ESG - Eastern Star Gas

[Logique]

“Both Eastern Star and Arrow Energy are in the coal-seam gas space, so whenever there’s a takeover of one company, people will suggest that the other one’s next off the block,” Chris Weston, an institutional dealer at IG Markets in Melbourne, said in a telephone interview. “Oil Search is also leveraged in this space.”

Eastern Star in particular, with its “relatively good assets,” and “attractive” price, may be seen as a potential target, Weston said.

Quote from Bloomberg article at URL: http://www.bloomberg.com/apps/news?pid=20601081&sid=azb2EpuQcc9w

Also see a NZ Herald article mentioning ESG and Bow at: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10630971&ref=rss

Both in recent days.

 

[Logique]

Tidy move today, +9.58% so far to 0.92.
With AOE on a trading halt, the market seems to think that an upped offer might come in from Shell for Arrow. Hence some hubris by association for ESG, but for the believers, not without just cause.

 

[growing]

Has anybody done an analysis on Arrow's reserves versus ESG's reserves then do a price comparison ??

It would be interesting to see what ESG would be worth as an exact comparison based on reserves with Arrow??

 

[jancha]

Has anybody done an analysis on Arrow's reserves versus ESG's reserves then do a price comparison ??

It would be interesting to see what ESG would be worth as an exact comparison based on reserves with Arrow??

Aren't ESG still adding to there reserves?
Cant see being able to find a comparison as ones producing & the other still adding to there reserves & not producing.
However the location of ESG's reserves are in a handy location as well as the interest Santos has in them & that has to play a big part in their SP.

 

[grace]

Some figures on BOW

At $1.50 x 239 mill on issue
= $358 mill market cap
divide by 2318 of 3P
= $0.15mill per PJ of 3P

Recent takover Santos on ESG reserves was $0.66mill per PJ of 3P.

ESG Reserves including contingent
3P + 3C = 9012PJ
2P + 2C = 5035PJ

At sp 0.93 x 924mill fully diluted
MC = $859mill
Cash = $41mill ($54mill at 31/12/09 less est. March qtr spend $13mill)
Apportionment for gas = $818mill

2P = 1520PJ (65% to ESG = 988PJ)
3P = 2797PJ (65% to ESG = 1818PJ)

$0.83mill per PJ of 2P
$0.45mill per PJ of 3P

Santos paid $0.66 per PJ of 3P on ESG reserves. Share price needs a rise of 47% to equate to the Santos transaction.

I haven't done the figures on Arrow, only heard a broker say that it is way below the heights reached for previous transactions (which were up to $4.95mill per PJ of 2P). Even the lowest price paid ever for 2P is $1.71mill per PJ, so still room to move upwards on those figures.

Let me know if you agree with these figures, or not. Contingent reserves look attractive! I wonder what BOW's contingent reserves are?

 

[growing]

Thanks Grace, that is great detail I also found a comparison between ESG and the Arrow transaction here:

http://www.stockanxiety.com

Not as much detail as you though but it is something

 

[pointr]

While not specifically about ESG but certainly of relevance to the space in which it operates, ie east coast CBM. Bloombergs is reporting that Martin Ferguson will be in Bejing today for the signing of a BIG LNG contract.
http://www.bloomberg.com/apps/news?pid=20601081&sid=a9gAkUQ4XWXI
The LNG to come from the Curtis Island project in Gladstone. It is news like this that underpins the value of east coast CBM reserves for both exporters and local energy companies trying to secure gas for their businesses in Australia. So ESG keep drilling and increasing the resource and reserves, at some point there should be rewards for the patient

 

[gooner]

While not specifically about ESG but certainly of relevance to the space in which it operates, ie east coast CBM. Bloombergs is reporting that Martin Ferguson will be in Bejing today for the signing of a BIG LNG contract.
http://www.bloomberg.com/apps/news?pid=20601081&sid=a9gAkUQ4XWXI
The LNG to come from the Curtis Island project in Gladstone. It is news like this that underpins the value of east coast CBM reserves for both exporters and local energy companies trying to secure gas for their businesses in Australia. So ESG keep drilling and increasing the resource and reserves, at some point there should be rewards for the patient

Interesting. Given the price based on AOE metrics and risk of further capital issuance, think I will avoid ESG. I hold AOE and was thinking of moving some of the money across to ESG, but current share price a bit rich for me.

 

[jancha]

Interesting. Given the price based on AOE metrics and risk of further capital issuance, think I will avoid ESG. I hold AOE and was thinking of moving some of the money across to ESG, but current share price a bit rich for me.

Interesting.
I rather see their value at what Santos values them at.
So what do you think would be a fair price to which you'd come in at?

 

[gooner]

Interesting.
I rather see their value at what Santos values them at.
So what do you think would be a fair price to which you'd come in at?

Around 70 cents would be appealing for me as this provides a good discount to the AOE metrics. I just can not see much upside in current price without a bid being made. Obviously if the bid comes in, then there is plenty of upside.

 

[jancha]

Around 70 cents would be appealing for me as this provides a good discount to the AOE metrics. I just can not see much upside in current price without a bid being made. Obviously if the bid comes in, then there is plenty of upside.

I traded in & out of AOE & made a profit of 40k overall so i should be happy with that yes?
Well i'm not. Last time i bought them i promised myself to hang on to them as long term but couldn't resist the temptation to sell when they hit around $2.60. Couldn't get back in as they kept going up & wasn't about to chase them.
Anyway it's the same with ESG but this time i'm sticking to the plan.

 

[malachii]

jancha,

I tend to agree with gooner on this one.

Fundamentally - ESG is worth north of $1. However in this current market all the good news about ESG reserves, good management etc have been factored in and the takeover interest caused by AOE has made the market drive the price to about the 90cent range. I think you'll find (barring any amazingly fantastic brilliant unexpected find/takeover offer) that the price will drift back down into the mid 70s (or maybe even into the 60s) over the next few weeks/months as the interest in the sector wanes. Heaven help the price if the company releases any bad or even OK news over the next couple of months.

The next hurdle for the sector is not so much locating the gas deposits - as finding something to do with them. The market is waiting to see what happens with the LNG plants out at Gladstone and then if there will be a massive oversupply of LNG in the Asian region. Until this starts to settle - there remains a "question mark" over the viability of the industry. Remember that while CSG is currently used domestically - and will be for a long time - we now have so much as a resource that unless we can export it efficiently - it is of no real use.

This is my opinion only - do your own research. I am a firm believer in this industry and have several large investments in it with various companies. I was an early investor in QGC when it was proving that CSG could be actually used for anything at all. To me, this is just the next phase of "proving" for the industry. It will get through it but it is still a risk that the market is factoring in (and rightly so!).

malachii

 

[jancha]

jancha,

I tend to agree with gooner on this one.

Fundamentally - ESG is worth north of $1. However in this current market all the good news about ESG reserves, good management etc have been factored in and the takeover interest caused by AOE has made the market drive the price to about the 90cent range. I think you'll find (barring any amazingly fantastic brilliant unexpected find/takeover offer) that the price will drift back down into the mid 70s (or maybe even into the 60s) over the next few weeks/months as the interest in the sector wanes. Heaven help the price if the company releases any bad or even OK news over the next couple of months.

The next hurdle for the sector is not so much locating the gas deposits - as finding something to do with them. The market is waiting to see what happens with the LNG plants out at Gladstone and then if there will be a massive oversupply of LNG in the Asian region. Until this starts to settle - there remains a "question mark" over the viability of the industry. Remember that while CSG is currently used domestically - and will be for a long time - we now have so much as a resource that unless we can export it efficiently - it is of no real use.

This is my opinion only - do your own research. I am a firm believer in this industry and have several large investments in it with various companies. I was an early investor in QGC when it was proving that CSG could be actually used for anything at all. To me, this is just the next phase of "proving" for the industry. It will get through it but it is still a risk that the market is factoring in (and rightly so!).

malachii[/QUOTE
All valid points Malashii & appreciate it. I personally like ESG long term & the only reason i'd sell is if i felt they would drop in sp only so to accumulate more shares at a lower price as i did with AOE.
Knowing my luck tho the moment i sell as you said a takeover or large find will occur & i would have missed the boat.
Just sitting tight on this one.

 

[Logique]

..However in this current market all the good news about ESG reserves, good management etc have been factored in and the takeover interest caused by AOE has made the market drive the price to about the 90cent range. I think you'll find (barring any amazingly fantastic brilliant unexpected find/takeover offer) that the price will drift back down into the mid 70s (or maybe even into the 60s) over the next few weeks/months as the interest in the sector wanes. Heaven help the price if the company releases any bad or even OK news over the next couple of months.
malachii

I feel compelled to say - this is also where I currently am in my thinking. If a bid comes in, it's egg-on-the-face time, that's the risk one chooses to take or otherwise. Also it seems Arrow may go for less than I had thought, and as well AOE has suffered a broker downgrade in recent days.

 

[philly]

This is off breaking news in "The Age"

Gas: Australia's biggest-ever deal looms March 24, 2010 - 12:43PM

Australia's single biggest trade deal is about to be signed-off, with a state-owned Chinese group expected to agree to buy $80 billion in natural gas from a Queensland project.

Resources Minister Martin Ferguson is in Beijing for the signing of the deal between Britain's BG Group and the China National Offshore Oil Corp (CNOOC), according to a report.

The deal by which CNOOC would buy 3.6 million tonnes of liquefied natural gas (LNG) from BG Group's Queensland Curtis LNG project each year for 20 years was proposed in May 2009.

The deal is expected to be worth about $80 billion and would be Australia's biggest ever trade, eclipsing a $50 billion deal from the massive Gorgon LNG project offshore from Western Australia.

And this is from me...
and where does BG propose to get all this LNG?
Stay tuned for more consolidation in the CSG sector.
All IMHO and DYOR
I hold ESG

 

[malachii]

Philly,

Unless I'm mistaken this will be sourced from the QGC reserves that BG purchased last year and put through their proposed LNG plant in Gladstone.

Again - this is emphasising the fact that the market "hopes" that CSG is able to be processed into LNG and transported effeciently to China. It also touches on the "hope" that China doesn't have any bumps in the "miracle economic" growth story and that there is not an oversupply of LNG in Asia over the next decade. Bear in mind that IF all the LNG plants (including the PNG LNG) plants come on line over the next 5 or so years - there will be much more LNG available than required. Basic supply and demand equation....

malachii

 

[kingcarmleo]

Philly,

Unless I'm mistaken this will be sourced from the QGC reserves that BG purchased last year and put through their proposed LNG plant in Gladstone.

Again - this is emphasising the fact that the market "hopes" that CSG is able to be processed into LNG and transported effeciently to China. It also touches on the "hope" that China doesn't have any bumps in the "miracle economic" growth story and that there is not an oversupply of LNG in Asia over the next decade. Bear in mind that IF all the LNG plants (including the PNG LNG) plants come on line over the next 5 or so years - there will be much more LNG available than required. Basic supply and demand equation....

malachii

You don't get it do you? You think the biggest companies in the world would spend billions CSG-LNG if they had any doubts over it being viable? The gas glut is a load of rubbish that was spun out of a few media reports. Anyway ESG is in a great position as they are the most dominant gas company in NSW and holds a competitve advantage over the competition.

The AOE metrics are dissapointing, however STO has already paid some decent metrics for esg and it will be very hard for them to backpeddle and offer something smaller.

 

[malachii]

kingcarmleo

Sorry - not sure what your getting at. I do get it and have understood and invested in this sector for many years. Before you blow your top may I politely suggest you read previous posts and comments made by myself and others.

You will also note that I (although I must admit to not putting the declaration on today - brain fade!!) declare in most previous posts that I am a substantial holder of ESG shares.

I think you should also be careful. At this stage NO company has spent billions of dollars on infrastructure for CSG to LNG. All infrastructure at this stage is in planning and none have "turned the first sod" or even got full approvals. A few have "significant status" standing from the state government. No company has yet proven that they can even turn CSG into LNG efficiently. Realistically - nobody expects this to be a major problem but the market will still factor the risk into the price until proven otherwise.

The "gas glut" as you call it may have been spun out of a few media reports (I dont know what media reports you are referring too) but it doesn't take much research to see how much is predicted to come online over the next decade and compare it to current usage and growth to come to the conclusion that there is a lot of people going to be looking for customers. That was one of the significant things about the AOE takeover - that it came with a large customer (Petro China).

Anyway - happy to discuss further but not happy to be abused for having a researched opinion.

malachii

 

[pointr]

Bloomberg is reporting on an AFR 'Street Talk' article that said Petronas and Santos may bid on ESG.http://www.bloomberg.com/apps/news?pid=20601081&sid=asToYWSP6fLA
No source given for the AFR report, I suppose its a good time for CSG / LNG rumours with recent sector activity. Santos also has an extra 100million to find a home for after selling some resource to Magellan, als announced today. We will continue to hold,wait and hope for a good payday,oneday

 

[kingcarmleo]

kingcarmleo

Sorry - not sure what your getting at. I do get it and have understood and invested in this sector for many years. Before you blow your top may I politely suggest you read previous posts and comments made by myself and others.

You will also note that I (although I must admit to not putting the declaration on today - brain fade!!) declare in most previous posts that I am a substantial holder of ESG shares.

I think you should also be careful. At this stage NO company has spent billions of dollars on infrastructure for CSG to LNG. All infrastructure at this stage is in planning and none have "turned the first sod" or even got full approvals. A few have "significant status" standing from the state government. No company has yet proven that they can even turn CSG into LNG efficiently. Realistically - nobody expects this to be a major problem but the market will still factor the risk into the price until proven otherwise.

The "gas glut" as you call it may have been spun out of a few media reports (I dont know what media reports you are referring too) but it doesn't take much research to see how much is predicted to come online over the next decade and compare it to current usage and growth to come to the conclusion that there is a lot of people going to be looking for customers. That was one of the significant things about the AOE takeover - that it came with a large customer (Petro China).

Anyway - happy to discuss further but not happy to be abused for having a researched opinion.

malachii

Once again the biggest oil and gas companies have got it wrong have they?

Enough of this talk.

Anyway as pointr mentioned there is street talk of a bid from petronas n sto. DC has been overseas for close to a month now.... wonder what he is doing.

I hope we don't get lowballed like aoe, DC has said we are worth 2.4 bill at least so I expect him to honour this valuation or else we have been failed as sharehodlers.