its interesting to look at the GLNG reserves picture and some what if scenarios.
Firstly, it appears the 2P reserves have dipped considerably since 2007. Who was it that said something about quiet downgrades? Anyway, this could be because of slips in the oil price and marginalising some of the 2P.
2/ Santos and FOS look to have stitched up Train#1 very well. Good job guys, keep it up.
3/ Based off the 2009 STO reserves report, I have extracted the non-GLNG CSG reserves in QLD and added them to GLNG. Now this is not strictly accurate because there is no way to discern which tenements have reserves, and which dont; from those that have been added to the GLNG supply pool. Rather, it is simpler to assume they are all added, but still inaccurate.
4/ Lastly, I have considered PEL 238s contribution they could make to the scenario I have speculated on in 3/. Now STO already have an effective hold on 50% ownership on the resource so it is not that inaccurate. what it does illustrate is that STO will most likely have sufficient 2P reserves if they own all of PEL 238; on the assumption that STO increase both their 2P in Dec 2010, as well as ESG raising the bar. I think the latter is quite possible considering that there are several pilots operating in 'stealth' mode at present that may deliver the required reserves.
5/ lastly, if you look at the general trending, STO have not increased their contingent CSG resource by a tremendous amount in the last few years. This suggests that they are on the exploratory edge of their acreage. adding PEL 238 expands their ability to grow to #3 and #4, and as such has the capacity to add substantial value to STOs future for only a 'moderate' price.
Anyway, it is just a means to illustrate where we are sitting.
There are some other scenarios to consider as well. We are perhaps 15months from a 2nd train FID, and that is plenty of time for STO to go crazy and work at converting the 3P to 2P resource, unless they have already maxed themselves out on that.
Also, I have not considered supply from ESGs other NSW acreage, nor have I considered the prospect of supply from the Cooper acreage, which by what STO have said, is an option. We should take them on their word, but I dont have the time to put those numbers together ;)
All of the above is not advice, just a punters unqualified opinion, so dont rely on it to make decisions.
Cheers,
SF
ESG Price at posting:
91.5¢ Sentiment: Buy Disclosure: Held
