the gas. So the JV can not be profitable before 2013 best case (time to apply and get a production licence if commercial gas is proved).

Hope you feel better...

Cheers,
Z