been here before

If you've held BOW and other CSG shares long term you get used to the peaks and troughs. Obviously we're all more comfortable during the peaks.

In the last week I've been rambling on about the bouyant long-term demand picture for Australian CSG and LNG on the ESG forum.

Just one thing I like about BOW is that they've set reserves targets for 2011. 1,250 2P and 6,200 3P.

Taking the latest relevant metric for reserves value from the Shell Petrochina takeover of Arrow. The low implied reserve multiple for 2P reserves in that deal was 89 cents per GJ and 3P 57 cents.

Assuming BOW achieves the 2P reserve targets by year end and using those Arrow metrics, BOW's market cap would be approx $1.113 millon. Taking the 3P metric and BOW's value looks ridiculously high.

Our market cap today is $386 million.

Before people start jumping all over the validity of those metrics, cut the 2P multiple by 50% and BOW shares will worth $1.52 ignoring additional reserves potential and power generation.

BOW's stated strategy is not to commit reserves to long-term contracts until the time is right on the assumption that we'll get a better price for the gas in the future.

If you believe the demand story, if you believe that BOW can achieve its reserves targets at commercial flow rates and that its enormous reserves potential can be realised its a great time to buy.

Please DYOR