Goodaye again SF, Sle and others.This tranaction is simply...

Goodaye again SF, Sle and others.
This tranaction is simply looking better and better !!
I was able to get a better understanding of the announcement, as i was not clear on some of the wording.

1. it appears that the vast majority of the Cert Reserves are in the PL94 and Mining Leases. Only a small amount of 3P are in ATPs.
So that means that virtually all the cert res are in the Anglo majority owned assets, which is the most likely to be acquired.

2. the $80m price tag refers to 100% of PL & ML and 50% of ATPs. I think, $55m represents 51% of PL & ML and 25.5% of ATPs but unsure.

3. any of the parties with LNG at Gladstone may well be interested in J/V, as all want gas, and these assets are close to Glad. BG would clearly be favourite because of existing WCL j/v and they know WCL, and they want gas.

4. because of variables in acq proposal the purch price is unclear - but at this stage acq will be funded by rights issue. (Press seems to say Bumi and SAAD are now in better financial position than previously, so they could participate)

5. funding for this trans is independent of previously announced 2010 drilling program. Tilbrook/Mt St Martins to resume drilling next week. 2010 is still fully funded.

6. it seems that acq of these reserves is cheaper than acquiring these reserves thru drilling (and less risky) and importantly will save 4-5 years of development to get to that stage.

7. my calcs show 3P costing 15.6c / gj, and 2P costing only 38c / gj. Why? it seems Anglo wants out, and in my view Mitsui is not a natural holder. Both Anglo & Mitsui are interested in coal - not CSG. Assets were probably too small for big guys, but a nice fit for WCL.

8. infrastructure assets alone are probably worth the acquisition cost.(67 klm of pipeline and 12 compressors)

There is no doubt that 2010 will be a big year for WCL.
I think we will triple in size.
This will give us critical mass, instant reserves (how many CSG coys have 1P reserves?), greater liquidity, and producing assets with contracts , plus the ability to convert 3P reserves to 2P by way of commercial agreements.

This is a company-making investment, but we will need to wait to see if any of the pre-emptive rights are exercised.

My view is to keep my powder dry, and wait to participate in the rights issue.

cheers