sleThank you for commenting on COI.The Australian CSG scene...

sle

Thank you for commenting on COI.

The Australian CSG scene seems to me a bit like what Woodside's prospects were back in the early/mid 1980s. I bought 2000 WPL shares at 90 cents because I understood there must be a big resource there but it would be years to its development. Sold them for around $1.90 2-3 years later as I needed the cash.

If what Santos' CEO said on ABC's Inside Business is correct, the present lower gas prices may result the QLD CSG export projects unviable for a while. Some major companies (such as Shell) want to lock up reserves on the cheap now and are planning to book them as boe in their reserve base. When things pick up again and they can get long term contracts the deposits will be developed. This could take some time, because there may be an over-suppply of gas in the Asia/Pacific region in the next few years.

Stockanalysis' review (25 March 2009) of oilers/gas suggested AOE was a buy under $3, but but also mentioned that there may be a bit of a bubble in the CSG sector. A couple of weeks later Stockanalysis came out with a much more bullish view of AOE prospects and suggestes that in the longer term it could have 70tcf once their tenements are fully assessed.

While I recognise that the current focus is on the Bowen basin as being the most attractive in the short term, there may be a lot of longer term potential for CSG in the Galilee given there is coal in that region. It is guite a gamble at this stage. I have been wondering about the likelihood of COI finding very ssubstantial quanties there. I guess I will just have to wait and see.

At this stage I get the feeling that COI has gone for a run for no clearly apparent reason, and may even have been manipulated up in price. Who knows for sure?

It will be interesting to see how the prices of the CSG companies perform if we have another major downleg in the market.

loki