CNX - Carbon Energy

[basilio]

I don't get it.. CNX only seems to provide good news and in fact beats expectations. The trials are going better than anticipated, they make an incidental uranium discovery, they have probably one and possibly a second major industrial plant lined up for 2009... and yet they still fall back.

I believe the CTG/GTL technology is a game breaker in the fossil fuel energy world. But CNX is still way below any reasonable valuation.

Again, any other thoughts?

 

[Big_Daz]

I guess cashflow is a big concern for this company.

The first 1/4 of 2008 saw it burn through over $8.2m of cash leaving it just over $17m. With a shortage of cash flow, they are goingto have to either go to market (which will be very hard) or go to its bankers. If it goes to the bankers then that obviously increases there debt and with debt in this market the share price is going to suffer.

This is my thoughts on the company...any others out there?

 

[Dink]

I find it difficult to understand why not a single person commented on the last couple of days. Up 15% two days ago. Great announcement yesterday and held that 15% and remained up on a day when most stocks were taking a battering. A shining light in what is an otherwise fairly grim portfolio for me at the moment.

 

[basilio]

It's great that CNX has held. But frankly given what seems to be very positive news I am disappointed there hasn't been a decent and held rise in SP.

This is still a very lowly capitilised company with what seems to be valuable and proven technology and on the brink of profitable commercialization. But you certainly wouldn't get that idea from its price.

But lets see what pans out.

_____________________________________________

To be fair it has risen from the lows of 22c just before Christmas. I suppose I am reflecting on the prices of 5 months ago which were before the successful trial.

 

[basilio]

And then suddenly CNX just JUMPS 12% in a couple of hours.

Who has been listening. Or maybe there are stirrings afoot.

 

[Mickel]

As a holder of CNX I agree that it's great to see the S/P rising.

However, as yet we haven't seen any financials for how profitable gas for power generation or chemical feedstock will be. Also, we don't know what further equity (if any) CNX will need to contribute for any joint ventures.

On the other hand, having Incitec Pivot as a 11% shareholder and a research agreement with a large international coy (Lyondellbasell) into methanol production suggests chemicals and explosives production could be very profitable. Also their valuable uranium assets could be sold to provide equity for any joint venture.

In my view we won't know much about profitability of any venture until after the completion of the 100 day UCG trial.

 

[james99]

Mickel

I have not posted for some time and agree that we will not know much about profitability until after the completion of the trial, and even then there will likely be significant delay whilst analysis and full commercial feasibility studies are being undergone. However, we do know that:

1. thus far, its technology has delivered in a manner consistent with its projections;
2. its technology can produce commercial products / by products (albeit efficiency is not known yet);
3. it is cleaner and more efficient than several alternatives (again, albeit we do not yet know whether it is sufficiently efficient to be commercially highly successful);
4. it has other strings to its bow (uranium and gold) and in respect of which there may be a spilt;
5. its managament, thus far, has made projections and time frames in a sufficiently conservative manner such that they have usually been able to be met, in contrast to some other small caps;
6. it has a good cornestone shareholder;
7. it has established relations with interested parties in other countries that may lead to uptake;
8. unlike many small caps, and despite its current price only being .355 against a 12 month high of .93, it has still managed to make and hold good gains over the last 18 mths or so. When I first posted (in about April 2007) it was about .09.
9. there is substantial global demand for energy and many coal reserves. I have, eg, just come back South East Asia where there are substantial shortages of energy. We are, I think, only seeing the tip of the demand iceberg insofar as memoranda of understandings etc are being entered into.

Several third world countries are taking a 5 - 15 year view of the need to meet power demand, and seem not much deterred by the current recession.

In summary, I think there is much to be positive about with CNX and that it is one of the alternative energy / by product companies that has a real chance of commercial success and the re-rating that goes with that, even in tough times.

All of this has been said before by many others, but is is helpful (for me anyway) to revisit it from time to time.
(PS: I disclose holdings )

 

[james99]

I should add, that in the first week of the oxygen gas trial 800 tonnes gassified with 16,000 gj of gas energy produced. Sino Ore is reported as paying US$7.80 gj for gas when oil is at US$50 (see link:
http://www.theaustralian.news.com.au/business/story/0,,24885298-5018015,00.html), so if we take that as a rough and ready guide the value of the energy produced in the first week from one module is about US$124,000.

 

[james99]

COAL RESOURCES UPGRADE: NEW ANNOUNCMENT

Increase from 100 mt to 269 mt, much of which is optimal for gassifaction. See announcement online.

Fantastic. But I suspect on a day when the DOW is down, all it will do is hold the price, rather than increasing it...

 

[Dezza]

2 weeks left of the trial left...time goes by fast. So does the SP.
Hopefully the trial results will be thumbs up for full production.

 

[james99]

Trial completed successfully! Hopefully we are now in buisness ...

Carbon Energy (ASX:CNX) announced today that it has completed the 100 day Underground Coal Gasification (UCG) trial at its Bloodwood Creek site, near Dalby in South East Queensland. Carbon Energy has clearly demonstrated that its UCG module can deliver commercial scale syngas production of 1 peta joule (PJ) per annum of syngas, with the following key outcomes:
• Demonstration of sustained production of air injected syngas suitable for low cost generation of power (achieved in November 2008);
• Demonstration of production of high value oxygen injected syngas suitable for the production of low emission electricity, chemicals and liquid fuels;
• The conversion of unmineable coal in-situ to gas energy at an average rate of 20PJ per million tonnes in the Surat basin;
• Validation of Carbon Energy’s proprietary design and economic models which can be applied to any suitable coal seam anywhere in the world; and
• Consistently achieving, and exceeding, target energy content and flow rates.
Carbon Energy’s Managing Director Andrew Dash said the Company will be completing its analysis of the data obtained during the trial phase prior to providing the results to its two main commercial partners; Incitec Pivot and LyondellBasell, for their assessment. It is anticipated that once approved, further pre-feasibility studies will then be undertaken to confirm syngas’s suitability for power generation, ammonia manufacture and methanol production. In the meantime, the UCG syngas reactor at Bloodwood Creek will continue to operate on air injection, with ongoing monitoring and verification of results, while plans for commercialization are initiated.
For and on behalf of the Board
Andrew Dash
Managing Director

 

[Dezza]

Wow, my 2 weeks went by like it was only 1 week.

Good news indeed. Pretty much went off without a hitch, and now time to start working on full commercialisation so they can start counting their cash.

What are the chances of a cap raise to get things started?

 

[Mickel]

ASX Ann today-

"19th February 2009 ASX Announcement ASX: CNX Government Policy Delivers Certainty of Tenure for CNX

The Queensland Government yesterday announced a new policy in relation to overlapping tenements between Underground Coal Gasification (UCG) and Coal Seam Gas (CSG) producers that clarifies the issue of priority access to resources and provides a clear pathway for all parties to move to production.

The key outcome for Carbon Energy is that the policy provides priority and certainty of tenure for Carbon Energy for the resource contained within its existing Mineral Development Licence area (MDL 374).
Andrew Dash, Carbon Energy’s Managing Director commented on the recent policy decision by saying “This policy ends months of speculation as to the competing rights between UCG and CSG players. For Carbon Energy this means that we have exclusive rights to at least 224 million tonnes of coal (approximately 75% of our recently announced resource upgrade) contained within our MDL which is suitable for UCG.
Based on our recent trial results, which demonstrated we produce 20 GJ for each tonne of coal gasified, we have at least 4,480 PJ of energy in situ. We believe that by applying our world leading UCG syngas technology and panel design that in excess of 2,500 PJ of UCG syngas is recoverable.
This is a huge resource in gas industry terms and can support more than 6 world scale manufacturing plants for over 30 years. In addition, the northern half of our MDL is relatively unexplored and is prospective for coal suitable for UCG; consequently further exploration in this area is likely to add substantially to our resource availability in the future.
This policy decision will now enable us to execute our plans for the development of this resource with full confidence”.
The announcement also outlined the requirement that each UCG syngas trial project be subject to monitoring conditions, including meeting stringent environmental standards, by the EPA (Environmental Protection Agency). “Such requirements exist now and as such were not unexpected. Indeed, we welcome the Government’s commitment to continued environmental monitoring as this goes to the heart of our process and is one of the key benefits our technology” said Mr Dash.

Carbon Energy believes it is prudent to follow appropriate review processes for all major projects, including UCG syngas projects. Carbon Energy’s technology and process is the result of rigorous scientific development by Australia’s premier research organisation over 10 years, the CSIRO, and Carbon Energy welcomes any appropriate review of its world leading technology."

I haven't been able to find this new policy statement as yet. It will also have implications for other UCG and CSG companies especially LNC.
Has anyone seen this new policy statement?

CNX currently up 3c to 30c and LNC up 4.5c to $1.245

 

[basilio]

Good news for CNX and LNC.

Question in my mind is the lack of market support for either company. Both are providing critical, basic energy necessities with proven technologies that turn stranded low grade coal into valuable commodities at a reasonable price.

And the shares still look like sxxx !

I suppose this just means they are great buying opportunities at the moment...

 

[Mickel]

Good news for CNX and LNC.

Question in my mind is the lack of market support for either company. Both are providing critical, basic energy necessities with proven technologies that turn stranded low grade coal into valuable commodities at a reasonable price.

And the shares still look like sxxx !

I suppose this just means they are great buying opportunities at the moment...

Agree 100%, Basilio. We just have to nerves of steel to withstand any negative news and PATIENCE.

I hold both CNX and LNC.

 

[fitz007]

second that notion haha

im very surprised we havent seen a more sustained rise in SP.

despite the global meltdown, the company on paper looks the goods.

ah well .. .. cont to hold onto CNX with great hope.

 

[basilio]

WA approves coal gas-to-urea initiative
March 6, 2009 - 1:34PM

Private fertiliser company Perdaman Chemicals and Fertiliser aims to commence exports from its $3.5 billion coal gas-to-urea project in Western Australia around mid-2013.

The private company, formerly North West Chemicals and Fertilisers, is led by Indian businessman Vikas Rambal, a former managing director of Pankaj Oswal's Burrup Fertilisers.

WA Premier Colin Barnett and Regional Development Minister Brendon Grylls on Friday announced approval for the project, near the coal mining town of Collie.

"The proposal is for a plant that will use around 2.7 million tonnes of coal annually - adding significant value to a local resource," Mr Grylls said.

Noticed in the paper that a private company is developing a Coal gas to urea plant in WA. Sounds very much like the CNX/IPL initiative. I wonder if this would have an effect on the joint venture proposal ?

http://news.theage.com.au/breaking-...-coal-gastourea-initiative-20090306-8qlf.html

 

[Mickel]

Great announc from CNX today. Increase in reserves of 125% from 296.9mt to 668mt.

S/P increased 16% (4c) to $0.285 .


Disc- I hold stock

 

[basilio]

It is great that the coal reserves have jumped. But all the reserves in the world mean little if there isn't a profitable contract to develop them.

Also hold, also waiting....

 

[ColB]

Originally posted by Basilio

"It is great that the coal reserves have jumped. But all the reserves in the world mean little if there isn't a profitable contract to develop them.

Up 20% today Bas!! Your post on the 19th February was right.

That contract will be on the way soooooon

[I hold]