bpt presentation, page-4

this is a poor copy of Slide 22 of BPT presentation.
sorry for the lousy copy, but my son was not here to remind me how to post the slide intact!

you can see the cross-sectional line A - B, and the view seems to be looking towards ICN's ATP855.
You can see the deepest section looks like it heads towards ATP885.

the point is, that BPT comments below, that the "sweet spots" are in the deepest section (which appear to probably continue thru ATP855), AND that the "Key to profitability is large positions in sweet spots..." !!!

So a key factor for Beach seems to be to attain large positions in these permits, and ICN ATP855 seems to be right in the guts of Beach plans. I think its a no-brainer that the highly prospective shale extends from PEL218 thru ATP855.

Also the Preso states that the US breakeven price of gas needed to be:
" Breakeven Price ($M/cf)(1) $3.25 " Base case.

So it seems that the shale gas proposition could be EXTREMELY profitable for Beach.

SO the game here for us is to try to figure out where it will take ICN?

there is no doubt that beach wants at least a share in ATP855, there's no doubt that Beach is serious about developing shale gas in C/B, no doubt its profitable, no doubt its feasible and technically possible, no doubt Beach has, or will get, the operational and technical expertise to extract the gas, no doubt there is a market for the gas, no doubt the resource is HUGE, no doubt that the infrastructure is available to get the gas to where it needs to go, no doubt that beach has the size and cash to arrange the provision of the large capital required to get the project going ---- and no doubt that ICN has NOT got the funds to develop ATP855, not got the expertise, and not got credibility to attract partners and capital (imho).

What ICN HAS got is currently 80% of a hugely attractive (to Beach) ATP855, and a ready market for the gas thru a GSA.

So, I think, its not a question of IF Beach will get hold of a portion of ATP855 resource, but HOW !??

Either it wins its battle and retains its right to farm-in to 40%, or it renegotiates a new arrangement to farmin to ATP855. Presumably on better terms for ICN.

I simply cannot envisage BPT making a t/over bid for ICN, simply because it would not want the rest of ICN, and because it would be very hard to shift RJ!

As an aside, I wonder if Beach would be able to fulfill the Stanwell contract from its resources? Perhaps that scenario may be attractive? They could just forget trying to find gas in ATP626? Because one would hope that the contract would be profitable enough to be of interest to Beach?

cheers

*****************************************************
Beach has "core" and flank Nappamerri acreage

* Shale gas plays cover thousands of square kilometres

* "Sweet spots" (e.g., the "core" Haynesville) may exist particularly where the shale target zone is:
- In the deepest parts of the acreage
- Over-pressured
- Thick
- Gas saturated

* Key to profitability is large positions in sweet spots