agm update?, page-5

Had a listen to the presentation and there is no doubt WCL has a clear plan at Meridian and with two new lateral wells showing decent production rates I think they are already demonstrating that will be able to get production up to 50 tj/d target by around the time the existing supply contracts finish.

50 tj/d should then equate to about $300 000 in revenue per day at $6 gj..and that is about $55 000 000 in revenue per year for their share. The best thing about this is they have most of the infrastructure in place.

They will however have to drill a lot of wells to get to this point.
Assuming it will be costing them $1 million per well and they need 50 more wells to get from where they are now to 50 tj per day, then they will be investing about another $25 million plus some extra (maybe $5 million ) for additional compressors (half share). To help with this they should be receiving somewhere around $8 to $10 million per year once all the current wells are performing and production climbs in 2012 through to 2014.

So not much dilution required to get to where we want to be in late 2014 and by then they should have the deeper reserves proved up to bolster 2p to around 600 pj for their share of Meridian plus Paranui. Btw. that mention of the tight radius well from deeper seams flowing at about a terajoule from 1998 sounds very promising. Like MS Beeby said..it is not a case where they need to run pilots for months on end, she saw this with her own eyes and that means they will be aiming to add to production with each well they drill, whether it is a vertical with two laterals or up dip or this close radius concept.

On the negative side, I really can't help wondering about the wisdom of chasing the Galilee at this stage having seen BUL blow a lot of money up there and get very little bang for drilling effort. It is like the csg investment community has moved on from getting excited by multi tcf 3C figures and in this risk averse climate investors are demanding safe bookable reserves before share prices are fully supported.

Either way an analogy to BOW earlier in its genesis is undeniable and as WCL builds reserves I can't see how it's market valuation will not climb to at least $200 million...I mean if they don't do anything stupid (ie blow $30 million getting a 3c figure to wave around in the Galilee!) and we get to 50 tj or 60 tj a day and the field is producing with all infrastructure paid for ...how won't they be earning say $30 million p.a after allowing for production costs and some drilling elsewhere?

BG will be aware of all of this and equally their is nothing to stop Mitsui deciding to step up. From what I've been reading it seems increasingly likely Japan is going to mothball most of their nuclear power plants and that means they'll need a lot more LNG and coal.