With EXR about to reach a pivotal point in the Companies development by drilling the first of 2 to 3 core holes at Nomgon Mongolia, it's a very opportune time to perhaps compare EXR with another ASX listed CSG stock to see how fairly valued EXR is in comparison.
The stock i've chosen to compare is GAS, a QLD based CSG explorer and interestingly both stocks are being run by none other than Mr Richard Cottee. So i think this is about as close as we can get to comparing 2 stocks that are based in totally different countries.
GAS:
Reid’s Dome Gas Project QLD (80%)MC = $89.6 Million
SOI = 143 million (77 million escrowed until 9/10/19)
Cash = $6.3 Million (30/6/19)
• GAS progressing a targeted strategy to bring gas to market from the Reid’s Dome Gas Project in 2021 to meet east coast shortfalls
• Two new wells (one cored) and two production tests planned; with works to commence Q3 2019
• Commencement of 2019 CSG Drilling and Testing Campaign expected late September 2019
• Historic seismic data to be processed and interpreted
• Export pipeline route investigations to commence
• Mr Richard Cottee Executive Chairman of the Company.
• Trial dates set for hearing of State Gas’ action to enforce its right under the Joint Operating Agreement to transition to 100% of PL 231.
State Gas Ltd holds a majority interest in, and is operator of, the Reid’s Dome Gas Project (PL 231) in Central Eastern Queensland, approximately 545 km northwest of Brisbane and 50 km southwest of Rolleston, in the Bowen Basin Central Queensland. The Petroleum Lease hosts both conventional and unconventional gas and is less than 50 km from the high pressure gas pipeline network in Queensland.
Drilling in late 2018 confirmed the western extent of the “Primero” conventional gas sand in the northern area of the permit, and the Nyanda-4 corehole, the first dedicated coal seam gas well at Reid’s Dome, established the potential for a significant coal seam gas project in PL 231.
The final results of Nyanda-4 confirmed the presence of more than 40 metres of net coal from approximately 394 metres depth to its total depth of 1,200 metres, and a further 25m of carbonaceous shales and thinner coal seams (i.e. <0.3m), indicating 65m of coals and carbonaceous shales (excluding conventional sandstones).The average gas content from cored samples was 14.6 m3/t. Gas content for the thickest seams was ~16.9 m3/t.
Gas market forecasting by independent parties has indicated a further tightening of gas available in the east coast domestic market from 2021. Conscious of these forecasts, State Gas is progressing a targeted strategy to bring gas to market from PL 231 at lowest cost, as soon as possible, to meet these shortfalls. State Gas has developed a program targeting first gas in 2021.
Share price of GAS in October 2018 just before drilling commenced was trading at .17c and on confirmation of successful first core hole in early December 2018 the share price shot up to around .75c and traded as high as $1.01in coming months. Currently trading at .625c with a second round of drilling about to commence late Sept 2019.
EXR:
Exploring for Coal Seam Gas in the South of Mongolia (100% Project)
MC = $25 Million
SOI = $488 Million + 110 Million options
Cash = $4.4 Million ( 30/6/19)
Enterprise Value = $22 Million
• The 7 million acre (30,000 km2) PSC covers a major Permian coal bearing basin on the border of Mongolia and China
• CSG risked prospective resource of 7.6 Tcf (best case )
• Active exploration program underway
• Multiple market options, including therapidly growing Chinese gas market
• Highly experienced CSG team
Two core holes scheduled, option for a third
• First well (Ugtaal-1) due to spud around the end of September/start of October
• Mongolian contractor Erdene drilling LLC currently sourcing long lead items
• Program of 2+1 core-holes with:
• Full HQ coring, desorption, wirelinelogging & IFOT (injection fall off test)
• Timeline of 15-20 days per well including ~300-400m of coring
• Desorption testing to USA/Australian standards
• Wells to be plugged & abandoned
• The Chinese Government plans to increase gas demand by 300% over the next 15 years
• China imports gas from every direction and seeks to continually diversify its sources of supply
• The Nomgon IX CBM PSC is located on the border
• Mongolian CSG expected to be highly cost competitive compared to alternative sources of gas for China
• Gas can effectively be exported by pipeline or electricity transmission
So we see , GAS is about 12 months more advanced than EXR with their exploration program, with a MC currently almost 4 times that of EXR. Interesting to note that GAS was trading with a MC similar to that of EXR just prior to commencement of drilling in October 2018 and spiked massively on confirmation of successful CSG drilling.
It will be interesting to see how these 2 Companies progress over the next 12 months under the astute directorship of Richard Cottee.
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