Why was there selling pressure on MEL in December 2009?Because...

Why was there selling pressure on MEL in December 2009?

Because Molopo sold off about 3 million shares Tranche 1 that it got as part payment for PEL 426 and PEL 13.

This is from Molopos last quarterly report
On 3rd December Molopo completed the sale of its interests in the Clarence Moreton Basin to Metgasco for $7 million ($3 million in cash, $4 million in Metgasco shares) plus a production royalty of 2.5% for 50% of gas volumes produced from reservoirs below 800m in PEL 13.

The Metgasco shares were divided into two equal tranches; Molopo has sold its Tranche 1 shares for gross proceeds of $2,637,112. The Tranche 2 shares are subject to a full trading restriction through to 3rd December 2010.

Calculations on back of an envelope:

In Kingfisher E1, the lowest 5.3 m is producing 2.97 million scfd. Bear in mind that this interval represented the lowest accessible zone identified from the wireline logs. So one would expect an extension of this gas bearing zone on deeper drilling.

That leaves another 25 m of net pay plus another 105 m of gas bearing interval.

Then read between the lines that that Mr Johnson has stated that Kingfisher is a major new gas discovery. This is the first significant conventional gas discovery in over a century of exploration in the state of NSW.


One would therefore be hopeful that the remaining depth of Kingfisher E1 would produce at least another 7 million scfd.

This would translate to a yearly gas production from Kingfisher of about 3 PJ....3 PJ from one well.

If further wells were drilled with deeper depth, this figure could possibly be surpassed in subsequent wells.


The PURITY of the gas produced is excellent. Unfortunately, it has not been given the publicity it deserves. Please note the very low water content.


A reserve upgrade is anticipated to be achieved in the current quarter, ie by end of March.

The revised mapping and coal character data has now been provided to its independent gas reserve certifiers for a more complete review of coal seam gas reserves within PEL 16.

The Company expects to achieve an increase in certified 2P and 3P coal seam gas reserves during the current quarter.

Note that this reserve upgrade only applies to the coal seam reserves and not to the conventional gas. So MEL is going to have a reserve upgrade within 6 weeks, and that is on top of the conventional gas discovery

The Clarence Morton Basin appears to be justifying Mr David Johnsons confidence in it being a major gas bearing province. Perhaps the good news is more covert than overt at the moment.

We expect very big things ahead.


JP everyone else away.