positive mosaic article in smh

Following article in the Sydney Morning Herald June 5-6 weekend edition page52 by James Chessel The Drum


The price of oil domindated headlines this week, with many energy stocks touching some kind of record high- - the struggling Amity Oil being a notable exception.
But while the market has focused on the like of Woodside Petroleum, Santos and Hardman Resources, there's a bit happening at the smaller end of the sector.
Take, for example, Dr Howard Brady's Queensland gas explorer, Mosaic Oil, which this week won a modest gas contract with the Queensland Government owned CS Energy.
The deal is for 3 petajoules a year for the next five years, with gas likely to be sourced from the company's southern gasfields, including its Waggamba development in the Surat Basin.
Waggamba, with its potential 1 trillion cubic feet of gas, had been a source of frustration in some corners of the market but things look to be moving.
As part of the contract win, Mosaic has been awarded its pipeline licence linking Waggamba to the grid and completing its development.
Mosaic's in house broker, Patersons, reckons the contract is a good one, generating revenues of some $17 Million to $19 Million.
The broker believes Mosaic will require about $6 Million to complete the Pipe line and drill two additional wells at Waggamba.
As of March , Mosaic had $5.3 Million in cash and $2 million of undrawn loan facilities.
The company had previoulsly estimated $3.9 million of cash outflow in the june quarter from exploration, evalutation and development activities.
Mosaic is also close to finalising the reserves certificatation at Waggamba. At Waggamba , Mosiac is attempting to go it alone, and is negotiating gas sales agreements at present notes Patersons.
We have previously indicated that even a modest gas sales agreement would add substantial value to Mosaic due to the high liquids content.
The trick will be in how the contract is financed.
We wonder if Beach Petroleum boss Reg Nelson has been watching the announcement given recent scuttlebutt involving a coupling of the two groups.
Anyway the deal was announced a week after Mosaic had upgraded reserves at the Churchie gas field which it owns with Santos.
The commercialisation of Churchie would be well received by the market, with the recent reserves upgrade possibly supporting production of 8-10 Pj a year.
The certified proven and probable reserves are now 56.6 Pj (up from 34Pj)