increase in gas , page-3

I want to preface this reply with the fact I like the CBM industry I have been around it for a while now. I am not bagging just stating the facts as I see them.So my reply.

Yes it is, but like all the hype for QGC, AOE and the rest, AOE are only producing 0.09 PJ pa currently and have been at it for 5 years. They can not supply 3.95pj let alone 18pj a year so you can sign all the contracts you want, they are not binding on either party and you can be assured that Wambo will have other contracts to supply with Santos and Origin.

This is becoming a bit like the Dot Com era, everyone getting all excited about big numbers but blind to fundamental fact that if they can't produce it means nothing.

I don't care who invests in what CBM company because there are very few people in this country who actually know how to assess a CBM project, without being fed BS by the company they are investing in and that includes power companies, pipeline companies and gas supply/ distribution companies. I know because they used to own all these cbm projects and failed to deliver after doing their dough.

Please ,you may make short term gains on the SP and I hope you do but take a profit because:

The underlying fundamental are, if they do not produce an average of 300 mcf of gas per day from each well they will never break even. That means that if one well is under 300, another well must produce above 300 mcf to counter and average out production. If one more well produces 0 mcf a counter well must produce double (600mcf) to make up for the cost of drilling that well. To make money you are constantly drilling new wells until you have enough to expand and replace depleted wells as they end there production life of 3-5 years and finally make a profit. I would say a minimum of 75 production wells. And remember all this is occuring where costs are at least twice that of the US and gas selling prices are about 1/3.

You can't make money selling gas for $2.50 when it costs $3.00 to get it out of the ground.