"Clearly they are not A grade assets"this is just imho. DYORI...

"Clearly they are not A grade assets"

this is just imho. DYOR

I don't know about you guys, but that question has been THE question ever since WCL acquired Meridian. And I guess it is THE most important question, because no gas = no business.

But I think that question is pretty much clarified by the following:

- in response to questions of mgt and board at AGM's, presentations, questioning etc, as I mentioned earlier, the response is "there is nothing wrong with the field". and I am comforted by the quality and experience of the board.

- Meridian has been producing gas for 15 years, and I think JB said it is the oldest, or longest running CSG field in Qld.

- evidently WCL believe they may have the answer to the "fines" problem by using "foam lift" and by drilling laterals specifically in the actual coal seam only. Previous laterals evidently went in/out of the seam.

- infrastructure already in place with compression for 30tj/d and pipelines for 60tj/d - and OPEX costs semi-fixed up to 30tj/d.

- WCL have got it producing steadily at the 12tj/d level for quite a while- it is consistency of production that WCL wanted to prove to customers

- WCL commissioned an independent Validation Report by RISC which evidently confirmed the modelling, costs and assumptions prepared by Mgt. Presumably they would have to "validate" production and reserves etc

- we have new institutional s/h such as Mirrabooka, the parent of whom is AFIC (huge LIC)

- we have Chinese now lobbing bid in, way above our current SP. and my bet is these Landbridge guys are just "frontmen"!

- and the big one for me is, if we sign a GSA with a LNG project, or one of their J/V parties, then that is the clincher for me. Because no LNG project would execute a GSA and rely on said supply of gas for their multi $billion project, unless they had the utmost confidence that WCL could fulfil its supply obligations. And remember that these guys such as BG, Santos, Origin etc, would have expert production mgt to vet the WCL project before they signed the GSA.

When we sign the GSA, it will be interesting what happens with the SP. Some l/t s/h will sell into the rise, but surely others will buy into the dips? WCL usually conduct roadshows to promote GSA. Instos will have problems getting meaning parcels.

At what point do institutions/investors etc, determine that WCL is no longer a junior O&G explorer, but a longer term producer, generating consistent production and stable cash flows? WCL will be sitting there with a 20yr contract worth possibly $1.5Billion+, hopefully producing stable gas flows into that contract.

What do they do with all that excess cash?
If one buys into WCL at say 28c, it would not take a very big dividend to generate a very attractive div yield.
It may not come for a couple of years, but the Mirrabooka's of this world will be wanting a return.

anyway, just my view.

cheers