WCL - Westside Corporation

[Sean K]

Looks pretty compelling YT. Not sure why BG haven't taken them out. Perhaps just waiting to confirm the Ps? Surely this result gives them quite a bit of confidence.

 

[YOUNG_TRADER]

WCL has finally got some broker coverage from Patersons

The first of many I hope

Hopefully as ESG and other CSG stories reach fuller valuations more and more brokerage houses like Patersons move on to "the next big CSG play"




Westside Corporation Limited (WCL) $ 0.51

Recommendation: BUY

Analyst: Scott Simpson Tel: +61 8 9263 1679


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2009 Program to Deliver Further Reserves Definition

Investment Highlights



· We are initiating coverage on WCL with a BUY recommendation and a price target of $1.00/sh based on assessment of current reserves and development objectives and highlight this is speculative pending further demonstration of the coals productivity. WCL is an Australian based CSG explorer with two permits in the Bowen basin in QLD with established production pilots and is also assessing the CSG potential of a number of coal deposits in Indonesia. WCL is operator in the most prospective areas of each permit with a 50% interest shared with JV partner QGC (BG).

· Strategic assets located in proven productive areas. WCL has established production pilots at its Paranui (ATP 769P) and Tilbrook (ATP 688P) projects. Paranui is located just 5km west of the producing Dawson Valley gas fields and along the Surat to Gladstone pipeline corridor, immediately adjacent to local pipeline infrastructure. The Tilbrook production pilot is located north of the producing Moranbah field and essentially on top of the North Queensland pipeline, providing immediate access to domestic markets and longer term pricing exposure to CSG/LNG via the proposed Mornabah to Gladstone pipeline.

· Initial goals achieved with certified 3P reserves of 211PJ. WCL achieved a major milestone in June this year when it booked maiden gas reserves at Paranui and Tilbrook from the pilot production. The reserve booking was across a relatively small area of coal and gives further confidence to estimates of a further 1682PJ of gas in place net to WCL.

· 2009 drilling program to drive growth. WCL have kicked off its $18m program with a number of coreholes and recently completed its first horizontal production well at Tilbrook. This well, together with further production wells and coreholes will allow for booking of additional 3P and maiden 2P reserves during Q4 2009.

· Reserve targets of 250PJ of 2P and 1000PJ of 3P. WCL are seeking to achieve these targets in the near term via its current program, proving up new reserves and seeking further CSG opportunities.

· Fully funded to complete 2009 program with $24m in cash following recent $18m in capital raisings.

 

[ands]

Hey YT,

To me WCL and MEL are similiar stories. Small capped, some would say undiscovered companies with great potential upside. In your eyes which do you think has the greater upside. Obviously MEL has more proven resources, but as stated in the report WCL are hoping to have proven reserves of 250PJ of 2P and 1000PJ of 3P in the short term. WCL has greater upside in the short term, MEL might be more medium term? A takeover can also be on the cards, as consolidation seems to be continuing.

WCL = $57 million mkt cap
MEL = $91 million mkt cap

WCL = 211PJ of 3P
MEL = 2.3PJ of 1P, 247PJ of 2P, 1389PJ of 3P

I hold both.

 

[Kipp]

211 PJ's at 40cents a PJ = $84.4m = Approx $85m

Hey YT,
I'm not 100% sure, put I think you mean 40c / GJ? Rather than PJ? Of course, 211PJ at 40c/PJ, would be around $84 in my head, Not a company I'd be keen to stick my money into!

If you'll forgive a very basic question, aren't 3P reserves more reliable than 2P? That was my interpretation according to the defination from Oil & Gas exploration See attached...
was that 3P was equal to the P90 [had only a 10% chance of being exceeded], as opposed to a 2P [50% chance of being exceeded]. Yet 2P reserves are worth more even though they are looser estimates?

Thanks.

 

[Sean K]

By my understanding kipp,

A company may have 1P, 2P, and 3P reserves.

If a company has just 3P and no 1 or 2 P shored up, it means it just has the Possible GIP. So, the key is to get to the 1P, which is the Proven P.

3P simply adds up the 3Ps...

 

[Kipp]

By my understanding kipp,

A company may have 1P, 2P, and 3P reserves.

If a company has just 3P and no 1 or 2 P shored up, it means it just has the Possible GIP. So, the key is to get to the 1P, which is the Proven P.

3P simply adds up the 3Ps...

Thanks Kennas,
makes sense then... sort of like a 1/2P is more like a JORC? But is there a statistical rationale behind it (as they are trying to describe with P10, P50s etc in the book?)

 

[growing]

OK, OK, I'm in on this one ... bought in today!

YT is right on the money in my opinion. I share his analysis as does Patterson's This stock when compared to its peers should be sitting on $1ish now .. if only based on Market Cap relative to development!

MEL are based in CASINO, NSW and are not in the exciting region WCL are right in the middle of! Also MEL's current Market Cap is around $79 Million where WCL is at around $53 Million as of today anyway...

New drilling program also recently announced for WCL and a very cashed up J.V Partner. I have bought today and I will hold tomorrow, thanks everyone for this thread especially YT!

 

[YOUNG_TRADER]

2 new permits with 21 TCF CSG potential in the Galillee Basin which is where AGL and Origin have been active paying big $$$$'s for permits with big reserves


I have no doubt now that this is the next PES/SHG/QGC

Got a nice holding and am happy to wait for a takeover offer from BG

Only a matter of when not if and how much


Oh and your welcome growing



http://www.theaustralian.news.com.au/business/story/0,28124,26021488-36418,00.html


WestSide targets new CSG frontier
Matt Chambers | September 03, 2009

Article from: The Australian
COAL seam gas ground and astronomical guestimates of potential reserves appear to go hand-in-hand.

The latest is from Brisbane junior WestSide , who has secured two exploration tenements in what’s being called the new frontier for Queensland CSG - the Galilee Basin.

WestSide says the area could contain up to 21 trillion cubic feet of gas in the Galilee, which is further from markets and lacks the infrastructure of the more established Bowen and Surat Basins.

To put that in perspective, the $50 billion Gorgon project to be built on Western Australia’s Barrow Island has reserves, said to be the nation’s biggest, of 40tcf, which is about the same Santos reckons it could have in CSG in NSW’s Gunnedah Basin.

Arrow Energy’s claims it could be sitting on 70tcf of CSG in Queensland.

Of course, the difference is the CSG figures have not been proved up and there will be years of drilling before the trumpeted numbers can be tested.

WestSide’s Galilee gas is equidistant between the domestic Townsville and Mt Isa gas markets.

Shareholders will get to vote on the deal to buy the tenements off WestSide chairman Angus Karoll’s private company Nazara next month.

WestSide’s main focus is still on getting its 211 petajoules (about 200 billion cubic feet) of proven, probable and possible reserves in the Bowen Basin to market.

Which is why it is tipped as a likely buyer of AngloCoal’s CSG ground and infrastructure, which is right next door to WestSide’s Paranui ground and has been on the block since early in the year.

An announcement on the delayed sale, which analysts said could raise $200m, is expected soon, Anglo says.

 

[grace]

Yes it seems that it is not just YT that saw the announcement today. A nice rise indeed.

Well it is frontier country as far as csg goes in a new basin. Those in here should watch ECU closely as they are further advanced in the Gallilee than anyone else I can find. Coals are deeper in the Gallilee - nearly at 1000 metres, and some deeper so there lies the risk. I'm watching ECU with anticipation on Rocky Creek to see if Gallilee will be the goods or not. Only time will tell. Clive might build us a rail line at some stage and that would be nice. Good luck to those holding!

As to who will be the next PES, my money would be on ESG or BOW, but that's just my opinion. (disclosure, I hold ESG only)

 

[growing]

Yes it seems that it is not just YT that saw the announcement today. A nice rise indeed.

Well it is frontier country as far as csg goes in a new basin. Those in here should watch ECU closely as they are further advanced in the Gallilee than anyone else I can find. Coals are deeper in the Gallilee - nearly at 1000 metres, and some deeper so there lies the risk. I'm watching ECU with anticipation on Rocky Creek to see if Gallilee will be the goods or not. Only time will tell. Clive might build us a rail line at some stage and that would be nice. Good luck to those holding!

As to who will be the next PES, my money would be on ESG or BOW, but that's just my opinion. (disclosure, I hold ESG only)

ESG has such a huge market CAP right now though....

Market Capital
$849 million

Based on a share price of only $1.00 (it is at a low share price at the moment compared to where it has been in recent times)

PES @ $8 had a Market Cap of 900 Million Dollars !!

Current Market cap of Westside: 62 Million $$ at 53 cents per share -- MUCH more room to grow Share Price wise and very analagous to PES !! i.e PES had a Market cap of around the same as Westside at around 50-60 cents per share

ESG is too diluted. (I do have ESG shares as well though so I don't want to jinx its current share price )

BOW is not bad but again has a 316 Million Dollar Market Cap at $1.48 .. My money is sitting firmly on WCL all the way to the takeover and/or possible bidding war.

Oh, I also noticed COI has a jump in its share price TODAY on an announcement of an award of LAND in the same BASIN as the WCL ZONE -- that Galilee Basin.... Interesting! COI has DOUBLE the Market Cap of WCL though

 

[grace]

ESG has such a huge market CAP right now though....

Market Capital
$849 million

Based on a share price of only $1.00 (it is at a low share price at the moment compared to where it has been in recent times)

PES @ $8 had a Market Cap of 900 Million Dollars !!

Current Market cap of Westside: 62 Million $$ at 53 cents per share -- MUCH more room to grow Share Price wise and very analagous to PES !! i.e PES had a Market cap of around the same as Westside at around 50-60 cents per share

ESG is too diluted. (I do have ESG shares as well though so I don't want to jinx its current share price )

BOW is not bad but again has a 316 Million Dollar Market Cap at $1.48 .. My money is sitting firmly on WCL all the way to the takeover and/or possible bidding war.

Oh, I also noticed COI has a jump in its share price TODAY on an announcement of an award of LAND in the same BASIN as the WCL ZONE -- that Galilee Basin.... Interesting! COI has DOUBLE the Market Cap of WCL though

You must remember to compare apples with apples here. PES would flow gas at 750 000 scfpd on some drills. Up there with the best! I noticed a drill on WCL started at 28 000. Quite poor - although they are getting some success in other areas I think. It is all about getting commercial flow rates.

ESG flows are very good too. Started at 250 000, and after dewatering I think they are more than 500 000 (need to check to confirm, but from memory). A nice reserve upgrade will come before Christmas too from new pilots that have been very good.

Watch for those flow rates and you will be on the money. Do your calcs on PJ of 2P and 3P and then compare to Market Value.

 

[Sean K]

You must remember to compare apples with apples here. PES would flow gas at 750 000 scfpd on some drills. Up there with the best! I noticed a drill on WCL started at 28 000. Quite poor - although they are getting some success in other areas I think. It is all about getting commercial flow rates.

ESG flows are very good too. Started at 250 000, and after dewatering I think they are more than 500 000 (need to check to confirm, but from memory). A nice reserve upgrade will come before Christmas too from new pilots that have been very good.

Watch for those flow rates and you will be on the money. Do your calcs on PJ of 2P and 3P and then compare to Market Value.

grace, any idea on how much flow rates improve with time. Or is it all apples and oranges and pears? kennas

 

[grace]

grace, any idea on how much flow rates improve with time. Or is it all apples and oranges and pears? kennas

If it flows at 28 000 scfd to start with, I don't think it would ever make it even with dewatering. Need 300 000 scfd for commercial flow.

ESG seem to be able to double their flow rates with dewatering 250k to 500k.

Some like QGC and PES drills are like 750 000 on day one - beautiful in gas terms.

The coals in NSW need a little bit more encouragement it seems. My unscientific opinion there.

I'm suspicious when ICN have production on flow, and don't make an announcement to the ASX on initial flow rates. Why not? Nothing to boast about yet I think. Waiting for a couple of months of dewatering they say. Whereas, ESG tell you upfront what's happening without dewatering. Hope my suspician is proven wrong though! Why haven't they given permeability figures in mD as well?? Sorry, off track. Just something to take note of.

 

[Sean K]

If it flows at 28 000 scfd to start with, I don't think it would ever make it even with dewatering. Need 300 000 scfd for commercial flow.

eeeek, that seems pretty damn ordinary!

Any chance they drag up 300k anywhere, or is it just pure speculation?

 

[swm79]

Did you guys read what the WPL Exec Don Voelte had to say about CSG in the Eureka Report?

The key points in Voelte’s criticism of coal seam gas are technical and financial, starting with an observation that “the coal-seam guys are having a bit of difficulty with their economics.”

“What happened 18 months ago is that you had coal-seam euphoria,” he says. Some of that euphoria was created by “guys who knew what the game was”, and that game was to declare a large resource of coal seam gas “and get out”.

Those who sold, Voelte says, “were smart as hell”. “They got out and other people paid huge prices and now they’re trying to figure out how to make these plants work. And, what are they running into? They’re running into [questions such as] how do you drill this many wells and keep them all running?

“What in the hell do you do with the water? You have to treat the water, and while some is clean, some is saline, some has magnesium and manganese and its really going to be a high-cost disposal issue.

“Number three: they’re finding out you have to compress all this stuff when it comes out. There’s not a lot of pressure to get it down to Gladstone. What happens is that if you take a close look at the Santos environmental impact statement, and look at the efficiency of the plant, everybody first thought this is all methane, without any carbon dioxide exposure, that these are going to be low-cost plants to build for the emissions trading system. Aah … wrong.”

Voelte says a rating of efficiency (greenhouse emissions per tonne of LNG) shows a clear advantage for conventional natural gas over coal seam gas.

“This is not me talking,” he says. “This is if you go look at their environmental impact statements. There’s been a late flurry of the coal seam guys working with [Climate Change Minister] Penny Wong, and you heard [Queensland Premier] Anna Bligh say we may just except coal seam methane from the emissions trading scheme, which [laughs] ain’t going to happen.”

According to Voelte, coal seam projects have a problem with emissions that is far greater than the emissions issue facing the North-West Shelf. “Their permitting [cost] on a unit basis is going to be more than double on a unit basis, which is horrific.

“Then you have the problems of gathering the gas, and starting the plant, with talk of building a surge bottle, which means an underground reservoir to store gas and act as a regulator.”

Voelte’s powerful criticism, which continues on to the question of gas quality and the possible need to blend coal seam gas with conventional natural gas, raises questions that few people outside the world of gas have previously considered; and while they come with an admitted degree of bias, they are questions to be considered.

So what happened when the coal seam boom hit the Australian stockmarket? “In my opinion, euphoria happened. The smart guys got out, and now there are other guys hung with big depreciations and the quiet word is that they’re all struggling to make the economics work.”

At best, Voelte is playing the role of Devil’s Advocate in questioning the economics of coal seam gas. At worst, he is saying the coal seam boom is over before it even starts.

definately something to think about.... makes me think CSG is no longer a long term play... would be nice to get out before the "herd" realises this

granted he has a vested interest but still, some interesting questions to ponder.

 

[prawn_86]

I kind of agree. Personally i think it is too late to be getting on the CSG bandwagon. And i have always wondered why conventional gas plays get overlooked? They never really have been a 'hot' sector

A bit off topic, sorry

 

[Sean K]

I'm not sure.

WPL saying CSG is no good when they're not in it?

It's like GM commenting on electric cars 10 years ago.

 

[grace]

Did you guys read what the WPL Exec Don Voelte had to say about CSG in the Eureka Report?



definately something to think about.... makes me think CSG is no longer a long term play... would be nice to get out before the "herd" realises this

granted he has a vested interest but still, some interesting questions to ponder.

I'm not convinced about his comments. Companies like BG sinking Billions into csg in recessionary times. The US relies on csg for quite a bit of their gas. I haven't studied the US in terms of csg, but would love to hear from anyone who has.

And Kennas, to be fair on WCL, they have proven up reserves from some commercial flows already from memory. Just some of their acreage is suspicious.

 

[swm79]

At the end of the questioning tho they said "will WPL NEVER get into CSG" and he said "never say never"

but with that i doubt you'd say "never"

i tend to agree tho. the questions he's raised are some of the questions i've had too... well, i cant say that i have his level of knowledge but issues like the number of active wells needed and the "dirty water"?... i think the costs of these things are going to be HUGE.

Also, if this is just another smoke screen why hasnt a company like Arrow been taken over?

STO purch Gunnedah/ESG for $0.74/GJ for 3P = $3.8B or AOE valuation of $5.17
STO purch Gunnedah/ESG for $285/GJ for 2P = $6.8B or AOE valuation of $9.42

BG purch Pure Energy for $0.41/GJ for 3P = $2.1B or AOE valuation of $2.98
BG purch Pure Energy for $2.57/GJ for 2P = $6.2B or AOE value of $8.49

AGL purch of Glouster/Molopo/AJ Lucas for $1.03/GJ for 3P = $5.2B or AOE $7.19
AGL purch of Glouster/Molopo/AJ Lucas for $2.11/GJ for 2P = $5.1B or AOE $9.97

Plus the additional value in AOE’s power stations/agreements approx $570 mil or $0.77 per share

Net cash $240m = $0.32 per share

Worst case AOE’s assets are worth $5.29 ($2.98 + $0.77 + $0.32 + international assets $1.22)

Maybe that's who the Chinese are looking at kenna?

 

[Kipp]

If it flows at 28 000 scfd to start with, I don't think it would ever make it even with dewatering. Need 300 000 scfd for commercial flow.

Encouraging annct just released, flow rates up to 240 000 scfd at Tilbrook, and increasing daily as dewatering continues. Look like it may reach 300 yet

http://www.asx.com.au/asxpdf/20090915/pdf/31kqp5bzhscrf3.pdf