ESG - Eastern Star Gas

gooner said:

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.

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Good luck with picking it up at low 70s.
Lot of upside & strong support.
Guess you've missed the boat on this one Gooner.

Well put.

And, kingcarmeleo, I'll say what malachii was too polite say - relax and get some manners.

And, yes, big companies do get stuff wrong from time to time.

And yes, I'm a holder.

malachii said:

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

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NedFlanders said:

Well put.

And, kingcarmeleo, I'll say what malachii was too polite say - relax and get some manners.

And, yes, big companies do get stuff wrong from time to time.

And yes, I'm a holder.

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I'm sick of this drivel that CSG-LNG might not be viable. I think you should go talk to COP,BG,SHELL,CNOOC,CNPC,STO,ORG,AOE. Now they are world class companies, what would you say the likelihood of all of them being wrong would be?

kingcarmleo said:

I'm sick of this drivel that CSG-LNG might not be viable. I think you should go talk to COP,BG,SHELL,CNOOC,CNPC,STO,ORG,AOE. Now they are world class companies, what would you say the likelihood of all of them being wrong would be?

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In terms of useful (flammable) gases, CSG is methane.

Conventional natural gas is also predominantly methane but also contains propane (what your BBQ runs on), butane (another LPG gas commonly found in Autogas and in cigarette lighters) and ethane (petrochemical feedstock). The non-methane gases are normally stripped out for separate marketing since they are far more vaulable than methane, leaving only the methane in the natural gas stream that goes into pipelines or for conversion to LNG.

The only real exceptions I'm aware of is (1) small gas fields where it's uneconomic to remove the propane etc due to scale or remoteness and (2) LNG destined for Japan which still contains the LPG gases due to gas specifications in that country. Sometimes this requires the additon of purchaed LPG (propane, butane) in addition to that naturally found in the gas.

Ethane is generally only removed if there's a local need for it. Eg Bass Strait - enough ethane is removed to meet petrochemical industry use in Vic and the rest is simply left in the natural gas that goes in to pipelines to homes etc. It causes no real hassle to leave it in, it's just that it's valuable (but not easily transportable) for other uses. Same with propane and butane except that they are more easily transported and hence more commonly removed from natural gas.

LPG (propane, butane and some other very similar gases) are also produced from crude oil at refineries that produce petrol, diesel etc. LPG from either oil refineries or stripped from natural gas is interchangeable in usage (though at least one oil refinery in Australia produces the propane and butane as a single mixed product stream specifically intended for use as Autogas - but they could separate the two gases if they wanted to (but there's no need in that specific case).

I'd be very, very surprised if there's a technical issue in converting CSG (methane) into LNG given that LNG is simply liquid methane at -161 degrees C. Depending on what market they are selling it into, they might need to purchase LPG (propane, butane) to add to the mix - but that shouldn't be a huge problem with proper organisation of shipping etc (and I'm sure that the likes of Shell, BP etc can work out how to source and ship LPG - it's a well established industry).

Smurf1976 said:

In terms of useful (flammable) gases, CSG is methane.

Conventional natural gas is also predominantly methane but also contains propane (what your BBQ runs on), butane (another LPG gas commonly found in Autogas and in cigarette lighters) and ethane (petrochemical feedstock). The non-methane gases are normally stripped out for separate marketing since they are far more vaulable than methane, leaving only the methane in the natural gas stream that goes into pipelines or for conversion to LNG.

The only real exceptions I'm aware of is (1) small gas fields where it's uneconomic to remove the propane etc due to scale or remoteness and (2) LNG destined for Japan which still contains the LPG gases due to gas specifications in that country. Sometimes this requires the additon of purchaed LPG (propane, butane) in addition to that naturally found in the gas.

Ethane is generally only removed if there's a local need for it. Eg Bass Strait - enough ethane is removed to meet petrochemical industry use in Vic and the rest is simply left in the natural gas that goes in to pipelines to homes etc. It causes no real hassle to leave it in, it's just that it's valuable (but not easily transportable) for other uses. Same with propane and butane except that they are more easily transported and hence more commonly removed from natural gas.

I'd be very, very surprised if there's a technical issue in converting CSG (methane) into LNG given that LNG is simply liquid methane at -161 degrees C. Depending on what market they are selling it into, they might need to purchase LPG (propane, butane) to add to the mix - but that shouldn't be a huge problem with proper organisation of shipping etc (and I'm sure that the likes of Shell, BP etc can work out how to source and ship LPG - it's a well established industry).

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Thanks for that smurf - everything I've ever read in my CSG research has supported your conclusions above - havn't yet read any release or announcement talking about the 'challenge' of conversion or whatever.

Added to that - the customers wouldn't be cueing up like they are to get involved for a product they could not use, or didn't trust!!

-d

Sorry - never meant to give the impression that it cant be done - just that it hasn't been done before and the market was factoring this risk into the price.

Smurf has written a great technical piece on the specifics of it. The only thing I would add is as the calorific value is lower (due to high methane content) the price at this stage is expected to be about 10% lower than "normal" LNG (which is 15% lower than the oil price parity). The Japanese seem to be saying that they wont lock into long term contracts because of this and yet in the next breath Toyota Tsusho signed a deal with LNG's Fisherman's Landing project for 1.5 million tonnes a year.

malachii

PS - A big call to say that it wont go back into the 70s and that "he's missed the boat". 3 weeks ago it was in the 60s!

PSPS - Have sold some shares to take profits - still a big believer in this company so still very biased!!

3 good interviews on CSG and LNG on Inside Business this morning.

http://www.abc.net.au/insidebusiness/

malachii

Thanks for the link Malachii. I saw those interviews on Inside Business - they could hardly have been more bullish on the sector and the future gas prices.

What about this from Grace over on the 'Your Top 3 holdings' thread: how good is she doing!

1. ESG
2. BOW (soon to be equal to or more than my ESG holding though)
3. AOE

All coal seam gas stocks that I believe will be subject to takeover. AOE already under activity.

I have held PES, QGC, Sunshine, etc that have already been taken over in this industry over the last couple of years. Once they get taken over, I just put the money in the next likely one to go (in my opinion of course).

Therefore, I'm in those 3 above for growth only, and takeover speculation.

From Grace on the 'Your Top 3 holdings' thread, on 14 Mar 2010:
Thread address: http://stockforum.com.au/forums/showthread.php?t=19031&page=2

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interesting how nobody has mentioned this SANTOS - Petronas thing since Friday's article ??

Didn't get a mention in Inside Business -- no Denial today even though the article obviously affected the share price

Good article out of the CSG conference in Brisbane.

http://www.theaustralian.com.au/bus...m-gas-conference/story-e6frg8zx-1225847171696

Better not read it kingcarmleo - it mentions the "gas glut" and actually puts some numbers to it.

malachii

malachii said:

Good article out of the CSG conference in Brisbane.

http://www.theaustralian.com.au/bus...m-gas-conference/story-e6frg8zx-1225847171696

Better not read it kingcarmleo - it mentions the "gas glut" and actually puts some numbers to it.

malachii

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I wouldn't worry about a gus glut. Developing countries with simply astronomical populations will continue to breed more people and more people need more energy...

INDIA is yet to throw their weight around although they expressed interest in buying all the COAL we can supply. In time, Coal will be replaced by gas Clean energy and all that

malachii said:

Sorry - never meant to give the impression that it cant be done - just that it hasn't been done before and the market was factoring this risk into the price.

Smurf has written a great technical piece on the specifics of it. The only thing I would add is as the calorific value is lower (due to high methane content) the price at this stage is expected to be about 10% lower than "normal" LNG (which is 15% lower than the oil price parity). The Japanese seem to be saying that they wont lock into long term contracts because of this and yet in the next breath Toyota Tsusho signed a deal with LNG's Fisherman's Landing project for 1.5 million tonnes a year.

malachii

PS - A big call to say that it wont go back into the 70s and that "he's missed the boat". 3 weeks ago it was in the 60s!

PSPS - Have sold some shares to take profits - still a big believer in this company so still very biased!!

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Malachii Not such a big call unless there's a double dip & even then i doubt it would reach 70s let alone 60s.
The big call would be to say that it would go back down to that level.
Gooner would be wishing otherwise but as i previously said you wont get them back at those prices you've missed the boat. Currently nudging $1.

jancha said:

Malachii Not such a big call unless there's a double dip & even then i doubt it would reach 70s let alone 60s.
The big call would be to say that it would go back down to that level.
Gooner would be wishing otherwise but as i previously said you wont get them back at those prices you've missed the boat. Currently nudging $1.

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Correction currently $1.025.
Some serious buying 2 over 750k & 1.1mill in volume.
News perhaps coming?

Yes good to see this jump Jancha. The buying orders now being about twice the sellers. It would be nice if all Fridays were like this, we'll wait and see if any news appears next week.

While cussing over a 50 yr old engine today, I overheard on the local ABC a short piece about possible gas pipeline to Newcastle.

ESG and Apollo were both mentioned, and another gas co, but I missed it.
(wasnt MEL)

I believe there may have even been a soundbite from an ESG spokesman.

Checked anns when I got home, nothing on either, but good rises, AZO up over 12%

Have heard whispers that the absolutely hopeless NSW Labor Govt is looking to make some announcements of their own in this area, in an attempt to shore themselves up.

God help them (Labor) if they have to actually make an effort in Newcastle, they have been raping the land and citizenry up here for decades

malachii said:

Better not read it kingcarmleo - it mentions the "gas glut" and actually puts some numbers to it.

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Short term a glut is quite possible I'd agree. But in the long term we're going to need all the energy we can get, especially fuels (including gas) which can be used for transport as conventional oil supplies decline.

11 million shares traded to drive the price up on friday(4th highest volume in a year). 5 million traded to day, still moving upward. Buy orders now outnumbering the sellers fairly consistently. Any more thoughts on this recent activity??

Good sign breaking that 0.96 to $1 "resistence" level that has been a ceiling for quite a while. Holding above it (and increasing today) is also a very good sign.

The only short term problem that I see is - what else (ie news) is coming to drive the price up? As far as I can see - all the good news is factored in. There is a drilling report due late this week or early next week but I cant see there being anything in there. Short of a new takeover or increased corporate activity in the sector maybe????!!! Open to suggestions.

malachii

Perhaps it may be a case as one commentator put it regarding ESG last week of being a 'steady flow of good news over the next 12 months". If that is the case their may be a series of little moves through ever higher resistance levels, punctuated by various market moods or corporate or sector activity.

Nearly panicked and sold out this morning after the big falls in the US on Friday night - glad I didn't.

Now in the ASX announcements I see the 27 page presentation 'Excellence in Oil and Gas', being presented by the CEO today 19th April at the Hilton Hotel. It makes good reading with some nice positive graphics.