bow dj interview - relevant to wcl

This is a DJ interview today with BOW.
It is entirely relevant to WCL.

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Bow Energy Would Like CSG Offtake Deal By Mid-201014/10/2009 11:41AM AEST
By David Winning
Of DOW JONES NEWSWIRES


BRISBANE (Dow Jones)--Coal seam gas producer Bow Energy Ltd. (BOW.AU) hopes to clinch an offtake deal by mid-2010, and early negotiations have included the possible sale of an equity stake in its reserves in Australia.

John de Stefani, chief executive commercial of Bow, said the company is waiting on the outcome of a fourth-quarter drilling campaign in Queensland state as this will likely strengthen its hand in talks with potential customers.

Brisbane-based Bow expects to beat an end-year goal of 750 petajoules of proven, probable and possible coal seam gas reserves, maybe by up to 33%, he said Tuesday in an interview with Dow Jones Newswires.

On the narrower measure of proven and probable reserves, Bow is on track to hit its goal of 100 PJ by the end of this year and continues to target having 450 PJ by the end of 2010, De Stefani said.

Coal seam gas - trapped stores of methane hundreds of meters below the Earth's surface - is one of the world's hottest energy plays, with more than A$20 billion spent over the past two years on mergers and acquisitions in Australia alone.

Bow is among a few companies with CSG assets in Queensland's Bowen and Surat basins that hasn't been taken over or committed any of its future output to companies proposing to build liquefied natural gas terminals at the port of Gladstone.

De Stefani said Bow aims to sell at least 50% of its future output into these LNG terminals, and securing a heavyweight joint-venture partner would help finance the development of its CSG fields.

"Our ultimate aim is to keep majority ownership of our fields," De Stefani said.

Bow is unwilling to commit its gas via an offtake deal until consolidation has taken place among the proposed LNG terminals.

"The last thing we need is a credit risk by signing up our gas to a project that won't go ahead," he said.

Large-scale projects planned for Gladstone include a standalone effort by BG Group Plc (BG.LN), a joint venture between ConocoPhillips (COP) and Origin Energy Ltd. (ORG.AU), and another between Santos Ltd. (STO.AU) and Petroliam Nasional Bhd (PET.YY). There's also a smaller-scale project to be built by LNG Ltd. (LNG.AU).

Royal Dutch Shell Plc (RDSB.LN), which wants to build a terminal with a capacity of 16 million metric tons of LNG at Gladstone, has confirmed it has already held talks on consolidation with at least one rival project.

The LNG terminals at Gladstone won't start up until 2013 at the earliest, delaying the point at which Bow could recover its costs through regular cash flow.

However, De Stefani said the scale of the proposed LNG developments was creating opportunities to sell gas more profitably into the domestic market, citing chemical plants and ammonia producers that now have to compete more vigorously for available feedstock.

"We will definitely contract some gas for domestic power generation" as well as pursue sales to LNG plant operators, De Stefani said.

Bow plans to build and operate a small-scale power generator, with a capacity of 30 megawatts. It will require 30-40 PJ of the company's proven and probable reserves, he said.

"It will give us cash flow in about 12-18 months, rather than LNG, which will be 4-5 years," he said.

Exact timing of starting up the power generating units would depend on commercial flow rates of CSG, connections to the local grid and the availability of equipment, he said.

De Stefani added that the company believed it could get more than A$5 per gigajoule for gas supplied for power generation.

Trading at A$1.49 as at 0037 GMT, Bow shares have experienced a sevenfold increase from 24 cents a year ago.


-By David Winning, Dow Jones Newswires; +61-2-82724688; [email protected]