bg: slow to shore up reserves, page-15

YAq,
BG has 8000Pj + in the bag A small step to the next level.

The Quarterly statement indicated that QCLNG3 is I think the state of gas reserves is best described as "adequate."

As a comparison, pound for pound BGs Marcellus+Haynesville Shale and Surat+Bowen CSG assets are matched in terms of resource size (former is also 8TCF+). The shale sweetspots they are hitting have min economics at $3.50-$4/GJ. The shale wells are a vry different game though, they indicated they are getting 9BCF recovery per well, and inital flow rates of 20 mmfcd (thats about 7 times ESGs reported rates). Naturally the production profile is very different with a much bigger drop off.

Back to CSG now. If BG are hunting 10.5mtpa they are heading for a reserve base and supply agreements of around 15TCF. They currently have +8 2P and have indicated they will get to a net peak production of 210kboepd for three trains. This coresponds to an (to borrow Santos' creativity) ultimate maturation of about 10,500PJ which should cover them for those first two trains. Life gets interesting for train three as they also have to cough up capital as well as money for reserves.

They do have 20TCF of resource in the bag though, so all might not be lost for them.


psi,
I would only pitch ESg as a tier one takeover target. Interestingly I own more MEL and BOW than I do ESG, but I dont think right now either are as advanced or potentially as large as ESG unfortunately.

The question of who has more speculative upside is an entirely diferent one though, as you rightly pointed out :)

Your statement that MEL is lean on reserves is out there. They have a much stronger reserve position than the other juniors, as well as the potential for an conventional/unconventional resource. Not to mention they are about to pull some bigger reserve numbers in previously 'undeclared' acreage.

Blue are hugged by Shell at present and they have a substantial resource they have pumped millions into exploring. Hopefully they are only a few weeks away from confirming this potential.

Time will tell, but we are looking at LNG projects now of over 40mtpa (if you include Shells 16) that will require about 50TCF of reserves to get out over the next score or so. Thats well short of the 30TCf they currently have right now.

favre,
I dont doubt your metrics are valuable to you; however, always with a grain of salt. most of the 2P that SHG left the market with were in lacerta, only to have that asset downgraded substantially. The real game for them was Polaris. Same for PES, the current reserves from Cameron are well over double the original takeover - this means that unless you are keeping your reserves up to date they could have little value for comparisons sake as the 'ultimate maturation' picture tells the true story of what went on in the back room discussions.

Cheers,

SF