bg takeover gaining momentum, page-6

I would be interested in any opinions to test my logic below.

I recognise the importance of market dealings and the associated momentum but for longer term holdings I have a different approach - I guess it maybe be more to do with fundamentals.

I am a little unconventional and do things like that when it takes my fantasy. Its like hitting a cricket ball on the up a la Viv Richards. I have bought to hold and here is my logic for buying at $4.76 based on the Origin deal.

ConocoPhillips to invest up to A$9.6 billion for a 50% share of a CSG to LNG Joint Venture at- A$4.00/GJ for 2P reserves; or - A$1.88/GJ for 3P reserves. On that basis the share valuation for Origin's reserves alone are $19 per share (I did sums independent of the analysts).

QGC have a similar number of shares and at July 08 they have Proved & Probable (2P) 2,415 PJ and Proved, Probable & Possible (3P) 7,163 PJ ie after adjusting for the difference in shares the value of QGC based on 2P reserves alone is $ 9. Given that BG did a good deal earlier in the year they have 30 percent of the supply for about $4.50 per share (my initial guess of value in March) therefore the prediction is reduced to $7.50 from $9.00. This reduction is temporal as QGC has recognised the differential and is quickly buying up other reserves which are outside the BG deal. I think the QGC Board and management are on the ball. The only danger now is BG comes in and offers $7.50 per share to guarantee and improve on their initial investment.

In summary, I am aiming at the $9.00 figure and it may take a little time. The other commercial interests will add further value and will wait and see. I realise its a best guess and calculations are based on assumptions but it is the Why I bought and it is ex mea sententia.

Latest news: As Origin begins its search for a site for its major ConocoPhillips joint venture, chief executive Grant King told ABC TV’s Inside Business that cooperation between Queensland producers would be “very sensible”.

“I think that question probably warrants consideration on a number of levels,” Mr King said of Queensland operators pooling facilities into one joint site at Curtis Island. “… people often ask that question in the context of the LNG facilities but it’s better to start I think actually out in the coal seam gas fields where I think it still makes a lot of sense for the major companies with the major resources to look very closely at cooperation around field development and transmission pipelines …”

I am certain he is talking about QGC and it looks like this will happen particularly if Cottee runs it all.