I’m just trying to put together a few clues from the Quarterly...

I’m just trying to put together a few clues from the Quarterly to determine if GAS is a buy at these levels.
1) How much value can the compression plant deliver? Well, we know it maxes out at 1.7 TJ/day. A GJ of gas is worth roughly $15 now. So a TJ is worth $15,000 and 1.7 TJ is $25,500. Let’s say $765,000 per month.
At the moment they’re only supplying 1 truck and it has taken $40,000 of gas in the first month. That client could use gas for 5 trucks. That might result in $200,000 in sales per month. So plenty of upside yet for sales.

2) How much gas in the ground? Just the Rolleston West lease has a 2C of 275 PJ. Management are hinting that they might get a 2P figure of 30 PJ from that (about 11% of the 2C). As 30 PJ = 30,000 TJ, it has a value of about $450 million. (They say they can sell it for a premium, yada yada yada. I’m just going with $15/GJ.)
All 2Cs sum to 534 PJ. 11% of that is 58 PJ or $870 million. So plenty of $$$.

If we consider the compressor plant fully operational and earning a gross of $750,000 per month, that is $8,250,000 for 11 months, allowing for a month of down time.
GAS has SOI now of 225 million. But we know this will increase. I don’t have an exact number but let’s say to 350 million.
Let’s say operating expenses are 30%. That means earnings are 577,000,000 cents over 350 million shares, or 1.6 cps. If that represents a ROI of 5%, then the SP should be 20 x 1.6 = 32c. Well north of where we are now.
Of course this is overly simplistic and doesn’t take into account other spending like drilling and pipeline development. But I think, if the possible 2C reserves are proven, it should be profitable.
I’m sure there are some errors in my estimate. Please point them out so I can make corrections.

The timescale of development I will leave for others to debate.

cheers

FHC