thoughts on fundermantals

I tried doing some research on the coal seam gas industry and this company because I'm also confused at what it appears to be.

And I cited from an assay
"A Study on Project Financing Models of Chinese Coalbed Methane"

It locates at http://epub.cnki.net/grid2008/detail.aspx?filename=2009074270.nh&dbname=CMFD2009

it comes from the Chinese acadamic database. And you have to pay to read. However the summaries may give you some hints to do further research.

There are mainly the discussions at present:

1 Changing boards:
It can be considered as operating risk. The loan lender or the bank will request the project to be under good management(page27, A Study on Project Financing Models of Chinese Coalbed Methane).

2 location
Most coal gas seam locate at distant places that carry high tranportation cost. That's why EPG highlights its location. Kind of near city and railway. The coal gas seam can be tranported by train, truck or pipe in high pressure liquid form.

3 water problem
The production of coal gas seam is different from that of gas. It actually needs to make use of the water(cites from http://www.cbmzx.com/ns_detail.aspid=500398&nowmenuid=500393&previd=500394). And the production technology is mature.I don't know how to explain technical terms. But the answer won't be hard to get on internet.
And epg is already produing, I roughly assume the operation is not big deal.

4 French Government
Coal gas seam is clean energy. It prevents sending CH4 to atomosphere. So a producer can benefit from selling carbohydrate allowance on their every litre of the production. The frecnch government don't need to stop epg. It's CDM project.They can later dig coal then after someone build the basic facilities. Forbid epg then.

And I suppose the perth project is for selling the carbohydrate allowance to get more income at a lower cost. Or the perth project is for finance purpose in worst case.

5 Financial risk
You can find lots of hints in project finance books. After viewing this epg case, I also find it very interesting. In fact it can use methods below.
1 project finance company. Outsourcing finance to other companies. Is it the role that FUT plays? Haven't done resaerch on FUT.

2 pay by product
It dates back to the method done in USA oil companies in 50s. If we calculate the reserve with a conservative way, we may assume potential financing ability.

3 leverage leasing
Too complicated. But seems to be good.

4 bot
Build, operate and transfer. It can be later transferd to government. It sounds good to french government. After all the project is in France, they benefit from GDP arise from the cost of the project.

5 Asset-back securitization
I'm very interesed in how much the asset can be sold at least. Than we may draw a relatively safe price for epg.

Also I have some wild guesses.
1The current so called financial risk is due to how lender and project company decide to share the profit.

2The coal seam gas project can produce in 30 years' time
which is much loger than natural gas production. Does it make epg confident?


I hope someone may share some calculation on this company's value.