doc,there are multiple compounding effects there. We know the...

doc,

there are multiple compounding effects there. We know the East Coast gas price will rise because of overseas SPAs. but prices will also rise because of the carbon tax.

Modelled gas market share at a higher east coast gas price under a carbon pricing regime will mean a reduction in 'otherwise' market share, because the cost of the alternative sources will be more competitive i.e black coal for NSW.

The plans for further plants and extra capacity are just lans at this stage. They need customers and contracts in order to be able to do all that. The very positive planning and development environment in the USA combines with substantially lower prices, technically competent idustry (Betchel are American), and a generally depressed economy means they will provide a formidable adversary in the bid to secure sales agreements from Asian customers. Very fomridable.

Other threats to Metgasco's future are the emergence of shale gas resources in central Australia. While it is highly likely they will experience there own set of unique problems because of their remote locality; they are fields set in the middle of already substantial gas networks and industry professionals...all with none of the development issues that you would expect in a moderately dense part of the world such as Northern Rivers.

The window of opportunity for the big three plants to secure additional customers is rapidly closing, and this will likely mean they will have additional gas that they cannot direct towards their LNG plants. Take Shell for example, they are focused on timeframes around the 2017-19 mark which led to substantial devaluations when they overtook arrow. They are sitting pretty waiting for the skilled vacuum to form and have services at their beckon call.

things are getting pretty tight for the big boys. Only 24 months till the taps get turned on and it takes that long to plan and drill a well and get it into production.

Anyway, this is about valuations for MEL, and I still stand by my original comments because they reflect the unique nature of MEL and its assets; not some generic assumption that all projects are the same.


Mind you, if MEL has brought on board some sort of genious of a drilling and completions guy, then things could change substantially if he can get a better result out of the wellhead economics.

SF