has mel got the most potential on the market?

We have all seen the concerted effort of a group of people to depress the MEL shareprice. We see it regularly here with new threads started with downramping titles and contents that instigate masses of replies, perpetuating the title of the thread and exposing it to more people in the process. We have all seen the facebook groups hell bent on destroying the company. We have all read the rubbish from media outlets that sympathise with this train of thought (or lack of).

Some of us have looked deeper and seen who is making money out of influencing the masses; who is protecting their own business by doing so; and who is politically gaining from siding with these viewpoints.

I would be interested to see how many of those opposed to the industry are aware that a political movement has been created not because of them, but by using them. As Dex pointed out, the greens were routed in WA. I expect a very similar thing to happen in Tasmania due to the problems that have arisen in the power sharing agreement, the public backlash to Ta Ann and Tarkine mining protests and the departure of Bob Brown. It leaves Drew Hutton as a founder of the Greens without much political clout. Is it a strong coincidence that the Greens were largely responsible for watering down pokie reform and the son of a pokie baron is financing lock the gate? We then have Drew Hutton as a founder of lock the gate…interesting connections to be made there.

They are playing on the conscience that is inside of everyone that says that we should protect things from harm, whilst harnessing a misinformation campaign that has utilised the social media tendency to repeat without thinking. We have people believing that core wells are fracced, that the great artesian basin is in MEL permits, that their tap water will catch on fire, that methane leakages have emerged due to a simple core well being put down, that tiny fractures in a well 2.5km deep will cause sink holes to emerge. The list goes on.

The not thinking part of the equation is clearly evident in the fact that Mr. Kjerulf Ainsworth, the financier of the operation, is no stranger to the oil & gas industry. He owns 15 petrol stations. 15. How does this tie in with “This is the battle for the end of the fossil fuel industry. This is the end game" from Drew Hutton. On the surface you would think that they would be mortal enemies, yet they are working together – the petrol tycoon financing the anti fossil fuel crusader. Why would anyone finance someone to wreck their business? I feel the answer is simple. It’s not the battle for the end of the fossil fuel industry – it is the battle for the end of alternative fossil fuel production in our own backyard –to ensure that gas companies do not sell a cheaper fuel direct to the public through their own outlets – underpricing conventional petrol fuel, and cutting out the business of the petrol station owner. The financier wins by keeping his business and margins. The politician wins by garnering a new support network – inclusive of the traditional opposition, the farmer. The politician also claims the vote of the activist, the environmentally worried and the socially concerned.

They have found strong allies in the activist rich northern rivers. I have no problem with activism, as long as it is thought out and rational. I noticed that a lot of people campaigning against this issue are also campaigning against coca cola. At the university down here the vending machines had signs put on them (as did many across the country) saying that they were out of order. I have a friend who owns a vending machine business who would have lost a lot of money due to this. He is very well respected in the community and financially supports a lot of initiatives for young people. He would have been financially hurt through this, with coca cola taking no pain from it – yet the community would have taken a hit as a result. People will always do what they feel is right. The problem is that the information that decisions are being based on is not rational. The radon testing for example is proof in case of this. The media is taking it as ground breaking research, where it is clear (as psi pointed out) that it really means not a lot at all.

Shopfronts are a fantastic idea and need to continue, but the industry as a whole needs to get its act together regarding the dissemination of facts. They walked straight into a bear trap as they thought that the community would accept the fact that everything would be fine with drilling. They were lazy. They need to get off their backsides and prove to those who are rational that it IS a safe industry. Our MEL is not big enough to do this on its own.

Although people would like to convince us otherwise, we are in a strong position. STO is struggling for landholder approval with only one landholder access agreement having been reached in the Gunnedah Basin although 15,168 stakeholders had been contacted by mail, phone, emails or meetings. MEL have over 300. AGK has been wiped out through political grandstanding for the western Sydney seats. COI needs STO. DTE would be in the same position as STO in the Gunnedah, is not looking fantastic at Fullerton Cove with new regulations and its assets near MEL are nothing special.

There is speculation that Mitsui have thrown a spanner in the works for LNG’s plans for WCL and they need evidence of supply agreements by the end of financial year. They have stated that they will be in talks with MEL this quarter. We have over 2500pj of uncontracted 2p, along with what appears to be a large level of conventional. The issues we have are financing and the stranded nature of the deposits; along with the abovementioned political and social problems. If Mitsui don’t want their gas going to China then LNG/Petro will need to act very soon if they want a field developed in time. There is no doubt in my mind that we are in play – and thanks to lock the gate we are prime for the picking; and you can bet that the Chinese won’t bow as easily to a minority group as community minded and relatively tightly funded MEL.

If that doesn’t happen and the government doesn’t pull its head in, then NSW will just have no gas, as 95% is imported, and the 5% remaining is CSG. Logically that cannot happen. On the upside, from what I have red we will be the least affected form the new regulations, and as such in the strongest position to take up the slack in NSW supply. Maybe that is the governments ploy – to ensure all gas produced in NSW stays there by cutting supply and inflating prices to a level comparative to export pricing as a result.

I feel we have the most potential there as we could well be the last man standing in NSW; whilst being of a large enough uncontracted size to be attractive to other players. If you were AGK and you had been wiped out by regulations, would you not spend some petty cash to continue that supply? If you were STO and had a carbon dioxide, water guzzling dud with no land holder agreements would you look up the road for Gladstone supply? Then there’s EPW…

We are currently trading at less than 2 cents per GJ of 3p. ESG went for 51, Bow went for 16. Although the mania has lifted in acquisition price terms, the demand is very much there with the NSW shortage and Gladstone plants coming on line. In my book we may have the most potential value on the market as I feel that the government may be snookering itself.

Thoughts?