Sorry, couldn't open the link.. chinese characters.Just a couple...

Sorry, couldn't open the link.. chinese characters.

Just a couple of more or less general thoughts on CBM, if that can be of help to you.

1 Changing boards:

Obviously it can be seen by the insvestors as a sign of chronic unstability, especially if directors don't stay more than a couple of years. From the operational point of view I haven't ever seen any board director on rig site doing any real job. But they can do a lot of harm on operations from the office if they unduly delay any decision, change their minds every fortnight, or take the wrong decisions in a repeated manner.
In this situation plain commonsense indicates that the risk would be to keep the current board.

2 location:

Being located close to the customers can be an advantage as well as a drawback. The NYMBY feeling can be very strong. Everywhere projects related with coal mining/CBM have experienced serious problems due to the opposition of the populations. It's sometimes better to drill far from the injuns (and from natural ressources reservations and various protected areas).
As a rule of thumb old mining areas should be less constestant than new residential areas. The inhabitants have been living with mines for decades if not centuries and CBM/CMM is just another coal related industry, welcomed if it can bring jobs, and much cleaner than coal mining, cokeries and gas plants.
It must always be reminded than local authorities have sometimes spent a lot of money and effort to mitigate the results of the past activities and to transform industrial derelicted areas into tertiary activity parks. They are are sometimes reluctant when it comes to restart an industrial activity, especially if there are possible pollution issues... they have paid to clean the precedent mess.

3 water problem:

EPG is already producing, but CMM. The water they have comes from gaz dehydration. The volume and quality can't be compared to CBM deliquification. The water mitigation problem remains whole for this company. But I am confident that technical solutions can be found.

4 French Government:

The status of CBM/CMM has not been formally and definitely sorted out yet by the french administration.

As you may know, there currently is a raging debate on Carbon taxation. The government would like to raise a new tax on the consumption of fossil fuels. The electricity would be excluded from the deal (Uranium not fossil?).
EPG is trying to avoid that by lobbying the administration. This is the deal behind the "Heads of Agreement signed on Electricity Generation Projects" (ASX release on 3rd August 2009). Imo, the agreement in itself is so unsignificant and unbinding that it was likely not worth being released. Just hope that EGL is not spending to much money on that.

If gazonor was to be taxed on produced CO2 it would be indeed competitively disadvantaged. So the deal is to convince the authorities that CMM and CBM are green. Technically speaking it's not easy to support and could be easily disputed, especially in a country that is exporting nuclear electric power.

5.2.3....

Not my line, so no comment excepted that the financial risk for EGL is to remain stuck into inaction due to lack of financing for the exploration.

4 bot:

EGL is not yet at the point of transferring anything to the government, and the french governmemt is not likely to operate or nationalize any power company anymore. I understand that the paper was for chinese CBM Co's... This explains that.

5 Asset-back securitization: Qs 1&2

There currently is no profit and likely will not be any before several years. Exploration costs a lot of money and will swallow most of the cash EGL can make from gazonor. Dividends are not for now.

Cheers,
Z