Totally agree with you.It is the right time to buy Key. George Soros the famous investor lived by the adage "discount the obvious,bet on the uncertainty"KEY is at bare bones,totally discounted with still $3.5million in the bank.
You mention csg and I agree with you.At the start of the csg boom I had a little company called Roma Petroleum,in outback Australia.I bought them at 5c,and they from memory may have put down 1 well but had no reserves but their real estate was sought after and they were taken over 9 months later for 20c.
The main inhibitor to the price of all Canning Basin stocks is the remoteness and lack of infrastructure.If KEY did strike the 5 million barrel reservoir in Cyrene#1,the best the JV could do is to truck it to Perth,whereas if infrastructure was in place closeby, and would have achieved optimal cost efficiencies.This would have dramatically changed the market reaction on an oil flow announcement.
Another way of looking at the effect of remoteness and infrastructure is to imagine the whole Canning Basin being plucked up and plonked into the USA,probably in most areas but Texes would be the best.This would become perhaps the greatest show on earth.Buru would become huge major and even KEY would probably worth a$1 or more.
Further quote from the Sunday Times article,"If the proposed gas hub is built at James Price Point(JPP),the value of Perth based explorers BRU and NSE( KEY would go with them) will soar.Experts say JPP would be logical as an export hub for onshore gas producers.Why pipe the gas to the Pilbara when there"s a hub on your doorstep. Premier Colin Barnett acknowleged as much....His vision is for the gas to be processed and exported from the precinct alongside the Woodside Pet led Joint venture.Locating 2 LNG projects at JPP would dramatically improve the economics for everyone "said the premier.
Later in the article Eric from BRU said"If somebody wants to take us over and then negotiate with the Government about going to JPP thats up to them....We have a very clear plan to take it down south."
My Comments.
The total infrastructure situation is completely uncertain and is holding back the development of the Canning and hence everyones share price as there is no clear path to success through cost savings and orderly development. The Woodside JV developing the deepwater option says would like to set up a floating platform to export,saying that it could radically cut costs,Premier Barnett says it will cost jobs.Eric from BRU is going his own way too, which potentially could be a big waste of money if the JPP option could be cut in costs by a big international player.
If a takeover of BRU is going to happen the player/s will be waiting till after the WA state election on the 9 March where Premier Barnett is the favourite and they need to know he will be elected as he wants the JPP option.Any big player will be able to win big concessions from the Government something that smaller companies cant do.
For KEY a dramatic rise in share price or BRU and the fixing of the uncertainty over development options would be very positive
KEY Price at posting:
1.3¢ Sentiment: LT Buy Disclosure: Held
(20min delay)
