1 Just because next door has gas does not necessary mean the BUL tenements too will have gas because if this is the case the guy next door would have bought the land in the first place, why leave it to BUL?
Answer: QLD is a big coal field and hydrocarbons are distributed over a larger area, different to metal ore distribution.
If surrounding area have gas then the enclosed area has too.
Comps such as Shell ( AOE ) and BG ( QGC ) are busy to develop their own tenements and thought they got enough,that's why they stopped buying. But Santos and AGL must find new gas sources soon. And there are more international comps sitting on the fence to jump in if it makes sense to them.
2. If it is a certainty that BUL has a lot of commercially viable gas why didn't Kogas excercise it's option to farm in ?
GFC, uncertainty about the LNG project in the early days plus the federal government incompetence regarding a energy policy and environmental issues put CSG in a bad position. But the fundamentals have changed back to favour CSG. Shale gas is very expansive to extract and current gas prices favour CSG over natural shale gas.
And : Santos would have easily paid 1.5b for BPT's gas, now 110m would buy BUL for 10c and a tenement area that Shell and BG paid billions for BEFORE developing their resource.
The time for a re-rating has come. It is now up to the market or a big gas comp to take advantage of this sensless low shareprice.
BUL Price at posting:
3.9¢ Sentiment: LT Buy Disclosure: Held
