Thank you very much for your comments, Zadig. What you said...

Thank you very much for your comments, Zadig.

What you said really worry me, so I do further check.

1 Operation risk

I check the history announcement of EPG, the board changes a lot. As a mid-sized company that knows its carrying high cost(mentions in the prospectus when it's still KBO), I think there might be explanation. I checked the financial report of 2006 and 2007. The board's wage increased too rapidly. If they are the only experts who can solve problem, I also hope they finish and leave. I know little about the salary system. But if I vote, I want them to leave.

2 Environmental risk

France lacks in natual resources. The oil crisis in 1973 taught them a lesson. They spent 15 billion francs on oil in 1972, which later rise to 52 billion franc in 1974. Due to other reasons( national pride, economics etc), they still carried on nuclear electricity project after nuclear acciednts in USA and Russia. At that stage, German, Belgium, Italy, Spain etc postponed.
Nowadays, ASN announced there are 72 nuclear accidents in France in 2008, which is higher than 56 in 2007.
I assume French people can accept the environment issues to some degree.

3 Water problem
I know little but quoting on this issue. Eco-Carbone, which is a french company, claimed that the technical problem for coal seam gas is not a problem, the key problem is to finance. I found it on a Chinese page

http://www.asianamericangas.com/web/news.asp?lang=C&id=33&pid=70

And the comapny's website is
http://www.eco-carbone.com/index.php?Firstlevel_ID=1&lang=en

4 Electricity
France exports the nuclear generated electricity abroad. It can not be denied. But the electricity's price is monopoly controlled, Pierre Gadonneix, CEO of French Electricity Group annouced to raise electrity fee 20% higher within three years in mid July, 2009.

The coal seam gas generated electricity should be a substitute. The natural gas price is going down while France raise the electricity fee. The power stations that EPG controls will accrue more income.

5 Cost
1,2,3 mentioned above will accrue expense more or less. That's the key issue that EPG should notice, although their style may be more on profit (judging from prospectus of KBO)

The cost management may already work, I found some positive signs in the financial report but not quite confirmed due to my lack in sufficient knowledge in this area. If Maoming really is a investor, I think they can cut down the cost. It's from the common sense of Chinese-- You can never find a labor work paid above 12 dollars per hour provided by Chinese owned company in australia. Usually it is 10 dollars everywhere even in 7-11. I'm confident on the cost management, if the current cost issue brings the entreprunurship.

6 Gas price

Natural gas price drops from 15 in Junly 2008 to 4.3, touching the bottom of 2.7 on August 24. I think it may be a true reversal recently. The wider correlation of oil and gas may let the hedge fund do the pair strategy at least. Besides, the recent 50 billion dollars of China buying Australia's natural gas project may work as a fundermantal signal. Petronet, an india company, done similar thing. They both bought from Exxon Mobile, one of the three main supplier of natural gas market.

But the hedge fund's failure in Feb stops my greed to
directly enter the market.

At least, if the gas price is still negative, EPG serves as my exposure to gas market ( I did not find coal seam gas price index) on ondition that it survives the cost restraints.


Still, there are companies funding coal seam gas in France. I found Aloe group (http://www.aloe-group.com/). It recieves good feedback in China.

I still think the funding is due to the interest reason, the dropping price of gas in recent years will make the board sacrifice a large portion of interest to funds.

Well, if the board also considers the Russia Nartual Gas company, I think the situation will be better(from material on Russia natural gas on internet). Through controlling more price power over Europe, Russia Company may eat the cost. I'm still very confused on the funding issue. The company seems to deny. And that is "interesting" really. ( my assumption is based on there's value in purchasing EPG)