re: some more thoughts (and answers) Hi all, Firstly let's clear...

re: some more thoughts (and answers) Hi all,
Firstly let's clear up the water issue. If you know anything about coal seam methane you know that it's the dewatering process that releases the gas..........no water=no gas. And usually the more water the more gas.......and ECU have heaps of water pumping. The problems of the past ranged from inadequate storage of fuel to pump the water .......to them using pumps that were inadequate to inadequate back pressure control to handle the LARGE surges of gas. You name it and Galilee Energy did it wrong.
The large American company that owned it was Enron (remember them??). Well before they closed their gas prospecting interests in 1996 (I think) including the Galilee field and went into energy trading instead.......BIG MISTAKE!!........they had indentified the ATP that is owned by ECU as very highly prospective for CSM gas. Enron didn't muck about with small projects and when final reserves are mapped in detail I think we'll see what I mean.
Tech has done a marvellous job of putting together all of the relevant reseach there,including the printed bakground info that people were provided yesterday on the field trip. I really can't add much factual detail other than a few thoughts of my own:

- I can second what Tech says re Gordon Smith (the MD of Galilee Energy....the relevant subsidiary of ECU). In the resources game it often pays to 1) back the man and 2) back the same man even further if he has his money where his mouth is. In ECU we have a very competent player with a great track record who basically controls half of the company. I am also very impressed with his constant efforts to cut costs and take all possible measures to make sure the mistakes of past CSM operators are not repeated here (some have to be seen to be believed). He is also is very loathe to say/promise too much too early (which I also respect) but has the air of a man who knows deep down his shareholders are going to do very well.

- I like Tech have seen the project first hand running smoothly with water pumping smoothly at all 5 wells. There is some gas flowing but the water pressure is being taken down slowly but surely so there are no mistakes.

- it is obvious that ECU have picked up a bargain with Galilee Energy due to the incompetence of previous operators.

-once we have gas flowing within weeks on the test wells it is a matter of sorting out transport and buyers for the gas. This is currently being negotiated (as mentioned in the release) and we should not be far from hearing some news on that. The Galilee ATP is in a very strategic position in terms of the gas requirements of surrounding areas and there is significant interest in ECU's gas.

-in terms of potential earnings it is a little early to speculate in great detail. The company expects even the 1st five test wells to be cash flow positive and there is a potential for up to 100 wells or more in the current area (quoted as estimated 800 bcf of gas). My estimates are for 2 million cubic feet/well/day at an average of $2.50/thousand cuft. So even for just 5 wells we have $5000/day/well = $9.1 million revenue for say a 3.65 mill profit. (assuming 60% costs)

-there is great scope to cut costs and the company are hoping to have power needs (currently powered by petroleum) serviced by their own gas in the not too distant future...........which will require the use of a gas turbine.

-once this is up and running there are enough reserves in the Rodney Creek/Crossmore area to last 15-20 years. And then there is the rest of the ATP which has similar coal with very open cleats that does not require fraccing.

-brokers have now seen with their own eyes what is possible with ECU and no doubt interest and liquidity should stay noticeably stronger from here on in.

If I think of anything else I will post it,but between my post and Tech's there is plenty of info there.

I was very peeved that the one day I was away from my computer in QLD the stock rocketed through my pyramiding point at 4c.................so peeved in fact that I broke all my rules and bought more today anyway in the low 5's (now at a loss). Assuming we get what we expect in coming weeks with gas flowing and buyers on board I see anything around 5c as very good value. How the shorter term traders will affect it is hard to predict. In a month or two's time I am hoping and expecting that all who invest in ECU (including me) will be very happy.....

Having said all of the above please note that I am trying to give people here an insight into this company in good faith BUT I do hold a large position in ECU. Trust your own judgement.

Cheers,

Ed.