Think about value of unallocated gas reserves, not just in terms of size (and we know ESG is the biggest), but in terms of TIME.
The other great strategic value ESG have got is that they are the furthest down the track. They are at least 2-3 years ahead of Santos in the Gunnedah Basin.
Now, back to the Carbon Tax and the gas-fired power industry. Planned gas-fired power stations, like Origin's Kerrawary 1,000MW project 60km south of Goulburn, is scheduled to begin construction at the end of 2012.
Who, apart from ESG, will be READY for the gas-fired power sector in NSW?
The beauty of ESG's position is, once a Carbon tax is in, and there will be an almighty rush to secure gas for gas-fired power stations. And ESG is so far ahead of the competition in terms of TIME. And this lead in development time also makes them the key target.
In situ gas is all well and good. (and, I have no wish to talk down other CSG companies and their resources - I wish them all the best). Others have resources that can be upgraded to reserves in the future (remembering that Santos 2P reserves in the Gunnedah basin stand at ZERO). But in terms of development, they are so far behind ESG in TIME.
Also, for those who either hold Dart or other juniors in NSW, consider this. Dart know that there will be a market for their gas. Even though they are behind ESG in terms of time. So Dart are betting that not only all of ESG's gas will find a market, but after that, those that follow will ALSO find a market. ALL the gas will be needing to feed these two big competing and booming markets, LNG and gas-fired power.
Yaq
ESG Price at posting:
64.5¢ Sentiment: Buy Disclosure: Held
