The CSM Thread! (Coal Seam Methane)

[chops_a_must]

Coal Seam Methane, Coal Bed Methane, Cow Bed Methane, whatever you call it, here it is.

And it's surprising really, considering that this sector has done really well, that no-one has bothered to devote a thread to it, or the stocks involved in the sector. I for one think this year will be a very good year for CSM stocks as transitional energy sources will be in focus for obvious reasons.

A few weeks back I was hoping to do this, a comparison between CSM stocks on the ASX. Alas, I haven't had the time and MEL sort of beat me to it. For starters, I'm just going to list the CSM stocks that I know of, with their market caps as of the 2/4/07. And over the next few weeks I will attempt to find out the 1P, 2P and 3P reserves each have (along with reserve targets), so we can then compare and rate. Feel free to add in any information or other stocks, it would be appreciated.

Cheers.

AOE - 973m
EIV - 41m
ESG - 127m
MEL - 101m
MPO - 58m
QGC - 1,127m
SGL - 126m
SHG - 109m
WCL - N/A
WGP - 4m

AOE still looks WAAAAY undervalued in comparison to QGC after the reserve upgrade...

 

[Dukey]

Re: The CSM Thread!

Whats your current favourite chops... AOE ??
I'm looking at which of these to invest in next. Guess I'll pick maybe 2 out of those listed. I've noticed SHG - which has been off my radar - has jumped a few cents today on news of good permeability in it's latest 'lacerta' drilling - after a big jump earlier in the month. Up from 37 to 53 ish cents this month!! would've been nice to be in on that.
MEL on the boil last week - looks good.
ESG looks like it could go anytime soon.

I guess the other consideration is potential M/A action in this sector.

----------
PS. ... Where's the CHEESE??!!

 

[Dukey]

Re: The CSM Thread!

Just notice WGP in a trading halt this morning - I've never heard about this mod before today!!

May have something to do with recent announcement of 'small oil show' in their kentucky well which was to logged and reported.....?? In fact their trading halt announcement clearly states that it IS in regards to the kentucky well oil show.

 

[chops_a_must]

Re: The CSM Thread!

Whats your current favourite chops... AOE ??
I'm looking at which of these to invest in next. Guess I'll pick maybe 2 out of those listed. I've noticed SHG - which has been off my radar - has jumped a few cents today on news of good permeability in it's latest 'lacerta' drilling - after a big jump earlier in the month. Up from 37 to 53 ish cents this month!! would've been nice to be in on that.
MEL on the boil last week - looks good.
ESG looks like it could go anytime soon.

I guess the other consideration is potential M/A action in this sector.

----------
PS. ... Where's the CHEESE??!!

I don't know what the potential reserves are for SHG, but they look to be one of the more overvalued on the list relative to certified reserves. However, a large part of their cap I think has to do with the acreage they have been granted in the north sea. And they look to be in production for CSM by the end of the year (I think).

Yeah, I think AOE has the best growth prospects with exposure both in Australia and overseas. To me, MEL still looks to be rather undervalued on reserves (and was the reason I bought into them), but it might not have the high impact of overseas results that AOE will bring.

ESG will likely trade in a range for the next few months as new certification will take a while. But if they get anywhere near close to what they are expecting, it could be huge.

At the moment holding AOE, MEL, ESG (as the high risk play) and QGC (for some unknown reason). But AOE looks the most secure out of the lot of them I think, and could become an enormous company.

Lol.

WGP - Yeah, I noticed that one last night. It is tiny, so any positive news might send it skyrocketing. Watching it closely for a potential short term trade.

 

[chops_a_must]

Re: The CSM Thread!

Interesting developments for MEL and MPO:

METGASCO EXPANDS CLARENCE MORETON BASIN
ACREAGE FURTHER
Metgasco (ASX:MEL) advises that it has expanded its interests in the Clarence Moreton Basin by farming in to PEL 426 and expanding our existing interests in PEL 13 to include conventional oil and gas rights.

Metgasco will operate and initially earn a 50% interest in the coalbed methane (CBM) and conventional hydrocarbon rights in PEL 426, currently held by Molopo (ASX: MPO) by funding an agreed work programme. This will involve drilling one new dual target exploration well and acquisition of new seismic and reprocessing of existing seismic over two identified highly prospective conventional hydrocarbon structures. Once Metgasco has earned 50%, by spending up to $500,000, if both parties mutually agree, Metgasco may increase its interest to 75% by spending a further $250,000 in PEL 426 on additional drilling or new seismic as agreed.

In PEL 13 Metgasco has farmed in to the conventional hydrocarbon interests held by Molopo. Metgasco intends to earn up to 50% interest by undertaking a mutually agreed work programme with an expenditure of $300,000. Metgasco is currently completing a CBM programme for the right to earn up to 75% in the CBM interests in PEL 13.

PEL 426 and PEL 13 cover an area of approximately 3,450 km² and 1,200 km² respectively. Despite exploration dating back to the 1960’s, the Clarence Moreton basin remains under explored and has the potential to host both coal seam gas and conventional hydrocarbon accumulations, with earlier exploration identifying a number of structures, which are as yet untested.

Metgasco’s Managing Director, David Johnson said “We are very pleased to be expanding our acreage further in the Clarence Moreton basin. We consider the
conventional and CBM prospectivity to be very exciting in certain areas of this acreage. We are also delighted to be working more closely with Molopo in these new project areas.”

Looks good for both parties, perhaps moreso for MEL, but it frees up some cash for MPO to develop its own areas of interest.

 

[chops_a_must]

Re: The CSM Thread!

News regarding AOE:

Arrow leverages bigger farm-out terms

Tuesday, 10 April 2007

FOLLOWING a recent upgrade to its coal seam methane reserves, Arrow Energy has revised the terms of a farm-out agreement with Swedish energy company Energy Infrastructure Group AB. Arrow will now keep a higher stake in its assets while increasing bonus payments for reserves certification milestones.

At the end of February, Arrow signed a letter of intent with EIG in which the companies agreed to fast-track the development of several assets by agreeing to share the interest 50:50.

But under the revised LOI, Arrow said EIG would now take a 30% stake in the Daandine power generation project.

This follows a major boost to reserves at Daandine by 221 petajoules, a rise from 25PJ to 246PJ, late last month. The increase saw Arrow's total net 2P reserves jump from 498PJ to 719PJ.

Despite the lower Daandine interest, EIG will continue to keep a 50% stake in the other assets subject to the farm-in deal, namely blocks in the Clarence-Moreton and Coastal Queensland basins, and the Dundee project.

Also, the milestone bonus payments have been increased from $75 million to $115 million. These payments will see EIG pay Arrow $30 million each time it achieves certification of 250PJ, 500 PJ and 750PJ of gross proven and probable gas reserves on the portfolio. It will also make a fourth milestone payment of $25 million for achieving 250PJ of 2P reserves on PL230.

As per the original agreement, EIG will contribute $150 million to exploration, appraisal and potentially development work, and will pay Arrow all of its costs spent on the assets since March last year.

Arrow said it expects to close the deal before the end of this month.

EIG is a privately owned energy asset holding company based in Sweden with energy development subsidiaries active in the Asia-Pacific.

Looks fantastic. And as I said elsewhere, looks like it is putting upward pressure on other CSM stocks. QGC and MEL in particular.

MEL now on a definite potential breakout watch. Very little stopping it getting to 1.20. Volume looks very good.



EDIT: 1.05 has now been taken.

And also, a nice little article about the CSM boom:

Qld Govt talks up CSM boom
Wednesday, 4 April 2007

QUEENSLAND'S Energy Minister Geoff Wilson has hailed the state's 13% gas scheme a success, saying it has helped spark more than $1 billion of coal seam methane development since the year 2000.

"The scheme and its requirements for gas-fired generation has been the foundation of Queensland's mushrooming coal seam gas industry," Wilson said.

Now in its third year, the gas scheme requires retailers and other liable parties to source 13% of the electricity they sell or use in Queensland from gas-fired generation.

"In 2000, when the scheme was announced, coal seam gas was supplying around 2 petajoules of gas a year, or around 2% of Queensland's gas requirements," Wilson said during a visit to Origin Energy's Spring Gully CSM project near Roma.

"Now, in 2007, coal seam gas will supply about half, or around 60PJ, of Queensland's gas."

This is expected to increase to 70% by 2010, he said.

Wilson said the CSM sector was expected to receive ongoing investment of $160 million per year, with most of that earmarked for regional areas.

He added that the scheme was also expected to reduce the growth of Queensland's greenhouse gas emissions by approximately 26 million tonnes over the 15-year life of the scheme.

"When the scheme was announced in 2000, Queensland's gas-fired generating capacity was about 900MW," he said.

"The commissioning in 2006 of the 450MW Braemar Power Station, west of Dalby, brought Queensland's gas-fired power station capacity to over 2000MW and there is at least as much gas-fired generating capacity under development or under consideration in Queensland."

Looks to be plenty of growth prospects in the sector for a while to come yet.

Cheers,
Chops.

 

[Dukey]

Re: The CSM Thread!

Does sound great doesn't it.
I sold a parcel of QGC on todays rise - so AOE and MEL will both be on my shopping list. Just wish to hell I jumped on AOE earlier. They've gone so hard recently its scary now - but it's hard to see anything but more of the same from here....
CSM sector has been so good for so long now.... I keep thinking the bubble must burst sooner or later - but I can't for the life of me find a reason why it should.
And green(ish) to boot.
Roll on CSM

 

[chops_a_must]

Re: The CSM Thread!

Does sound great doesn't it.
I sold a parcel of QGC on todays rise - so AOE and MEL will both be on my shopping list. Just wish to hell I jumped on AOE earlier. They've gone so hard recently its scary now - but it's hard to see anything but more of the same from here....
CSM sector has been so good for so long now.... I keep thinking the bubble must burst sooner or later - but I can't for the life of me find a reason why it should.
And green(ish) to boot.
Roll on CSM

AOE's prospects look fantastic and they seem to be positioning themselves to become a giant of a company. Although I have no idea as to what value they should be as of yet. I think the safest way to go is to avoid the CSM producers that only have fields in Queensland; the margins are too small. I can't see the CSM bubble bursting just yet. The fundamentals are too strong and most importantly, the cash earning potential is current and huge. Cheap to produce, close to existing infrastructure, in an environment where everyone is so conscious of clean energy, makes CSM a definite growth industry going forward.

QGC is an interesting one. Insto's and directors sell, and then it breaks out at the end of a failed buy-back. It makes me want to say in a Bender voice, "Funny, funny ... stuff ..."



I see it as a huge positive for QGC that the buy back failed. It was a silly idea, and was giving the company away at a discount. And obviously I'm not the only one that feels that way. Heads really should roll because of it.

But now, is it breaking out? Or is it a false break? It may need some consolidation.

 

[chops_a_must]

Re: The CSM Thread!

As Bjork says, "It's Oh So Quiet!! SHHHHH! SHHHHHH!"

ESG with a monumental breakout today.

Done some basic P/E numbers on it. And it might be worth reading if you are an MPO lover.

SIGNED current contracts = 1.5 billion $ over ~ 20 years.

With a current market cap of about ~140m, it has a forward looking P/E with the current cap at less than 2.

The reserves should be sured up for this by the end of the year with deilvery next. May need to dilute, but they only need to get a fifth of what they are going for this year, to fulfill that contract . Crazy stuff. No brainer for me. Maybe results on the way, to drive the breakout? Maybe something else?

MEL had a price spike Tuesday, on a very narrow range, following a hammer on Friday. And tonight it released fantastic drill results. Here's a taste:

Corella-E5
(Metgasco 85%, CS Energy earning 15%)
Location:
PEL 16, Stratheden Joint Venture Area
Objective:
Coring and associated testing of the Walloon coal measures. This is one of up to ten core wells being undertaken for the Company’s joint venture with CS Energy. The goal of the joint venture drilling program is to establish up to 540 PJ in 2P gas reserves.
Spud Date:
19 February 2007
Drilling Activity:
This well has been drilled to a total depth of 791 metres. The Company has obtained 32 metres of coal core sample comprising a well developed sequence of Walloon Coal Measures. This is a significant increase in coal volume observed at this location. This well is currently suspended to allow for wireline logging and additional testing to be completed.

Corella-E1
(Metgasco 85%, CS Energy earning 15%)
Location:
PEL 16, Stratheden Joint Venture Area
Objective:
Coring and associated testing of the Walloon coal measures. This is one of up to ten core wells being undertaken for the Company’s joint venture with CS Energy. The goal of the joint venture drilling program is to establish up to 540 PJ in 2P gas reserves.
Spud Date:
27 January 2007
Drilling Activity:
This well has been cored to a total depth of 738 metres. A well developed sequence of Walloon Coal Measures has been obtained comprising 26.6 metres of net coal. These coals have exhibited excellent free gas shows. This well has now been logged and additional testing is currently being undertaken.

http://imagesignal.comsec.com.au/asxdata/20070418/pdf/00712460.pdf

It could go again on these results and the fact that other juniours are looking very good technically, i.e. MPO and ESG, SHG etc. Something tells me a bit of money is floating around in this area again. STO has begun making noises again about CSM.... Hmmmm. Eenee, Meenee, Mainee, Mo?

 

[nizar]

Re: The CSM Thread!

Got some ESG and AOE at the open.

AOE iv never held but saw it when it broke $1.37 and it was a buy then.
ESG a good mate of mine traded it all the way up since it broke 11c last year.

But yeh Chops thanks for alerting me to ESG, its just the type i like, at exactly the right time.

 

[chops_a_must]

Re: The CSM Thread!

but they only need to get a fifth of what they are going for this year, to fulfill that contract

Can not for the life of me remember where I read that. Maybe I was hallucinating?

Niz.
Put up a chart of AOE. It's been running in a channel between the close MA (10-15 days) and the upper bollonger band. May go sideways for a week, but that's the best indicator I've found for picking it running. No signs at all of it coming down.

By the way, the results MPO released today (despite the HC crew) were absolute s***e.

 

[Dukey]

Re: The CSM Thread!

Chops - got another one for your CSM thread...

PES - Pure Energy Resources - a small cap ($16M) CSM that floated just last year.

Started a dedicated PES thread

and here is the PES company website

Looks like one to keep an eye on with Qld assets in the right places incl "Walloon Fairway" ; farm-ins with AOE and Tassie Assets drilling now.

Yippee !!!!Jumpin Jack Flash - bring on the GAS !!!!!!!

 

[chops_a_must]

Re: The CSM Thread!

Chops - got another one for your CSM thread...

PES - Pure Energy Resources - a small cap ($16M) CSM that floated just last year.

Started a dedicated PES thread

and here is the PES company website

Looks like one to keep an eye on with Qld assets in the right places incl "Walloon Fairway" ; farm-ins with AOE and Tassie Assets drilling now.

Yippee !!!!Jumpin Jack Flash - bring on the GAS !!!!!!!

I had a look at that last week. It looks a nice one to trade. The only thing that worries me about it is the fields in Tas. The electricity is so cheap there, so I assume the margins wouldn't be that great. However, with a market cap that small... who cares? Lol! Chart looked very good until today. Had a really tight consolidation after a breakout and everything.

 

[Dukey]

What possible pitfalls for CSM sector??

OK - so some may have realised I'm heavily invested in the CSM sector.
Currently holding QGC; AOE; ESG and now PES. Have a couple or regular gas-oilers too - ADI, ARQ and NWE !!! Yep - I know - terribly unbalanced portfolio!!

At the moment it's great - We are making hay while the sunshines. But I'm enough of realist (apologies to the one and only 'Realist' of ASF ) to understand that external factors can sometimes throw a spanner in the works. I - and maybe others - need to consider what possible pitfalls to watch for - for the CSM sector or individual players.

Just off the top of my head - I guess thing such as:
1. General market sentiment, corrections & crashes???
2. Price of energy or Price of Oil.
3. Competition from other energy sources. Nuclear future??

Taking no1. I would think CSM may do better than most in a down market because basic energy demands will still be there - nobody's gonna stay at home with the lights off and take cold showers just because the sharemarket dropped.
Industrial demand may fall. How much I couldn't guess.
Any ideas on that??

2. Price of Oil is an obvious factor. I don't have any particular knowledge here, but I can't imagine why POO (!) would suddenly fall significantly for any extended period given the global and middle-east situation. Additionally CSM has the advantage of a green image which has increasing govt support with global warming, etc going on.

3. Alternative energy sources?? Seems like anything significant - Nuclear, Geopthermal, Solar thermal etc - may take quite awhile to come on stream. But something to watch out for in the future.

Any other traps we should be looking out for folks??

 

[Jimminy]

Re: What possible pitfalls for CSM sector??

Currently holding QGC; AOE; ESG and now PES.

Any other traps we should be looking out for folks??

If I was you Dukey I would be a tad worried about traps in the CSM sector too - you should have done exceptionally well out of those stocks in the past few months.

But traps? No I don't think so..... Each of them are working towards (or already have) sales of gas contracts which will continue to mitigate risk on each of the plays you hold, whilst they prove up further resources.

My CSM plays are actually outperforming my uranium over the past 2 months. Over the last six months they are about even. CSM is a good sector to be investing in imo. You, Chops and I have at least worked that much out.

 

[Col Lector]

Re: The CSM Thread!

Greetings CSMsters, my first visit to this thread but have been interested in CSG sector for a while. Bought into AJL while in a trough last year.....established CSG drilling operator/pipeline construction with a potential CSG play in NSW Gloucester basin.
Read up on PES thanks to Dukey's evident enthusiasm on this one. Looks good.
Has anyone out there any thoughts on Sapex SXP.....floated today....currently below issue price. Large SA tenement holdings...adjacent Prominent Hill & Olympic Dam..close to transport. They are selling it as the next Cooper basin. Targetting inground coal-gasification + coal+CSG + oil/gas.
Was struck by the minimal info provided by website etc though.....a major contrast to PES's detailed/professional data/presentation.

 

[Smurf1976]

Re: What possible pitfalls for CSM sector??

Just off the top of my head - I guess thing such as:
1. General market sentiment, corrections & crashes???
2. Price of energy or Price of Oil.
3. Competition from other energy sources. Nuclear future??

4. Conventional gas reserve depletion in US, Europe, NZ etc.
5. Globalisation of gas trade due to the above.
6. Reserve dominance by Russia, Iran and Qatar limiting long term competition.
7. Moves to create a gas version of OPEC.
8. Increasing use of gas as motor fuel as oil supplies diminish (noting that world oil production has been falling since May 2005).

4 - 8 above are all absolutely long term bullish for gas prices. It could take quite a while though.

 

[Dukey]

Re: The CSM Thread!

Well CSM thread quiet since june - maybe time for some updates...
All took a hit in August - as you would expect...
now in QLD,
QGC and AOE both recovering steadily since august correction.

AOE building partnerships with Indian/Indonesian interests.

PES - coming back after share issue seemed to halt the SP climb. Have just drilled 'dingonose1' intersectiong 15-20m coal with gas indications. Now drilling 'Duckworth1' . Previous Tassie drilling - showed good permeability but low-mod gas content.

ESG: Proving up reserves at Bohena - looking good.

MEL: - 2P reserves up 50% in Casino area to 194 PJ.

New players -
SPX - sp a bit above issue price (I think). Signed agreement with LINQ energy towards JV for coal gasification and Coal-to-Liquid projects in SA.
- SPX increasing JORC coal to 1 bill tonnes inferred and CSM potential to 0.5 - 2 TCF.

Newest kid on the block in CSM -
ICON (ICN) energy. : Just about to drill 1 x CSM hole and 1 x conventional oil hole just south of Moonie. Given the way Innaminka went off today (conv oil find) - Success for ICN could be interesting - though the play is not likely to be so big.

Sector still looking good to me.
Anyone care to comment or add other CSM-ers to the pile??

 

[joelc]

Re: The CSM Thread!

AOE - 973m
EIV - 41m
ESG - 127m
MEL - 101m
MPO - 58m
QGC - 1,127m
SGL - 126m
SHG - 109m
WCL - N/A
WGP - 4m

*BUMP*

After about 90mins of compiling and looking up/through company ann's I've decided to give up for tonight. I'll work on/edit this over the weekend to fill a few more gaps, if there are any more CSM companies out there that I haven't yet added please advise!

Here's an update of market cap, sp, some p1, p2 and p3 and 06-07 earnings.

comp -- cap ----- sp -- p1 -- p2 -- p3 ---- prof06-07 ----- target07-08 ----- future targets
AOE - 1,594m - $2.28 - 171 - 791 - 2,790 - ??see notes
ESG - 259m --- $0.375 - 21 - 185 - 1,300
MEL - 99m ----- $0.825
MPO - 95.1m --- $0.52
QGC - 2,959m - $4.00
SGL - 120.76m - $0.30
WCL - 30.5m --- $0.50
WGP - 5.45m --- $0.071
PES - 34.5m --- $0.550
AJL - 194.1m -- $3.550
LNC - 115.2m -- $0.640


*notes
**Market caps and share price as quoted above are from theage.com.au after market close on the 15/02/2008.
**AOE's 06-07 sales rev = 27.87m and maiden yearly profit 06-07 = 17.83m (unsure which to go by, could someone please advise me on this)
**AJL is diversified company, not purely a CSM explorer/producer.
**LNC is tapping into the stranded coal seams with intent to produce clean liquid fuels (Jet and Diesel) via Underground Coal Gasification (UCG) clean coal technology and Coal To Liquids (CTL).

 

[grace]

Re: The CSM Thread!

Aaaagh, thought there must have been a thread on this sector. I looked for CSG not CSM. Anyway chops, SXP would be one to add.