Panicked over a 1% drop on Wall Street on Friday night?
Boy you must have been a nervous wreck thru the GFC.
ESG - Eastern Star Gas
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Panicked over a 1% drop on Wall Street on Friday night?
Boy you must have been a nervous wreck thru the GFC.
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Down she goes again. Qtrly came out but no news came with it.
ESG knows how to take her time but I guess it will be worth it if a higher price can be gained from its shares when takeover day happens.
ESG knows how to take her time but I guess it will be worth it if a higher price can be gained from its shares when takeover day happens.
Any thoughts on the current downward price action?. Is this the 'smart money' leaving, stop's being triggered, or just a good buying opportunity. I don't know.
I dont think the nature of this type of development is going to generate price changing news from the drill bit unlike conventional oil and gas. The upward drivers will be steady apart from exceptional production from pilot projects, corporate activity or significant development announcements
I dont think the nature of this type of development is going to generate price changing news from the drill bit unlike conventional oil and gas. The upward drivers will be steady apart from exceptional production from pilot projects, corporate activity or significant development announcements
Logique
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This wouldn't have helped:
Coal seam gas sector fears blowout from RSPT
http://www.smh.com.au/business/coal-seam-gas-sector-fears-blowout-from-rspt-20100503-u3qe.html
As to the future of ESG, it's hostage to the proposed RSPT, along with the rest of the resources sector. Markets hate uncertainty. ESG is a sound business, but 40% tax on super profits is going to affect your bottom line.
Coal seam gas sector fears blowout from RSPT
http://www.smh.com.au/business/coal-seam-gas-sector-fears-blowout-from-rspt-20100503-u3qe.html
As to the future of ESG, it's hostage to the proposed RSPT, along with the rest of the resources sector. Markets hate uncertainty. ESG is a sound business, but 40% tax on super profits is going to affect your bottom line.
Not sure this is the case. This is from PetroleumNews.net.au
WHILE the oil and gas industry has raised concerns about the impact of the proposed tax changes brought by the Henry Tax Review on the coal seam gas sector in Queensland, junior explorers will benefit from the introduction of a resource exploration rebate.
IMHO the drop in SP maybe due to ESG'S current drilling programme coming to an end and not resuming until later this year. See ASX announcement yesterday
I nvestors may be moving out looking for better opportunities elsewhere
All IMHO & DYOR
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With a 16 Million trade volume and the biggest single day fall since early 2009, there are bigger issues at play! I've just read a VERY heated post on stockanxiety.com 's blog! He is pretty angry and he posted up a link to Bloomberg article specific to Eastern Star Gas! I dont have the link off hand but it is on his post anyway and his post is pretty funny! Actually its not that funny when I look at my own personal ESG holdings decline today
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That was a BIG recovery by ESG today. Up 14.6% Over 12 million shares traded. Certainly been oversold but is there more to the rise than just that ? Hope so...
I think we are in the opposite to what was discussed a few weeks ago. Back then all the good news was factored into the stock and short of a takeover offer for the company - it really wasn't going to go much higher. Now I think all the bad news is factored into the price and any good news story - directly related or not - will drive the price higher. Just look at there reserves/output/industry/managment. A bargain in the 60s and only now in the mid to high 80s could you say it was getting close to fair value. Even if the Government manages to introduce the super tax - it's got to be worth it. And if they water it down at all like everyone is hoping/expecting then I think you'll see another jump in price.
malachii
PS - I've been buying large chunks of ESG so I am extremely biased yet again!!
malachii
PS - I've been buying large chunks of ESG so I am extremely biased yet again!!
So with the current mootings of Santos possibly selling a portion of its Gladstone LNG project to Shell ( as reported by Bloombergs quoting AFR also referred to by media quoting Macquarie a few days ago) what does this potentially mean for little ESG quietly drilling holes in the ground? Has the time interval where STO would have had to pay extra to Hillgrove passed? Would a cash injection from Shell free STO to make an offer for ESG? Does AGK's interest in a gas storage facility via their MOS offer mean that they would like to secure more reserves for their long term east coast business. Would AGK have an interest in ESG. Or am I an ESG holder clutching at straws
I found this and have been told other VERY good things about ESG:
It has been a very long wait but the esg rocket is about to take off for the following reasons.
1.esg is not doing much drilling these days as it has more gas than it can handle.
2.wilga park is at full capacity.More capacity arrives in a couple of months.
3.Rbsmorgans have placed esg on it's high conviction list.(they believe esg will be taken over before 6 months).nik burns their gas analyst is very close to esg.
4.santos and bg have not got enough gas.
5.tax position is now sorted out.
6.reserve upgrade cannot be far away.
7.the last 2 months have allowed esg more time to do some more deals.I am expecting a number of new deals to be announced over the next month.
It has been a very long wait but the esg rocket is about to take off for the following reasons.
1.esg is not doing much drilling these days as it has more gas than it can handle.
2.wilga park is at full capacity.More capacity arrives in a couple of months.
3.Rbsmorgans have placed esg on it's high conviction list.(they believe esg will be taken over before 6 months).nik burns their gas analyst is very close to esg.
4.santos and bg have not got enough gas.
5.tax position is now sorted out.
6.reserve upgrade cannot be far away.
7.the last 2 months have allowed esg more time to do some more deals.I am expecting a number of new deals to be announced over the next month.
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Thanks for the info, I hope we get a good price for our shares when it happens
............................Welcome Gunsmoke - as you can see there are many of us on here that are believers in ESG. However just make sure you dont get caught in the hype. We have seen many claims in regards to this stock and this sector - claims that the share will never be seen at current prices again, that it is racing away and will never be as cheap as last week. It is still just a stock that is caught up in the rest of the emotions of the current market.
Just some comments on the points you make:
1.esg is not doing much drilling these days as it has more gas than it can handle.
ESG is drilling and is planning on drilling as much as ever as far as I can tell in its announcements and in the reports (see the recent presentation to the Credit Suisse London Oil and Gas conference)
2.wilga park is at full capacity.More capacity arrives in a couple of months.
This is being ramped up as we speak.
3.Rbsmorgans have placed esg on it's high conviction list.(they believe esg will be taken over before 6 months).nik burns their gas analyst is very close to esg.
I know nothing about this but like anything - it's not a takeover until it becomes a takeover! This sector has seem major rationalisation over the last couple of years - it wouldn't suprise me but there again - I wouldn't invest for this reason alone.
4.santos and bg have not got enough gas.
Good report in the weekend AFR about this. BG have more than enough gas for their first 2 trains and even the guy writing the article could not come up with any reason why BG would merge/takeover anyone currently. They have reserves/capacity/contracts coming out of their ears!
Santos are a different kettle of fish - although it seems that they need to sort out production concerns before they look at more reserves.
5.tax position is now sorted out.
Think you're refering to the RSPT. They copped a bad deal out of the initial announcement and the market pretty quickly realised this was going to change so the price bounced. Haven't seen much in regards to the new announcement. Not even sure they have got around to specifics on CSG but I might be wrong on this one.
6.reserve upgrade cannot be far away.
Like most exploration companies - they try to make upgrade time never too far away!!
7.the last 2 months have allowed esg more time to do some more deals.I am expecting a number of new deals to be announced over the next month.
Could be - who knows???
This is a good company with good reserves in a good sector with good managment. As a long term hold I dont think you can go wrong (subject to all the usual insanities on the stock market and with mining companies!!). In the shorter term it wouldn't surprise me to see this dip back into the 70s as there is no real news expected for a little while and the overall market is very volatile. However a takeover anywhere in this sector could throw all these assumptions straight out the window!
malachii
PS I own shares in ESG so my opinions is very biased!!!!!
Just some comments on the points you make:
1.esg is not doing much drilling these days as it has more gas than it can handle.
ESG is drilling and is planning on drilling as much as ever as far as I can tell in its announcements and in the reports (see the recent presentation to the Credit Suisse London Oil and Gas conference)
2.wilga park is at full capacity.More capacity arrives in a couple of months.
This is being ramped up as we speak.
3.Rbsmorgans have placed esg on it's high conviction list.(they believe esg will be taken over before 6 months).nik burns their gas analyst is very close to esg.
I know nothing about this but like anything - it's not a takeover until it becomes a takeover! This sector has seem major rationalisation over the last couple of years - it wouldn't suprise me but there again - I wouldn't invest for this reason alone.
4.santos and bg have not got enough gas.
Good report in the weekend AFR about this. BG have more than enough gas for their first 2 trains and even the guy writing the article could not come up with any reason why BG would merge/takeover anyone currently. They have reserves/capacity/contracts coming out of their ears!
Santos are a different kettle of fish - although it seems that they need to sort out production concerns before they look at more reserves.
5.tax position is now sorted out.
Think you're refering to the RSPT. They copped a bad deal out of the initial announcement and the market pretty quickly realised this was going to change so the price bounced. Haven't seen much in regards to the new announcement. Not even sure they have got around to specifics on CSG but I might be wrong on this one.
6.reserve upgrade cannot be far away.
Like most exploration companies - they try to make upgrade time never too far away!!
7.the last 2 months have allowed esg more time to do some more deals.I am expecting a number of new deals to be announced over the next month.
Could be - who knows???
This is a good company with good reserves in a good sector with good managment. As a long term hold I dont think you can go wrong (subject to all the usual insanities on the stock market and with mining companies!!). In the shorter term it wouldn't surprise me to see this dip back into the 70s as there is no real news expected for a little while and the overall market is very volatile. However a takeover anywhere in this sector could throw all these assumptions straight out the window!
malachii
PS I own shares in ESG so my opinions is very biased!!!!!
Logique
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One of my favourite stocks, it's been on my watchlist forever. I've traded in and out over the time.
My strategy is to buy on weakness, but ESG has had an alarming tendency to pulse up, and then either ease off or go dormant for a while. But I think it's beautifully positioned in the csg industry, which got a special deal on the MRRT.
So long as it's share price erraticism suits your trading strategy, it's a great long term stock, and Malachii's and Gunsmoke's comments are worth reading.
My strategy is to buy on weakness, but ESG has had an alarming tendency to pulse up, and then either ease off or go dormant for a while. But I think it's beautifully positioned in the csg industry, which got a special deal on the MRRT.
So long as it's share price erraticism suits your trading strategy, it's a great long term stock, and Malachii's and Gunsmoke's comments are worth reading.
If ESG reaches 90c by mid week, STO will move immediately to prevent having to pay too much. The Octopus told me this!!
The only thing stopping them will be available funds.
ESG will want more then the usual 40% premium before they sell. I'm hoping for over $3. What do you guys think would be a fair price?
The only thing stopping them will be available funds.
ESG will want more then the usual 40% premium before they sell. I'm hoping for over $3. What do you guys think would be a fair price?
It's based on my massive knowledge in aussie stocks and share trading
actually just an arbitary figure that I've come up with when I kneel before God each night!!
I haven't bought shares for about 10 years and have only bought ESG based on a friend who thinks he's on a winner. Hope he's right!!!
I have been trawling the net for info etc and I can't see how STO can't buy ESG in the sooner, rather then later.
actually just an arbitary figure that I've come up with when I kneel before God each night!!
I haven't bought shares for about 10 years and have only bought ESG based on a friend who thinks he's on a winner. Hope he's right!!!
I have been trawling the net for info etc and I can't see how STO can't buy ESG in the sooner, rather then later.
JUST FOUND THIS ON HOTCOPPER:
Like the Panteen shampoo comercial. It won't happen overnight....but it will happen!!!
For the benefit of all the new investors looking at ESG, and some of the older ones who may have been getting jaded by all the shorting and downramping (yes, you SomeGUY : ) ), it might be time for an executive summary of ESG, and the trends surrounding it.
(feel free to chip in any extra info that I have missed).
ESG SPECIFICS
- ESG already have 988PJ of 2P. At average transaction metrics, and according to DC, this is worth $2.4 billion. So, over 3 times the current price. And that is based on 6 month old data.
- Since then, ESG have been production testing 3 seams for the first time ever.
- There is an estimated 17TCF in just PEL 238.
- The flow rates ESG have already reported are incredible from ESG thinnest seam - 2MMCFD en route to a forecast 3.5MMCFD. And with ESG demonstrating they can have large spacings between laterals, it means great economics for full field development. High flows and large spacings = lots of gas for less money. This also means a much smaller footprint.
- ESG has signed two huge MOU's recently, one with ERM Power, one of the biggest privately owned companies in Australia (who are looking to list publicly), the other with the massive Japanese consortium of Hitachi-Toyo to examine a scalable LNG plant in Newcastle. Hitachi also allude to the fact that there are deals in the wings for offtakes from this project.
- ESG has a size resource that rivals QGC. So, easily big enough to support the massive deals we have seen signed with the Chinese ($50 billion).
- ESG is tightly held by management. (over 10%) Thus, they are highly motivated to get the best possible deal for shareholders.
DEMAND
- Asian demand is strong. The number of deals in the gas sector demonstrate this beyond a doubt. China, Japan, India, Malaysia etc. all need gas to underwrite their economic development. And there are competitive tensions between these Asian buyers to secure gas resources.
- There are very few countries in the world who have large gas resources that are open for investment for multi-nationals. The rise of State-Owned resource companies locks up much of the world's gas. Only Australia, the US and Canada have large and open markets for gas investment. So this is where the majors are going shopping.
- That Australia's CSG is in demand by multi-nats is evident in the $30 billion worth of investment (so far) in QLD. Shell, BG, ConocoPhillips, Petronas... a who's who of international players buying into CSG. This is the sector ESG is in.
- NSW electricity to be privatised, meaning new power plants to be built. These will be gas-fired. The market is suddenly going to expand in size.
- No new coal-fired plants will be built in this country. NSW planning to introduce a ban on new coal-fired. ESG has the dominant gas reserve in the biggest state. Geographically central. Strategically valuable.
- Carbon emissions will have to drop. So, one way or the other, a price of carbon is coming. Gas will benefit. It is 'carbon-light', and will take the bulk of the base-load that renewals cannot in the short-medium term.
- The LNG projects in QLD will cause the price of domestic gas to rise - parity pricing. This is a huge benefit to all gas producers, exporters or not. Santos and Origin know this, as does AGL and TRU. You need to control the resource from source, or else be a price-taker.
- NONE of the LNG projects in QLD have the requisite gas to meet their size ambitions. And if and when there is to be consolidation between these companies, they all want to be the larger and more dominant player in an mergers or JVs. As such, there is considerable competitive tension for each of them to secure the unallocated gas resource, and get to the scales of economy to maximise their project returns.
SANTOS
- Missed out on QGC in a bidding war, who later signs a $50 billion offtake deal with the Chinese. Darn.
- Santos buys into ESG and PEL 238 subsquent to this. PEL 238 gives them gas rights, the ESG gives them nothing except a stepping stone to attempt a full acquisition.
- Santos have already shown a willingness to pay $1.00 per share for ESG based on much lower 2P reserves.
- Santos holding in PEL 238 gives them strong synergies with their other Gunnedah holdings (which are some way back in the development cycle).
- Santos is making the Gunnedah basin a major focus, with a new regional office set up there in the last 9 months.
- Santos say ESG's resource is one that they will "die fighting for".
- In 12 months since becoming ESG shareholders, there have been no commercial deals of any sort done with ESG, or with PEL 238 - so where is the commercial benefit that Santos have achieved? Not only that, ESG have been signing deals with third parties independently, not as as JV with Santos in PEL 238.
- Santos are looking to sell down an equity share in GLNG, freeing up more capital.
- Santos have $2 billion in cash, free cashflow, and a debt facility of $3 billion. They will have more gas after they sell down and equity share of GLNG.
- Santos would benefit from the supply-point flexiblity that ESG's gas could give them. As a major domestic supplier, a NSW resource would give them the ability to do 'gas-swaps'.
- Santos would benefit greatly by having sufficient 2P reserves for a second LNG train at GLNG. The capex for the first train is around $8 billion, whereas the second train would cost an extra $4 billion. So the ability to commit to a second train is highly attractive.
- Santos' 2P reserve growth has been slow in the last 12 months. In order to make an FID on a two-train project, and attract equity/offtake partners, they need to demonstrate they can deliver of 2 trains worth of 2P reserves. And, they cannot do that based on their current 2P reserves and growth curve.
SUMMARY
So, we have a commodity in strong demand in a growing region, and in a lower-carbon environment. We have gas resources hard to secure for multi-nats, and a growing domestic market for power-gen. We have ESG with a known massive and growing resource and reserve. We have a large shareholder who previously missed the prize with QGC, unable to obtain any commercial deals with ESG, and an imminent FID on their project which is short of gas. And we have consolidation likely to happen this half (with Santos' FID already delayed twice).
Meanwhile, we have ESG being very quiet publicly but clearly doing deals in the background. And ESG share price being shorted in the last 9 months - who would short a known takeover target..?
And, we know that the vast majority of companies with massive resources tend to go up the food chain, as the big resources get together with big capital. And this process of course means strong share price gains for the companies who go up the food chain.
No conspiracy theories here. Just research, business fundamentals and common sense.
I will leave you all to work out what is like to happen next...
Like the Panteen shampoo comercial. It won't happen overnight....but it will happen!!!
For the benefit of all the new investors looking at ESG, and some of the older ones who may have been getting jaded by all the shorting and downramping (yes, you SomeGUY : ) ), it might be time for an executive summary of ESG, and the trends surrounding it.
(feel free to chip in any extra info that I have missed).
ESG SPECIFICS
- ESG already have 988PJ of 2P. At average transaction metrics, and according to DC, this is worth $2.4 billion. So, over 3 times the current price. And that is based on 6 month old data.
- Since then, ESG have been production testing 3 seams for the first time ever.
- There is an estimated 17TCF in just PEL 238.
- The flow rates ESG have already reported are incredible from ESG thinnest seam - 2MMCFD en route to a forecast 3.5MMCFD. And with ESG demonstrating they can have large spacings between laterals, it means great economics for full field development. High flows and large spacings = lots of gas for less money. This also means a much smaller footprint.
- ESG has signed two huge MOU's recently, one with ERM Power, one of the biggest privately owned companies in Australia (who are looking to list publicly), the other with the massive Japanese consortium of Hitachi-Toyo to examine a scalable LNG plant in Newcastle. Hitachi also allude to the fact that there are deals in the wings for offtakes from this project.
- ESG has a size resource that rivals QGC. So, easily big enough to support the massive deals we have seen signed with the Chinese ($50 billion).
- ESG is tightly held by management. (over 10%) Thus, they are highly motivated to get the best possible deal for shareholders.
DEMAND
- Asian demand is strong. The number of deals in the gas sector demonstrate this beyond a doubt. China, Japan, India, Malaysia etc. all need gas to underwrite their economic development. And there are competitive tensions between these Asian buyers to secure gas resources.
- There are very few countries in the world who have large gas resources that are open for investment for multi-nationals. The rise of State-Owned resource companies locks up much of the world's gas. Only Australia, the US and Canada have large and open markets for gas investment. So this is where the majors are going shopping.
- That Australia's CSG is in demand by multi-nats is evident in the $30 billion worth of investment (so far) in QLD. Shell, BG, ConocoPhillips, Petronas... a who's who of international players buying into CSG. This is the sector ESG is in.
- NSW electricity to be privatised, meaning new power plants to be built. These will be gas-fired. The market is suddenly going to expand in size.
- No new coal-fired plants will be built in this country. NSW planning to introduce a ban on new coal-fired. ESG has the dominant gas reserve in the biggest state. Geographically central. Strategically valuable.
- Carbon emissions will have to drop. So, one way or the other, a price of carbon is coming. Gas will benefit. It is 'carbon-light', and will take the bulk of the base-load that renewals cannot in the short-medium term.
- The LNG projects in QLD will cause the price of domestic gas to rise - parity pricing. This is a huge benefit to all gas producers, exporters or not. Santos and Origin know this, as does AGL and TRU. You need to control the resource from source, or else be a price-taker.
- NONE of the LNG projects in QLD have the requisite gas to meet their size ambitions. And if and when there is to be consolidation between these companies, they all want to be the larger and more dominant player in an mergers or JVs. As such, there is considerable competitive tension for each of them to secure the unallocated gas resource, and get to the scales of economy to maximise their project returns.
SANTOS
- Missed out on QGC in a bidding war, who later signs a $50 billion offtake deal with the Chinese. Darn.
- Santos buys into ESG and PEL 238 subsquent to this. PEL 238 gives them gas rights, the ESG gives them nothing except a stepping stone to attempt a full acquisition.
- Santos have already shown a willingness to pay $1.00 per share for ESG based on much lower 2P reserves.
- Santos holding in PEL 238 gives them strong synergies with their other Gunnedah holdings (which are some way back in the development cycle).
- Santos is making the Gunnedah basin a major focus, with a new regional office set up there in the last 9 months.
- Santos say ESG's resource is one that they will "die fighting for".
- In 12 months since becoming ESG shareholders, there have been no commercial deals of any sort done with ESG, or with PEL 238 - so where is the commercial benefit that Santos have achieved? Not only that, ESG have been signing deals with third parties independently, not as as JV with Santos in PEL 238.
- Santos are looking to sell down an equity share in GLNG, freeing up more capital.
- Santos have $2 billion in cash, free cashflow, and a debt facility of $3 billion. They will have more gas after they sell down and equity share of GLNG.
- Santos would benefit from the supply-point flexiblity that ESG's gas could give them. As a major domestic supplier, a NSW resource would give them the ability to do 'gas-swaps'.
- Santos would benefit greatly by having sufficient 2P reserves for a second LNG train at GLNG. The capex for the first train is around $8 billion, whereas the second train would cost an extra $4 billion. So the ability to commit to a second train is highly attractive.
- Santos' 2P reserve growth has been slow in the last 12 months. In order to make an FID on a two-train project, and attract equity/offtake partners, they need to demonstrate they can deliver of 2 trains worth of 2P reserves. And, they cannot do that based on their current 2P reserves and growth curve.
SUMMARY
So, we have a commodity in strong demand in a growing region, and in a lower-carbon environment. We have gas resources hard to secure for multi-nats, and a growing domestic market for power-gen. We have ESG with a known massive and growing resource and reserve. We have a large shareholder who previously missed the prize with QGC, unable to obtain any commercial deals with ESG, and an imminent FID on their project which is short of gas. And we have consolidation likely to happen this half (with Santos' FID already delayed twice).
Meanwhile, we have ESG being very quiet publicly but clearly doing deals in the background. And ESG share price being shorted in the last 9 months - who would short a known takeover target..?
And, we know that the vast majority of companies with massive resources tend to go up the food chain, as the big resources get together with big capital. And this process of course means strong share price gains for the companies who go up the food chain.
No conspiracy theories here. Just research, business fundamentals and common sense.
I will leave you all to work out what is like to happen next...
but this too....
Resources Daily | More than $35 billion in coal seam gas projects will be delayed after Federal environment minister Peter Garrett demanded more time to study their potential environmental impacts.
WA got their approval so I would think QLD will get theirs.
More time for ESG to grow.
Resources Daily | More than $35 billion in coal seam gas projects will be delayed after Federal environment minister Peter Garrett demanded more time to study their potential environmental impacts.
WA got their approval so I would think QLD will get theirs.
More time for ESG to grow.
