bowen vs surat, page-18

tui

Thanks for your comments, which make a lot of sense, and I am very much aware of the need for the oil majors to book boe or they will die, and the increasing significance of Australia to them. Just look how quickly Chevron moved to progress its offshore gas deposit once the Federal Minister made some noises about Chevron losing its tenements if they did not move towards production. I have to say it annoyed the hell out of me that besides some tax and perhaps some of the workforce, most of the benefits from that huge deposit will flow overseas. Such is life when our national and state governments are no longer interested in strengthening local companies.

In the longer term I want to have a significant investment in the oil/gas sector, but in the shorter to medium term I am keeping my involvement small because of potential global macroeconomic headwinds. I am of the view that oil/gas/uranium will be central to economic prosperity and those who invest in successful companies will eventually be rewarded.

Given my perception of likely economic instability I feel it is unsafe to hold shares in companies that are unable to survive a storm without massively diluting shareholders. It is for this reason I sold out of most of my oil/gas plays and only hold small investments in a few (BUL, OEL, GBP) and a somewhat larger amount in WCL. For the time being my primary investments are in gold producers and explorers because, rightly or wrongly, I see gold as being the most likely commodity to continue to trend upwards (or hold its price in relative terms) even in a global financial storm. In the absence of gold, I would be in cash or trying to eke out something by trading the larger and more liquid companies (not BUL), however I have not developed any trading shills. I just try to follow an upward trending market where I believe it exists.

In relation to BUL, any remaining added loss if it failed would be less than 0.5% of my total investment, and hence is insignificant. However, I would like to see BUL survive and stay in Australian hands given its potential from the vast tenements. Maybe I am wrong, but it seems to me that they need to have a plan to avoid excessive dilution and loss of ownership of the tenements if we get GFC2. WCL seems to have one by becoming a CSG producer. Perhaps someone could enlighten me what BUL's plans are. At present the trend looks like an almost certain downward spiral for BUL.

As an aside, I have been coming round to the view that Australia should move its road transport system towards LPG (or whatever it is they put in vehicles besides oil/ethanol) to reduce our dependence on oil from unstable regions and save a lot of foreign currency. Rather than exporting the gas from the North West Shelf it could be used here. Perhaps CSG could also play a part in this and for other energy generating activities (which I note is beginning to happen in electricity).

Instability in Iraq and other oil producing countries would actually make our CSG plays potentially worth a lot more,. Once foreign troops are out of Iraq we are likely to see a revolution overthrow their semi-democratic government. It would not surprise me to see Saudi Arabia undergo a revolution some time after that, and further disrupt the oil supply to the US and Europe.

Hendrous
I have never had a CFD account, I do not know how to trade or use them, and have no intention of ever touching them.

loki