mr lincoln augustus shares thoughts on sapex, page-4

Yo bro bro an de sistaladymons,

Ah be readin de Sndney Herald papers(dat be nearlys as goodys as de Kinston Tribun papers)an ah be readin wat dis Santos combany be sayin about de gassyting in de Coopers Basin.

Dis heres Coopers basinting be nex doors to de Arkaringka Basinting dat be belongin to de Sapex scareytings.

Ah be postin it sos alls yo edjukated fuks cans be readin it an be tinkin. Dat be de ways, bros, dat be de ways...always be tinkin an den always be arsekings.

May yo be ketchin many fishies to be feedin de pussy ob de Lod wen it be comin aroun.



Santos in 'unconventional' tack

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* Jamie Freed
* June 4, 2008
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EXPECTATIONS of higher gas prices in eastern Australia have led Santos to study developing "unconventional" gas resources in the Cooper Basin which could add substantially to its portfolio.

At an investor briefing in Sydney yesterday, Santos's vice-president of gas marketing and commercialisation, Rick Wilkinson, said there was the potential to book more than 7 trillion cubic feet of shale gas, "tight" gas and coal-seam gas from the company's legacy asset.

Santos expects to release the first contingent resource for the area later this year. "There are methane molecules there that are available to be tapped into," Mr Wilkinson said. "What I think is misunderstood many times is that [our reserves are] based on today's gas prices, sub-$4 [a gigajoule]."

The acting chief executive of Santos, David Knox, noted that about one-third of the gas production in the US came from so-called "unconventional" sources.

"Unconventional is going to come into play much more strongly than it has," he said. "The implications for Santos are very significant. We will see particularly the tight gas aspects come to the fore over time"

Australia already produces a growing amount of coal-seam gas, but little of its large resources of tight gas. This is trapped in less permeable formations and requires special production methods which are more costly than for conventional gas.

Santos is conducting tests of the tight gas while it drills conventional wells near Moomba.

An analyst for Macquarie Equities, Andrew Blakely, said there was no doubt Santos had large reserves of tight gas.

"All the upside is there," he said. "The question is what price is required and what technology is required to deliver the commercial development."

During the four-hour presentation, Santos executives discussed last week's $US2.5 billion ($2.6 billion) deal to sell a 40 per cent interest in its Gladstone liquefied natural gas project to Malaysia's Petronas.

An analyst with UBS, Gordon Ramsay, raised concerns that Asian LNG buyers might not be willing to sign contracts before Santos had booked enough proven and probable reserves to underpin the contracts. But Mr Knox said it had taken potential customers to the site to gain a better understanding of the differences with conventional gas reserves.

Coal-seam gas reserves must be proven by the costly exercise of drilling more wells than in a conventional field.

"If we overcapitalise early, we will end up with capital sitting on the books and wells shut-in, doing nothing, which is not where we should go," Mr Knox said. "The Japanese in particular understand this is not a conventional gas contract we are entering into, in that the resource is an unconventional type of resource. There certainly won't be a discount in price."

During the briefing, Mr Knox also ruled out the sale of the company's Cooper Basin oil assets, adding that Santos had received no takeover approaches even though a shareholder cap is set to be removed in November.