comparative value, page-5

Followers of ESG,

Have a look at the following link to a presentation by MEL from the 22nd May 2009.

http://imagesignal.comsec.com.au/asxdata/20090522/pdf/00955151.pdf

The first graph shows the value of the transactions in the sector, EV/2P and 3P: (go to page 11.)

The second shows a variety of Australian CSG companies, using the same metric: (p.12.)

Note in the p.12 graph how ESG looks to be the most expensive?

It isn't.

I think this is the same reason why ESG has not broken out. This is based on their current (and OLD) 2P of 336PJ. Ancient history.

Now, overlay this graph with the same metric once the 1300PJ has been certified (this is 4 times the 336PJ, so the metric is now 1/4 of the size). Now, ESG is one of the cheapest of the CSM developers.

As previously discussed, a larger reserve demands a higher value due to its strategic value (which is why the larger transactions in the sector tend to be at higher metrics... not always, though.)

So, by rights, ESG's dominant position would suggest it SHOULD be trading on a higher metric. But once the 1300PJ 2P is certified, it will be cheaper per PJ than much smaller companies...


Clearly, ESG's share price has lagged behind their development progress. And once the new reserves are released, that fact will become even more stark...

Y