see broker reportThis research was conducted by Bell Potter...

see broker report

This research was conducted by Bell Potter Securities dated 30/08/2002.
Molopo - Speculative Buy.
Molopo Australia is a well funded junior,
currently undertaking significant appraisal
activities of coalbed methane (CBM)
projects in the Bowen Basin of Queensland.
It is also appraising its CBM project in Luilin,
China, and undertaking CBM exploration in
the Bowen Basin, Queensland and the
Gloucester Basin of NSW.
In its Bowen Basin CBM activities during the
last year the company has:
sold 25% of its 50% interest to Helm
Energy Australia LLC for US$1.5 million
cash and US$3.5 million exploration,
appraisal and development funding,
announced proven and probable reserves
of over 80 petajoules (PJ) of gas in its
ATP564 prospects,
farmed-in for a 25% interest to the
Mungi prospect in PL94, estimated to
have recoverable reserves of over 100PJ,
farmed-in for a 25% interest to ATP602,
containing the Timmy prospect, that could
have reserves of the order of 230 PJ.
Current interest relates to appraisal drilling
of the Mungi and Harcourt projects. In
partnership with the leading CBM operator
in Australia, Origin Energy subsidiary Oil
Company of Australia (OCA), Molopo is
drilling both vertical wells and innovative
horizontal completion wells, to test for
relative gas productivity. Both these
prospects have flowed gas previously and
the new wells will be placed on extended production test prior to larger scale field
development. Molopo has entered into a
sales contract with a local cotton drying
operator to take its share of the gas
produced from the extended production
test.
OCA is already producing CBM gas from
over fifty wells in nearby project areas
within ATP564, which lies close to
infrastructure and the gas pipeline to
Gladstone.
Molopo’s share of a similar fifty well
development at Mungi or Harcourt could
provide the company with annual
production of the order of 1.5PJ, and
provide revenue of the order of $4.5 million
per annum. This level of production could
be achieved within three years of successful
appraisal. Ultimately, just these two projects
could sustain a 100 well development for a
25 year period.
Molopo has at least seven other identified
prospects within its Bowen Basin inventory
awaiting initial test drilling, and two
prospects awaiting production testing.
We see considerable upside potential from
further exploration, appraisal and
development drilling over the next twelve
months.