transforming nse, page-50

The best way to analyse the recent NSE is to look at what the experts are doing:

1. Eagle Ford. Magnum Hunter is a seller. They sold most of their acreage and got left with the rump. They went around the world trying to find someone, anyone, who would buy the rest. And found a little company in Perth that miraculously believes that it can make money when the rest of the world has passed it up.

2. Cooper Basin. Santos are the clear experts here. If they really thought Cooper Basin shale was economic, and deliverable in volume, why wouldn't they do so from their own acreage? Instead they have to buy large amounts of gas from Origin CSG just to fill up GLNG. Hard to believe that NSE has just lucked into a sweetspot that Santos and the other basin experts had missed.

NSE is a 'sell'. It has a big cash burn. Unless it can find a greater fool to take on some of its obligations it will most likely have to raise more equity in 2014. And if it does it is hard to see how that could be at a price in the double-figures (cents). Anyone who argues otherwise is thinking with their heart and not their head.

The solution? Vote no. Being focused on Carnarvon and Canning might not be much better, but its hard to see how it could be worse.