another good say.

Bow Energy Ltd (ASX:BOW) is certainly in the right industry where gas is paramount in producing power. 03/11/2009 11:37AM AEST




It had to be a good stock to beat yesterday's downturn of 103 points, or 2.2 per cent, on the ASX200 index.

Bow Energy Ltd (ASX:BOW) is certainly in the right industry where gas is paramount in producing power.

In its latest report to the ASX, Bow Energy made a reserve upgrade for its Blackwater coal seam gas (CSG) field in Queensland.

It increases the company's total net 3P reserves 50 per cent to 993 petajoules (PJ) and 32 per cent more than its end of 2009 3P reserves target.

Independent consultant MHA Petroleum Consultants LLC has now certified 886 PJ of 3P gas reserves within the Rangal coal measures of the Blackwater CSG field.

MHA also certified an additional 330 PJ of 2C contingent resources within the Rangal coal seams at depths greater than 600 metres in the southeastern corner of the Blackwater CSG field.

Bow intends to drill one deep core hole in the 2C area in the near term with the aim to convert the resources to reserves.

A further reserve increase from the deeper Burngrove coal measures at Blackwater is anticipated prior to the end of 2009.

The Burngrove coals are generally similar to the Rangal coals in coal thickness, gas contents and permeabilities but have slightly higher ash content.

Bow has commenced investigations for pipeline access and routes from the Blackwater CSG fields to supply both domestic and export gas markets, and is currently investigating high yield power generation strategies, initially in the Blackwater area.

Last week, in its quarterly activities report, Bow Energy said the initial nine-well 2P appraisal drilling program in the Blackwater CSG field is being carried out within the shallow central western area of the field where drill stem tests (DSTs) confirmed multiple permeable coal zones in two wells, BW3 with up to 51 millidarcies and BW4 with over one darcy.

The top section of six wells had been drilled, cased and cemented to immediately above the first coal seam.

A larger rig is now mobilised on site to start airdrilling the first of these six wells this weekend through the Rangal coal measures to below the base of the Burngrove coal measures.

Seam-specific DSTs will be performed to determine the permeability of the coal seams.

Wells which encounter sufficient permeable coal seams will be completed as future pilot production wells and the areas around the permeable wells high-graded for future production drilling programs.

Gas saturation data received to date indicates 100 per cent saturated Rangal coal measures and 80 per cent to 90 per cent saturations in the Burngrove coal measures.

Given the high gas saturations in the coals, sufficient permeability that allows water and gas to flow in multiple adjacent wells and coal seams are expected to provide potential 2P upgraded gas reserves in that area.

A coring rig is on schedule to start on the seven-well fully cored 3P exploration program on the Norwich Park CSG prospects this month.

In a letter to shareholders, Bow said it had delivered strong growth during an extremely challenging period for the global economy, not only because of the recognition of its coal seam gas and conventional oil projects but from the strong support of its shareholders.

SHARE PRICE MOVEMENTS

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Shares of Bow Energy yesterday jumped 11.5c to $1.395. Rolling high for the year is $1.60 and low 71c. The company has 216 million shares on issue with a market cap of $301.4 million.

The award of three high-potential Bowen Basin CSG blocks in March this year has given impetus for the company to expand in this booming industry.

A successful capital raising in early 2009 provided the necessary funds to enable an aggressive exploration and appraisal program aimed at delivering significant certified gas reserves in its CSG areas.

Bow has already delivered its first CSG milestones by certifying gas reserves from the Don Juan CSG field in the Surat Basin and the Blackwater CSG field in the Bowen Basin.

Managing director Ron Prefontaine said the company had accumulated 664PJ of 3P and 19PJ of 2P certified net gas reserves.

It is confident of achieving its end of 2010 targets of 1,900PJ of 3P and 450PJ of 2P CSG reserves ahead of schedule.

Bow's growing certified gas reserves in the Bowen Basin constitute one of the few remaining sources of uncontracted gas resources located near Gladstone where a number of world-class export LNG projects are being planned with CSG as a feedstock.

A substantial portion of Bow's uncontracted gas reserves are targeted to feed one or more of these LNG projects.

Bow expects higher than current domestic gas prices for its gas through this direct link to the world market, the managing director told shareholders.

To complement its CSG portfolio, Bow will continue to seek value-adding, risk-mitigating and capital-preserving farm-out joint ventures in its conventional oil projects.

These joint ventures limit the need for shareholder capital to fund exploration and appraisal programs, while offering considerable potential for increased shareholder wealth following discoveries and reserves additions.

Bow currently has two joint ventures where it is fully or partially carried on up to ten oil exploration wells.

Bow's CSG and conventional hydrocarbon assets in Queensland offer tremendous growth potential.

In particular, the current exploration and appraisal programs in its Bowen Basin CSG projects, located strategically west of proposed world-class LNG export facilities in Gladstone, are demonstrating that potential.

"I believe success follows success and judging from the performance of your company over the past year and the likely continuation of that performance, Bow is on track to become one of Australia's major upstream listed energy companies," Mr Prefontaine said.

"On behalf of the directors and management, we look forward to continuing the company's strong growth over the upcoming year towards Bow achieving its real potential for the direct benefit of all shareholders," he added.

BACKGROUND

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Bow Energy Ltd joined the Australian Stock Exchange list on May 20, 2005.

The company is an exploration company focused on the discovery of commercial oil and gas fields with projects in several of Australia's producing basins.

According to one broker review, Bow's upside value is expected to be driven by increasing 3P and 2P certified gas reserves currently in progress.

Should the company's business plan progress favourably throughout 2009, Bow is likely to be positioned as a significant mid-tier upstream energy company by the conclusion of 2010.

John De Stefani, CEO Commercial, said that over the next six to eight months Bow Energy's primary focus will be on upgrading certified reserves in its coal seam gas projects, particularly its Bowen Basin blocks.

The increase in its gas reserves targets has come on the back of strength from the company's Comet block and Norwich Park block, located in the Bowen Basin, which have multiple coal measure targets.

Bow was awarded and granted these two high-potential permits in the March quarter, and a third block, Gunyah, is subject to Native Title.

Further highlighting the value of Bow, the company has a proven business development management team and is in a strong cash position to deliver on its planned reserve target.

The group has a clean asset base with 100 per cent ownership interest in key tenements, operator positions and significant uncontracted gas potential in regards to resources located at Gladstone.



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03/11/2009 11:37AM AEST Bow Energy Ltd (ASX:BOW) is certainly in the right industry where gas is paramount in producing power.
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