PES - Pure Energy Resources

[anatol]

Not so sure about your accuracy Anatol. I'm glad you put your ' I own AOE shares' disclaimer at the bottom - because - to me at least - your post reads like a biased AOE shareholders post would.

Warning to all - emotional attachment to a particular share - for any reason - is dangerous in this game.
...........

.... well it just sounds like a biased AOE holder to me!! They know exactly what they are doing and why and they know what all this gas will be worth in a couple of years time when the world wide recession is history and oil heads sky high forever more.

-E.

Dukey,
I did not answer to right after your reply, because my only answer would be to say that you were a biased PES holder. I just wanted share my ideas and analysis with you guys here. I believed I was seeing some tricky things happening behind the scenes (which some of you can't see!) I did not try to manipulate anyone.

What I said on Tuesday Feb 25th, IT IS PROVEN TO BE TRUE NOW. I am not biased, was just trying to help you guys. What AOE told yesterday was, recommending to sell your shares in the market. Same with what I said. You should come back to me and and apologize for saying "Biased".

Now, smart BG managers (!) understood AOE's intention and increased the bid to $8.25. Huh! we'll see. They are always coming behind. Believe me our aussie guys are smarter.

Yes, of course AOE is acquiring more shares. No one should complain that why AOE is not telling its every intention to the market! Who does that? In this market only the actions are being told but not the intentions. When the intentions are told, it is being only speculative. (Like Link Energy's selling coal tenement for 1.5b to a Chinese company story. A lot of people ate this bait that time, Link went up to $4, now $1.25, and I wouldn't pay more than $0.10 for it)

 

[Dangerous]

anyone dial in yesterday to the arrow briefing?... i did and my opinion is that they were not as forthcoming as media reports today suggested. anyone agree?

 

[Dukey]

Dukey,
I did not answer to right after your reply, because my only answer would be to say that you were a biased PES holder. I just wanted share my ideas and analysis with you guys here. I believed I was seeing some tricky things happening behind the scenes (which some of you can't see!) I did not try to manipulate anyone.

What I said on Tuesday Feb 25th, IT IS PROVEN TO BE TRUE NOW. I am not biased, was just trying to help you guys. What AOE told yesterday was, recommending to sell your shares in the market. Same with what I said. You should come back to me and and apologize for saying "Biased".

Now, smart BG managers (!) understood AOE's intention and increased the bid to $8.25. Huh! we'll see. They are always coming behind. Believe me our aussie guys are smarter.

Yes, of course AOE is acquiring more shares. No one should complain that why AOE is not telling its every intention to the market! Who does that? In this market only the actions are being told but not the intentions. When the intentions are told, it is being only speculative. (Like Link Energy's selling coal tenement for 1.5b to a Chinese company story. A lot of people ate this bait that time, Link went up to $4, now $1.25, and I wouldn't pay more than $0.10 for it)

Anatol - I'm not interested in some kind of protracted argument. I just call things as i see it. In fact we agree on some things, maybe many things! Clearly you have taken offence to the word biased - but the fact is everyone here is biased to some degree - whether they like it or not. It's a simple fact of human nature. You want your horse to win!! but IMO it's not part of good analysis.
I will say only this:

SOME things you have posted have been proven correct. You have some good insights.

OTHER THINGS you said are unknown - like whether or not AOE is somehow buying PES on market >$8.00 - maybe through shell??. Some are of the opinion that they CAN'T do that legally (see AOE thread). If you are saying that you KNOW they are buying on market - then I would be keen to know HOW you know that!!

SOME things you said are simply opinion - such as your repeated statements that BG is 'not serious' about their PES offer and that they 'don't know what they are doing'. and they made a mistake in buying QGC. . To me - that kind of statement reveals a clear bias, and I won't be apologising for drawing attention to it, so that others here might think twice.

-------------
For what its worth - as i have said before, I hold AOE and PES and like you, I would prefer to see AOE win the day, but I'm not blinkered enough to think that only AOE is smart or fantastic, and that BG are a bunch of clowns! BG have shown serious intent to win PES or maybe part of it. They have been smart enough to recognise the future value in QLD csg industry and invest heavily.
BG are not stupid.... but they did start this race handicapped by the initial AOE/shell holdings in PES - so they'll have to do something extraordinary to win PES. $8.25 may not be enough.

 

[anatol]

Anatol - I'm not interested in some kind of protracted argument. I just call things as i see it. In fact we agree on some things, maybe many things! Clearly you have taken offence to the word biased - but the fact is everyone here is biased to some degree - whether they like it or not. It's a simple fact of human nature. You want your horse to win!! but IMO it's not part of good analysis.
I will say only this:

SOME things you have posted have been proven correct. You have some good insights.

OTHER THINGS you said are unknown - like whether or not AOE is somehow buying PES on market >$8.00 - maybe through shell??. Some are of the opinion that they CAN'T do that legally (see AOE thread). If you are saying that you KNOW they are buying on market - then I would be keen to know HOW you know that!!

SOME things you said are simply opinion - such as your repeated statements that BG is 'not serious' about their PES offer and that they 'don't know what they are doing'. and they made a mistake in buying QGC. . To me - that kind of statement reveals a clear bias, and I won't be apologising for drawing attention to it, so that others here might think twice.

-------------
For what its worth - as i have said before, I hold AOE and PES and like you, I would prefer to see AOE win the day, but I'm not blinkered enough to think that only AOE is smart or fantastic, and that BG are a bunch of clowns! BG have shown serious intent to win PES or maybe part of it. They have been smart enough to recognise the future value in QLD csg industry and invest heavily.
BG are not stupid.... but they did start this race handicapped by the initial AOE/shell holdings in PES - so they'll have to do something extraordinary to win PES. $8.25 may not be enough.

Dukey,
if you are not interested if any kind of protracted argument, you did not need to bring every detail of my opinions. Ok. Lets cut this off here.

I don't need to be biased because no one is my horse. I can change my horse anytime. Everyone investor should do the same, then no need to be biased. I am 53 years old semi-retired business professional with mech. eng. background. I can't act with my emotions even I want to.

I did not say that I knew from a source that AOE was buying PES shares in the market. That was an analysis. And I was trying to warn you that important day (Tuesday 25th Feb). And it happened.

I knew many other things which might be very helpful to you guys here, or we could consider about those things all together. I am ready to share with you. I am making a research about the energy industry all around the world; Which energy source is coming to primary position (Oil, gas, nuclear)? What are the reserves? What are the productions? What are the consumptions? What is left for future? When does it end? Why CSG (Or CBM) is so important now? What is driving this? Which buyers want it first? Which countries needs it more? Who has it more? etc.etc. ...

I will make my posts in AOE thread.

Yes, I admire AOE. I am still investing on it. I would like to be part of this company if they could offer a job for me as I am in Brisbane

Yes AOE is a very smart company. They have very limited resources but they are managing dancing with the wolves; BG, Shell, Golar LNG Ltd., Santos, Petronas,etc.

Read AE's last presentation carefully and see how fast and safely they are going upwards;

They are going fast because you all AOE share holders and know how much you earned so far from it. (I have bought mines only four months ago).

They are safe because they have enough cash to manage their activities for the next two years.

This is another prediction from me now; They are giving the signals that are not connecting them selves to Shell very tightly, so they can move to any other direction in any time for the sake of company. (giving their resources separately, not saying together with shell or bla,bla,.. everything is net there. And LNG gas sales are already separated than Shell with LNG Ltd. Shell is out of the game there. And AOE is alone with Goral and LNG Ltd.) So There is a separation from Shell, that shows me that AOE is gaining more confidence. In this BG game there is no help from Shell, but AOE continues to fight with the BG giant in a GUERILLA WAR manner. Good on you AOE !

They are keeping their core (domestic) business active and producing gas, selling it and making money, owns half shares in Power Plants.

They are playing internationally in 4 emerging markets; China, India, Indonesia and Vietnam, exploring CSG.

They have the best experience and techniques for exploring the CSG. Now, they use Shell's Lean Manufacturing techniques to lower the Finding Cost of Gas. it is $0.07/GJ now. Market valuation is $2.07. Significant difference. (I know what is Lean Manufactruring and how it can change the things). Aoe is honestly giving its all reserve capacity net, gross, uncontracted,.. unlike others CSG explorers. I could not find those details from any of the others' sources.

I think this is enough, you should look at their presentation to understand how well AOE is doing.

Yes BG is not a smart company IMO because BG failed twice. They underestimated Origin, they lost it. They overestimated QGC, they got it. So they need PES.

Now this might be BG's third failure. And that might be the failure of BG and the PES directors who sold their shares to BG, all togehter, and some PEs shareholders who don't sell their shares over $8.

Could you understand why people were selling their PES shares at $8.15 last Friday even though BG said they will buy them at $8.25 ??? And over 4 million shares (nearly 4%) was circulated. I did not have any time to analyze this.

 

[beerwm]

I wouldnt say BG is "not a smart company", there actions seem pretty clever to me.

BG's offer of $8.25 is conditional on whether the obtain 90%, so i guess the market trading at $8.15 feel that they wont get 90%,

i guess the 0.15c premium being paid by the market is from those punting on them getting 90% or AOE upping their offer to get a greater share, or even perhaps Shell making a play.

 

[Dukey]

I I I !!
Anatol - as i have said previously - I'm not interested in some kind of protracted argument. Obviously it's pointless anyway.

Suffice to say - your last post proves my point - but you can post where you like - as can everyone else.

& Beerwm - answered your question satisfactorily IMO.
the reason is the 90% condition - which is a long way off, if it ever happens.

------------------

A question for all ...
Given Anatol's opinion about AOE & shell relationship - raises some questions like...
What exactly is SHELL's role in this struggle? So far they appear to have done sweet FA. WHY is it so?
- could this 'appearance' of separation be strategic? a trump card for AOE?

- or is there a possibility that shell could do the dirty on AOE and offload their PES holding to BG?... just - 'take the money and run'?

- on Feb 27 BG had 28.9%
- on Feb 26 AOE had 20.2 %
- we PRESUME shell still has their 15 odd %. - could be more... or less!! there have been no market releases about changes in their holding - so it should still be 15% - no?

IMO AOE need Shell bigtime. At the very least they need their 15% of PES. They simply aren't big enough to slug it out with BG alone. If they can't rely on that - then the upper hand could change to BG quick smart.

#NOTE - these are not predictions - just questions or possibilities to ponder. Any ideas welcome.
...Best value is still on the market.

 

[Ross Walker]

Well, it's only natural that we have some differences in our interpretations of the current situation, but I think we agree on all the 'fundamentals' to a great extent.

I have very little criticism of Arrow and greatly admire the vision and 'smarts' of the CEO and directors. I think their only major failure to date (as another poster pointed out recently) was not making a bid for Pure much sooner, when the Sp was around 50c or so. They must have known that Pure was vastly undervalued, given the huge tenements involved and their location. I'm sure they had a fair idea the tenements were of high quality, even without data from the subsequent drilling programs. Well, this criticism can be leveled at any of the CSG players, including BG, Shell, etc.

As for BG, well, they've made a strong offer ($8), and if they get to 50% then it will have been a successful strategic move. My feeling is that their $8.25 offer @ 90% was directed more at Shell and Arrow than we minor shareholders, and Arrows 'late' market announcement re "sell on market" (and no counter-offer) was a message to BG to let them know they'll sell their PES holding if BG offer a good enough price (though I don't think $8.25 will be enough).

What exactly is SHELL's role in this struggle?

I have no idea either. They have a small part of Arrow and a small part of Pure (spoiling stakes). That may give them enough gas for the small LNG plant but probably not enough for their proposed larger plant(s) on Curtis Is. I would have thought they would try for PES rather than see it go to BG. If not PES, then their target must be Arrow, no?

or is there a possibility that shell could do the dirty on AOE and offload their PES holding to BG?... just - 'take the money and run'?

That's my take. I can't see them being a minority shareholder with BG, unless they can cut a good deal for a % of reserves to feed their Curtis plant.

there have been no market releases about changes in their holding - so it should still be 15% - no?

I think (may be wrong) that substantial shareholders have around a month to submit their notification to the ASX, so hopefully some of our questions will be answered in a couple of weeks

 

[Ross Walker]

MEL seems to have plenty of gas in place and good location, and undervalued I think.
ESG - nothing against them but they seem to move slowly and I just can't see how they are worth 8 to 10 times what MEL is at the moment!!

Dukey, I ran a ruler over MEL and, my goodness, you're right; they appear to be a diamond among the rough. Here's my rough valuation:

Gas reserves:
2P reserves: 284 Bcf * 1.05 * 0.7 = 208PJ (assumed 70% net to MEL)
3P reserves: 1,460 Bcf * 1.05 * 0.7 = 1073PJ (assumed 70% net to MEL)
Shares 132m + 21m options
@$2/PJ (2P) = $2.71/share 2P
@50c/PJ (3P) = $3.50/share 3P

The above figures of $2/2P PJ and 50c/3P PJ are conservative; recent takeovers have averaged $2.80/PJ 2P and $1.10/PJ 3P. Using these figures we get ridiculously high valuations, suggesting MEL is very under-priced at 44c/share. My evaluations don't include MEL's other operations like conventional gas plays (Kingfisher Field, etc.).

Negatives are their location (NSW) and lack of a pipeline to their tenements (145km Lions Way pipeline to Brisbane is in the planning stages), but my belief is that NSW CSG will take off in the near future (thus my entry into ESG) and the pipeline problem will resolve similarly (in the mean time, short lines to local power stations may suffice). There have been questions raised about the quality of their coal beds in the Clarence Morton Basin, but the booked 2P and 3P reserves quoted to date suggest the quality is good enough IMHO.

I used some of my Pure proceeds to buy a sizable position @ 43.5c/share, so we'll see how they go as a long-term investment.

Here's their latest announcement:
http://www.metgasco.com.au/files/699854.pdf

anatol, have you analysed MEL?
Anyone else have comments?

R.

 

[Dukey]

Thanks for your replies Ross.
Whatever happens it will be interesting to see how it all plays out with shell, AOE, BG and PES!!
I think there is a distinct possiblity that PES could be chopped up after some kind of stalemate is reached. Only problem is - they will all want the same piece !!

As for MEL - yep I think they will have to get some attention sooner or later. If they can hook into the QLD market - they'll be laughing. There's a little on the MEL thread - but usually pretty quiet.

Hope it goes well for you ross - and me too!

 

[Dangerous]

Gas reserves:
2P reserves: 284 Bcf * 1.05 * 0.7 = 208PJ (assumed 70% net to MEL)
3P reserves: 1,460 Bcf * 1.05 * 0.7 = 1073PJ (assumed 70% net to MEL)
Shares 132m + 21m options
@$2/PJ (2P) = $2.71/share 2P
@50c/PJ (3P) = $3.50/share 3P

R.

Being in NSW wouldn't you be beter using the SGL valuation? I have heard others to say to have a look at MEL. I'd think something will have to happen there soon as they only have $2M in bank and are burning through it

 

[Dangerous]

Being in NSW wouldn't you be beter using the SGL valuation? I have heard others to say to have a look at MEL. I'd think something will have to happen there soon as they only have $2M in bank and are burning through it

Should have held my fire.... Their latest presentation shows that was $4.08/GJ!!!... second only to the petronas deal.

I don't think AGL have a clue what they are doing in this sector... not a clue

But yep... like MEL

 

[beerwm]

AGL basically just bought the full rights to their tenements,

i think both of SGL's tenements were 50% JV with AGL, so it made perfect sense,

sure you can look at $/GJ
But SGL didnt have much proved resources, so its abit skewed.

It would be like valuating a purchase of BOW/WCL, they dont have any proved reserves but I think they would be considered 'smart' buys, by AOE/BG alike.

SGL's potential was massive I believe, and 40c was a great price in prespective to its shareprice movement.

regarding PES.. whats the piece they are both after?

 

[anatol]

anatol, have you analysed MEL?
Anyone else have comments?

R.

Good work for MEL Ross, Thanks.

No I haven't done a serious work on those NSW and VIC explorers. I prefer to open my eyes on OSH (Oil Reseach) as may next candidate. I recommend you to look at it. I need more time to make a good reasearch on their reserves, but its price is already going up after their repprt this week. I am expecting a Chinese takeover on OSH in the short term. ( I've got a few signs but not so sure)

I don't beleive those big foreigner guys who have already invested and planning to invest huge amount of dollars to QLD CSG field in this very bad economical conditions, would make new investments in NSW. (And a pipeline is a another huge investment)

I can say that the NSW and VIC gas explorers' tenements are good for domestic electricty production in gas power plants. Because we have target to reduce the carbon emissions to 20/20, most coal power plants will be replaced with gas power plants, and the new power plants will run with gas. NSW and VIC gas emmisions are terribly and emberessingly high for Australia! Most of them are brown coal power plants. A CCPP (combines cycle gas and steam power plant) produces 70% less carbon emission than a brown coal power plant and 50% less than black coal power plant. Interesting isn't it! we are killing the world. The worst is VIC, unfortunately they are paying for it now. (I am an ex victorian)

Also, QLD's CSG is so much important for those big guys that they will export it to mainly to China and India which have very little domestic gas usage at the moment. In comparison to the other countries in the region like Japan, Korea and even Taiwan, they (China and India) they don't use gas, they don't know about it,.. for now. So that is the expectation that those market will emerge soon and there will eb big gas shortage. (I will post the number later on)

 

[anatol]

Regarding to the AOE and BG fight;
I think this fight will end up this way ; AOE/Shell front will come up with more than 45% at least and will force BG to give up some tenements. That would be the best reasonable business solution for both sides. They wouldn't kill each others.

The reason I am thinking this, I had a scenario; I believe BG had some discussions with AOE for a takeover offer (of AOE) last year but could not get a positive result. Then silence. AOE put the bid on PES, thought that they would buy it comfortably, didn't think BG would make and attack. (That was their biggest mistake) Then BG threatened AOE that they would not let AOE to takeover PES and pushed AOE to discuss the takeover again. But AOE refused again. BG accepted that they would not be able to buy AOE anymore. Then BG become very serious after AOE's this much challenging and put the crazy bids on PES (sorry, to me they were crazy bids). Now they saw that there is no solution, AOE's associates (not official) are buying those shares. So both sides have to be reasonable from now on. So they will share PES. So it is better to sell those PES shares and get out the mess.

Regarding to Shell's attitude; (this my perspective in the means of business) This is a very big company (6-7 times bigger than BG). AOE directors are talking and discussing the issues with some Shell managers here. Those managers are not the guys who are making those big decisions in such short times (buying AOE or bidding on $1b PES takeover). By the way QLD coal CSG issue is not a big deal for Shell either. They have a very big LNG export facilities investment in Qatar who has the second largest natural gas (not CSG!) reserves in the world. And Qatar is the only and biggest LNG exporter to Asia from Middle East (mostly to Japan who has more consumption than the total of whole Asia). So QLD CSG reserves are too small for them. So what is the rush for them! AOE sould look after themselves.

AOE directors are so smart, they saw this situation, which Shell would not help them much. Shell did not do anything other than making an announcement of "looking for a LNG plant land in Curtis Island" during the PES war either. Then AOE could not bid anymore than %7.16, but made their own strategy to buy as much as PES shares and increase their % in it. Then they wuld bargain for some tenements as they don't need the money but the gas, like BG.

Maybe, maybe,.. If above thesis is right (Shell is not very supportive to AOE is proven) BG may put a hostile bid on AEO after everything has settled down. This might happen easily if AOE SP is still under $3. I can see a good chance for this. Because AOE will have a very good position with those tenements. There is a very good logic in that takeover and it is viable. That would be the best business decison of BG then. I have the whole tenements map, I can see BG's and AOE tenements are all coming all next to each others.

By the way, it is necessary to say that the best gas fields (between Roma and Emerald) are already taken over by Santos and Origin. BG and AOE are working on their leftovers. PES and BG have a few pieces over there.

Those BOW, BUL, MPO, etc small explorers have small or big acreages in between those AOE and BG tenements in Bowen Basin (I am including PES in AOE and BG from now on), but they are not sitting on efficient gas fields (other a few of them). So those small guys will not be very important for BG and AOE. I wouldn't make any investment on them unless I have some spare money to invest on the cheapest one like BUL.

So that best option for me to hold my AOE shares and see what would happen after this BG fight ends. (I am fully in AOE)

 

[anatol]

Another news : From Eureka Report (needs to be a member to see this news)

Citi rates AOE as Buy, High Risk 27/02/2009 04:00PM
AOE -- Arrow Energy NL
The broker expected a profit and Arrow posted a loss, which doesn't sound promising, so the broker has reduced future profit expectations.
This is not the prime focus however, that being LNG potential, and the broker has actually increased its target from $4.57 to $4.86 to account for reserve increases. With a strong balance sheet, the broker retains Buy.
Target price is $4.86 Current Price is $2.69 Difference:$2.17 - (brackets indicate current price is over target). If AOE meets the Citi target it will return approximately 81% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.
Citi forecasts a full year FY09 dividend of 0.00 cents and EPS of 2.80 cents .
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 96.07.
Market Sentiment: 0.7

 

[Dangerous]

Yes BG is not a smart company IMO because BG failed twice. They underestimated Origin, they lost it. They overestimated QGC, they got it. So they need PES.

My comments on the KAR thread should be read... CSG is a very unreliable feed gas for LNG - why do you think Shell is taking so long to move.

Anatol, IMO you are correct - BG need PES (although a huge understatement)

 

[anatol]

My comments on the KAR thread should be read... CSG is a very unreliable feed gas for LNG - why do you think Shell is taking so long to move.

Anatol, IMO you are correct - BG need PES (although a huge understatement)

What I said before was "BG needs more than PES. PES is not BG's real target. It is AOE". I still insist on this idea and posted the above thought last night.

 

[beerwm]

Anatol;

BG would not make a $1,000,000,000 bid for PES, just to "punish" AOE. And certainly not offer them $8.25 for shares they picked up for <$1.00.

-and why would the buy a stake in PES at $5.00+ then? if they intended to T/O PES all along. <$3

Shell's intentions are not of pure business. Take their 10-15% stake in PES, they were happy to sell to AOE at $5.00, but now have gone silent. If it was purely business they would of accepted or intended to accept BG's superior offer. Shell's intentions arent entirely clear.

And why would BG make a hostile bid for AOE now? they have inflated AOE's price by upping the bid for PES [ie. csg], and why wouldnt they make a T/O after AOE acquired PES.

-

Basically, BG has contracts and need CSG. PES is great value at $8.25. So BG must be very happy with themselves, they have upped their reserves at a good price.

AOE dont have the money BG has.

 

[Mad Mel]

They have a small part of Arrow and a small part of Pure (spoiling stakes). That may give them enough gas for the small LNG plant but probably not enough for their proposed larger plant(s) on Curtis Is. I would have thought they would try for PES rather than see it go to BG. If not PES, then their target must be Arrow, no?

Shell may go a completely different direction: Santos. Santos has both gas, and a site for a LNG facility. To be honest, I will be completely surprised if STO isn't bought by one of RDS or XOM (or maybe even BG) in the next year.

 

[Dangerous]

Shell may go a completely different direction: Santos. Santos has both gas, and a site for a LNG facility. To be honest, I will be completely surprised if STO isn't bought by one of RDS or XOM (or maybe even BG) in the next year.

would be acquirers are worried about the indonesian mud flow that won't stop.... it's a nightmare



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