The fundamentals are even stronger now than before. Dirt cheap price today ! Bought in at 34 cents again. Was at high 38 to 39 cents last week.
Patterson's have got an initial coverage at 70 cents. http://www.easterncorp.com.au/PDF/broker-research.pdf
We are initiating coverage on ECU with a HOLD recommendation and a price target of $0.70/sh. ECU are leveraged to early stage exploration for CSG in the Galilee Basin in QLD and hold a portfolio of producing coal mines in New Zealand and Australia. While the Galilee basin assets are highly prospective for CSG, any investment is speculative at this point due to the early exploration stage of the assets and lack of production to date. We believe that successful testing of ECU’s pilot production pilot will provide considerable upside – demonstrating productivity of a significant resource. For this reason ECU presents a potentially high impact speculative opportunity but due to the recent share price appreciation have initiated with a HOLD recommendation. Early Stage CSG Assets. ECU holds a 68% interest in subsidiary Galilee Energy Ltd which has interests in two permits across ~9,000 km2 of largely underexplored prospective CSG acreage. The permits are estimated to contain up to 20tcf of GIP and are well located 80km from an exiting pipeline into Moomba and Brisbane and to a local gas-fired power station. The Galilee basin has attracted significant interest over the past 12 months as explorers and investors search for the next high-growth asset/basin. Ongoing exploration program. Encouraging exploration results in ATP529P (50%) secured a $37m farm-in with AGL, funding an extensive exploration program. The 5-spot production pilot has been drilled with stimulation and dewatering to commence shortly. Results will demonstrate the productivity of the coals with initial reserves certification targeted for Q3 2010. Recent capital raisings have funded exploration of ATP-799P (100%), initially focussed on 150km of 2D seismic followed by 2-coreholes in late 2009. New Zealand coal assets profitable on a stand-alone basis. Fully funded and leveraged to upside. The producing coal assets, AGL farm-in and recent capital initiatives will see ECU through a defining 18-month exploration program in the Galilee Basin. Results from the production pilot and further exploration will help to define the extent and productivity of the coals. With an estimated 20tcf of GIP and the close proximity to markets there is potential for significant upside from delineation of the resource. The results will have a significant impact not only on ECU but on all Galilee explorers and will capture the attention of the wider market. 11 September 2009 12mth Rating HOLD Price A$ 0.73 Target Price A$ 0.70
Also read up about the Permian aged Betts Creek Bed and Aramac Coal Measures from Blue Energy who is operating (like ECU) in the Galilee Basin
"Due to the depositional nature of these coals, we are hopeful that other Coal Seam Gas (CSG) operators in the Galilee Basin will record similar results, which will enhance the development of a large natural gas program from the Galilee Basin.
