The institutional players have demonstrated little interest in Queensland CSG plays. Even though the largest LNG players in the world have spent large sums acquiring CSG resources for LNG plants to be located in Gladstone.
However, in the case of Karoon with a conventional gas play on the North West Shelf it is pushed to a market cap of $1.5 billion. I watched the interview on ABC and noted that the one well had not been flow tested and more [expensive] wells were needed to determine a resource figure. As for a development cost + timetable - go figure.
CSG is much more predictable than conventional gas reservoirs. The coal measures are stratigraphic, can be profiled with seismic and a number of cheap wells can determine gas content and permeability of the selected seams to give resources quickly.
However, there is a short history of CSG discovery and no LNG plants are in operation. The opposite applies for WA conventional gas and encourages conservative institutional investment.
Thus there is little meaning in the day to day movement in share prices of AOE/BOW/WCL in the absence of field data.
This leaves the field wide open for large LNG operators to pick up cheap CSG resources in Queensland. The real value is in the energy content of the CSG resources and thus the attraction for a major to acquire this.
One must wait for such an acquistion to occur again as it has for Santos/Origin/QGC/SHG and others.
WCL Price at posting:
35.7¢ Sentiment: Hold Disclosure: Held
