Did anyone else notice within Neil’s Next Oil Rush audio that he...

Did anyone else notice within Neil’s Next Oil Rush audio that he mentioned the project had now been de-risked to the point that the original risked prospective figure of 7.6 TCF (19% of 40.1 TCF) is expected to increase after this round of appraisal and exploration? When reading the latest K1 Capital research report (table 4, page 4) I also noticed that the geological risk factor had been adjusted to reflect this:

Best case: 35%: 40.1 TCF / 100 * 35 = 14.04 TCF
Mid case: 30%: 40.1 TCF / 100 * 30 = 12.03 TCF
Low case: 19%: 40.1 TCF / 100 * 19 = 7.62 TCF

The mid case is now almost double the original prospective figure. As the project is further de-risked with ongoing seismic, field work, exploration and appraisal these percentages are likely to go up.

All of this got me thinking about information I’d read on former ASX listed Sino Gas and Energy (SEH). They are probably the closest CSG peer company to Elxir playing the Chinese gas thematic. EXR have mentioned them as a peer comparison company in a few 2018/2019 announcements, this table is from one of those:



As some of you would be aware this A$209 million amount was far surpassed when a A$550 million takeover offer from US Lone Star was executed in mid-2018. The market and many shareholders expected more. Hopefully these links to ASX SEH work:

https://www.asx.com.au/asxpdf/20180531/pdf/43vfkpj99fkl4l.pdf

https://www.asx.com.au/asxpdf/20180712/pdf/43wghlt48234lm.pdf

I’m sure Lone Star, the giant CNPC (Sino’s JV partner) and a number of other multinational are closely watching EXR’s progress.

When comparing Elixir to Sino Gas a few things stand out that seem to indicate that any eventual valuation of our company when fully de-risked and with 2P reserves could blow this A$550 million figure out of the water.

Sino Gas had 2C (contingent) resources of 3.2 TCF and 2P (reserves) of 2.1 TCF that sit within Northern China’s Ordos Basin. Our initial 2C figures for Nomgon will come later this year and 2P figures for Nomgon will come mid next year when the pilot is run. My educated guess is that the Nomgon basin alone could hold a minimum of Sino Gas’s contingent (2C) resources. IMO DYOR

Another factor to look at is that Sino Gas held approximately 740,000 acres, which is about a tenth of our PSC. We hold 7,000,000 acres in one of the most prolific coal basins in the world. Our PSC holds a multitude of basins that are ripe for CSG, ERCE has high graded the area for CSG. Therefore the chances for further success in another basin are strong with at least four strat holes being planned for this round of drilling and a possible core hole. Of course success in any of our other basins will bring us further 2C and 2P figures in time and Nomgon is likely to be just a piece in the puzzle.

The final point is that Sino Gas held less than 30% net interest in a complex JV over their PSC (Linxing and Sanjiaobei). Over time we will probably JV the PSC, perhaps to a number of parties in different basins as Neil has eluded to. That’s where master deal maker Richard Cottee comes in…

I understand that we are still in the exploration stage, but the early indicators are exciting. The potential valuation of the company compared to its current market cap of $117 million means this current figure is likely to be the tip of the iceberg.