bul london investor presentation 16 july 09, page-17

regi,
There are a few other companies that are also examining Galilee basin CSG economics.

We know that Blue have already drilled there. It is a vast and expansive permit with considerable potential. They are going to have to drill it quite a bit to prove up the reserves there. The 813 results they got are not exceptional (only in comparison to other better permits in bowen and surat) other than the fact that they are possibly over such an expansive area; hence the need to carry out an extensive drilling program and really test the scale of the resource. Dont get me wrong, the characteristics of the coal from the core hole sound quite good, there is just a lot of competition in projects just now and having a less great resource could cost you its development.

They have a big challenge with infrastructure, as well as being able to find a means to get the gas to the export market - lets face it, its not domestic gas. If they do get even in on the low end of reserve estimations for the 813 permit, this could be enough gas to underpin about a 6mtpa plant. If they converted the whole 15Tcf this would be a much larger facility; dont forget to also add on the VERY LIKELY 4 Tcf from 814.

So from the presentation you can also see they are already looking at the best routes for the pipeline. If they were to go further north than gladstone, this suggests to me that they would be looking to sell the gas to KOGAS with KOGAS basically building the LNG export terminal. This would be a pretty exclusive deal effectively integrating one supplier with one buyer. Great to exclude competition from both world markets, as well as anything from down South at Gladstone. The only problem would be making sure the supply was reliable and relatively cheap to drill.

We know that AGL have already invested quite a bit of money to farmin to the westerly adjacent permit to 813; I think around $40m. Comet ridge also hold some acreage up there. Depending on those companies strategies, there could be the possibility to share in the pipeline costs.

813 look like a bit of a pipe dream in the immediate future with so much competition to get into gladstone. After that all gets thrashed out, there might be room for Blue further north or at Gladdie. the best thing about all this is getting on board with a Major LNG buyer. This is a help to no end for Blue and Peter Cockroft and the team deserve big medals for it!

813 could definitely be a company maker mate. I believe they are already a billion$ company without it which makes them so attractive for a patient investor.

http://www.youtube.com/watch?v=hYHfh94LfNw

SF