bowen vs surat, page-19

Loki

You pretty much summarised why I am still holding BUL despite the gloomy outlook and despite their poor strike rate under old management. I was dubious about BUL attacking their Surat tenements first and changed my opinion on them when the new management team came on board and went direct for ATP 814.

Imo BUL do have a well defined plan to avoid excessive dilution and I don't see what they could be doing differently. They are trying to get 2p reserves booked having established where they have coal across ATP 814 and 813. This is their strategy and it should add value. I would agree they could have waited on ATP813, but I think at that time Kogas were hatching plans for their own LNG terminal and so they went for that drilling program to move that forward. The RSPT spooked Kogas.

Anyway I think we agree the looming oil crisis will not be averted only delayed if we get a GFC2. There is also ample evidence from the last GFC showing that the oil majors will not be deflected in trying to lock up whatever gas reserves they can before national oil company's beat them to it. A second recession won't halt that and cheaper valuations could stoke it along.

I suspect if BUL do start running low on funds before they can book enough 2p to justify a rerate, Stanwell will step in given how much money they have in there already.

All the best with yr gold plays. I hold only one small gold speccy because the gold market is notoriously volatile and I wonder if anything will be allowed to dislodge the greenback. Even the Chinese don't want to see the USD go down another 30% and seem cognizant that the weaker the greenback becomes the more the whole economic system is threatened by a runaway gold price. We can't all sudddenly start buying power drills from China with gold coins and the gold market is still a market that can be managed, although I know an increasing number of major hedge funds see the POG breaking out in one massive panic..I still wonder why that didn't happen when Lehmans went down? Another debate i guess.

Some news out on Santos this morning

Santos to sell more of Gladstone project Mathew Murphy
August 27, 2010

SANTOS will sell at least 15 per cent of its Gladstone liquefied natural gas (GLNG) project to Asian buyers in an effort to finalise binding offtake agreements and make a final investment decision by the end of the year.

In announcing a first-half underlying profit of $210 million, up 121 per cent on the previous half-year, Santos said the door for consolidation of LNG projects in Gladstone was ''still open'' but consolidation was unlikely before it made an investment decision on its first LNG train. Santos has been rumoured to be considering a multibillion-dollar tie-up with Royal Dutch Shell, which is working on its own Gladstone LNG project.

Santos shares rose 23, or 1.6 per cent, to $14.07 after the company maintained its production guidance of between 49 million and 52 million barrels of oil equivalent (boe) for the full year. This was despite first-half production falling 9 per cent to 24.2 million boe due to flooding in central Australia and a planned 35-day maintenance shutdown at its Darwin LNG project.

Santos matched the 22 dividend from the same time last year. The dividend will be paid on October 6.

Chief executive David Knox said an announcement of offtake agreements and new equity partners for GLNG was awaiting government approval by the Asian countries. Santos owns 60 per cent of the GLNG project, with joint-venture partner Petronas holding 40 per cent.

''We are not talking to the buyers about non-binding heads of agreement or memorandums of understanding,'' he said. ''These are binding, fully termed deals that we are working through, so they are very complex and they are taking some time. These (buyers) want to see volumes in 2014 they want to negotiate with projects that they have confidence in and they do value equity participation, which we are able to offer.''

Santos has always said it will retain majority ownership in GLNG, but it has lowered its desired level from 50 per cent to 45 per cent.

Korea Gas and China's Sinopec have previously confirmed that they are also in the hunt to buy gas from the project and a potential equity stake.

Mr Knox said Santos was not engaged in any consolidation talks, and played down speculation that it would combine its LNG muscle in Queensland with Shell in the foreseeable future.

''My door is open but that's not what my focus is,'' he said. Santos could resume talks once it had made a final investment decision on its first train and was on the way to its second, he said.

Mr Knox said he did not believe a federal Liberal government would delay environmental approval for GLNG but called for the uncertainty about the government to be sorted out in the next few weeks.

He said about 50 people had been hired for Santos and GDF Suez's Bonaparte floating LNG project in the Timor Sea, which is expected to produce 2 million tonnes of LNG a year.

''We are going to drill a few appraisal/development wells next year in order to find out the hydrocarbon content and the mix of oil and gas in the reservoir so we can design the facilities appropriately,'' he said.

''So that will lead us to an investment decision maybe in late 2013 or 2014 for first LNG in say 2018, but after GLNG gets over the line and after PNG LNG gets over the line.''