relativities and grizzly bears

Just musing ...

Russia is to supply 30 bill cubic metres (1060 bill cu ft) of gas into Europe this next yr ... thats close enough to 1,060 PJ.

The original Lorraine permit area of 460 sq km has GiP of about 980PJ within just the current study area of just 69 sq km ... Enron previously estimated the total permit area to have GiP of over 6,000PJ ... factoring up for the recent Lorraine southern extension of another 528 sq km there could be pro rata a GiP over 13,000PJ for EPG's Lorraine permits.

In the original ASX announcement in 2005 (as KBO) at the start of applications for the Lorraine southern extension (just granted) and Lons le Saunier (not yet formally decided), management stated Lons le Saunier likely to contain at least as much gas as the Lorraine basin (I am not sure what exact area this refers to).

So, being conservative, I would expect Lorraine plus Lons le Saunier to have GiP of around 20,000PJ. EPG management has oft stated that they expect about 50% of the original Lorraine study area GiP of 980PJ to become recoverable reserves. Based on the recent Diebling results, management has given strong guidance that they expect to upgrade Lorraine GiP prior to booking reserves.

Look at the relativities:

. Gazprom will will sell 1,060PJ of gas into Europe over the next 12 months.
. In just 2 French projects, EPG may have GiP of over 20,000PJ.
. If just 20% of the GiP is recoverable, EPG could be sitting on sufficient reserves to supply the equivalent of Russia's gas exports into Europe for 4 yrs ... or more realistically, sufficient reserves to replace the eqivalent of 10% to 15% of Russia's gas exports into Europe for 25 to 30 years ... now that would surely make for a grizzly bear lol!

Finally, I recall that QGC here in Australia has GiP of something like 17,000PJ and they are on a program to prove up 1,000PJ of 2P and 3P reserves ... QGC has a current mkt cap of around $600mill. Imo, that makes EPG look a tad undervalued at a current $120mill.

An interesting year ahead I would have to say.

Cheers all
Poyndexter