I am looking expecting a few things to happen into the future that I reckon will affect BOW over the next 6 months.
1. The rights issue swings into effect on the 20th or 23rd April. The issue price is at 27cents. Why would anyone be afraid to sell their shares down to 40 cents. They will still clear a signficant profit. Hell, a sell at 40 cents is still a 50% pat on the back. Sure some people will hold, but there will definitely be some tree-shaking going on which will result in a price drop. Maybe we wont see 40 cents but I definitely expect a bit of a fall back coming.
2. The wind in the CSG sail is dropping for now. AOE has spent a bit of its moolah already on BPT and there is no way that BOW holders would let them use the remaining cash on BOW without first proving up some reserves to help get fair value - maybe AOE could add a significant scrip portion to sweeten it - I still think that RP wants to drill his permits before he even starts to negotiate. The CSG wind will be back as there is plenty of action left in this story yet. Santos just announced they are going for environmental on their trains. There must be some more large announcements coming with respect to consolidation for the export market. A lot of hints were dropped by AOE and Shell about bigger plans to help woo over holders during their PES debacle. I would even tip ESG to come up with some nutty plan like SHG did to export LNG with Sojitz... where they really knew it was only a backup plan to make the majors know they could do it if they wanted to.. only the real strategy was to simply help negotiate fair value. VPE in this case does not have the mass to consider this, and their relationship with BG is as much a hand brake as is a benefit. Same as WCL. WCLs only strength is that they have a closely held register, same as ESG and can at least elect to keep developing the assets to push a higher price. ESG have critical mass. BOW will. VPE wont, and I am not so sure WCL can get there. BOWs big success in negotiations with any suitor will be the location location location of their permits. Point is, CSG will cool down a bit now and I doubt BOW wants to consider a takeover offer yet.
3. You know and I know that the Atria permit was the reason BG paid an extra 700m for the SHG purchase that QGC just made. QCG just paid for the value of Lacerta. BG picked up the rest. Sure we still got ripped, but at least we have got the money now and can invest it in other great spec stocks like BOW. I know this is a sore point for you, but there is probably a good chance that Atria extends right into BOWs territory and certainly ups the prospectivity for BOW. I am not sure why people think that we will be getting numbers in June. Did I miss something? I would have thought the data would take a few months to process yet and we still have to do some drilling before we know what is really in there. The drill results in the rights issue prospectus were not 'amazing'. Point is, I still believe it is sometime before we can expect numbers for reserve certifiers.
4. We are not out of the woods yet and I really believe that a continued rush of bad economic news will rattle the markets some more - a pluck might be that the ASX tests down to the low 3ks again. People still seem to think there is a magic wand that will magically fix everything. I was in a bar in Michigan last week speaking a Canadian banker. I asked him what he thought of the Chinese increasing in power. He scoffed hard at that suggestion and thought it was utterly ridiculous. The US is headed for a serious rerating and call it what you will, but for me this is a depression. The amount of people I have bumped into that no longer have jobs is a little ridiculous. China is in a very strong negotiating position and the will now share the role of being the worlds economic engine. So to cut the waffle (or add to it) ..a power transfer is underway and while the US will recover in the longer term, they dont realise how bad this hangover is going to be ...and maybe that shot of absinthe was a bad way to end the night when they should have been thinking about drinking water. Changing game. Chainging rules. Point is, after the rights issue sell off subsides, by that stage people will be sufficiently gloomy again and start selling out of risky positions - even if there is long term value in BOW. This great rise will be rewarded with a great fall.
5. A bit of a left field thought, but that is why I have bought big into them. The UCG industry is progressing, and we should not underestimate the potential impact that CNX, LNC or CXY would have on the CSG industry if they can prove commercially viable. I think Arrow has already cottoned on to this and I think I remember reading an announcement from CNX about some discussion they are having. Check out their anns from the last two months and their recent one regarding reserves potential. Point it, this budding industry could smash CSG for everything else but LNG export. CSG still wins under an ETS, but so does UCG with a reduced carbon intesity per kW. Just keep an eye on it. I am hoping for BOW to be the mid-cap that RP is promoting by Dec next year, but the rules may change between now and then.
Sorry, a bit more than you probably asked for maybe, but I am on leave in Brissy right now and just had a double espresso! Time for a jog maybe.
Cheers mate.
SF
BOW Price at posting:
$1.00 Sentiment: Hold Disclosure: Held
