Interesting times for CSM, hot rocks Francine PenningtonFriday,...

Interesting times for CSM, hot rocks

Francine Pennington
Friday, 23 February 2007

AUSTRALIA'S young but thriving coal seam methane sector is seeing plenty of share market action, and this week investors also showed increased interest in what could be the next boom energy commodity, hot rocks.



Petratherm's heat exhange within insulator model


A gas flare from a CSM well

Queensland Gas Company came crashing back to earth as one of the market's biggest losers this week, now that Santos has thrown in the towel on its proposed takeover.

Shares in the coal seam methane producer plummeted 13% to close the week at $1.38. Despite the drop, its shares were still trading at an 8c premium to Santos' revised offer.

Santos pulled out of its long-running bidding war for QGC on news the Australian Competition and Consumer Commission planned to block the $910 million offer over fears it would "substantially" reduce competition in the CSM market.

Unlike QGC, however, the announcement barely scratched Santos' share price, which has only just started recovering following a string of bad news in recent months.

STO closed the week down 2.7% at $10.02, but the drop was probably more attributable to the release of disappointing financial results, in which it posted a 16% profit loss for 2006.

Despite the drop, Santos was still trading up 5.6% for the month.

It was also an interesting week for Australia's fledgling geothermal sector.

Petratherm was a market favourite this week after the Federal Government agreed to inject $5 million into advancing the company's Paralana hot rocks project in South Australia.

PTR gained 23.6% for the week – or 33.8% for the month – to close at 89c.

In a further leap of faith for the sector, fellow hot rocks player Geodynamics has made good on its word to buy a "state-of-the-art" drilling rig after realising Australia does not possess a unit large enough to drill its Habanero-3 well to depths of 4000-5000m.

The company has agreed to pay $32 million for a high-tech unit from Texas, due to be imported into Australia by mid-year.

GDY has recovered 27.7% of its market capitalisation this month, with its share price trading up around the $1.20 level.

But both pieces of good news were not enough to bolster the share price of a third geothermal explorer, Green Rock Energy, which also had news of its own.

Despite making headway at its Hungarian conventional geothermal project with the start of production testing, shares in Green Rock dropped 3.4% for the week to 5.6c.