psiYou make some good points, however I would argue some of your...

psi
You make some good points, however I would argue some of your assessments are a little glass half empty.

"Also I think a forward PE of 15 is too high for a small company in O&G. 8 to 10 is much more usual.

WCL is in an interesting position because their opex and development costs are already high due to the low flow rates per well (currently far higher than their revenue, hence why they're running such a loss). One thing the Qld CSG industry has taught us is that when you try to scale up, costs go through the roof. Small companies can make Meridian work, larger ones couldn't "

If WCL can lock in an offtake then I think a forward p.e of 15 is totally possible. Not comparable in size but STO is on a p.e of 25 and AWE is on a p.e of 35 so I can't see why
a company like WCL with a locked in means to get product to market and all the infrastructure in place wouldn't attract a decent p.e multiple.


Regarding development costs, you reference old wells and low flow rates when the company is stating they believe they can get flows above 250 scf/d to 500 scf/d spending $1.5 million per well and largely overcome the well known issues with fines blocking pumps (see foam lift). Remains to be seen if they can deliver on that promise but you can't really use old wells drilled by Anglo coal as a benchmark.

I also can't see why scaling up should be so expensive if all they are doing is contracting someone to drill and complete wells and attach them to the Hillview processing centre. It is farcical to just speculate that costs will be high by virtue of them doing more of it. Mike Hughes was involved with STO trebling their drilling rate and costs per well have come down because they are not mugs. He would know how they go about this.