Look at KEY . Announces that it has found a gas bearing layer...

Look at KEY . Announces that it has found a gas bearing layer and it doubles in price . Mind you, they have tested nothing yet .

You can't compare the two. KEY's market cap was a miserable 5mn. They had been sinking eversince Kiliwani-1 bit the dust. Despite the well not being tested yet, the fact that they have encountered a gross 60m reservoir (same as the producing reservoir at Songo Songo) is extremely promising for this well, as well as for other prospects in the region.

STX will be fine over time. Even if Cypress is marked down to 100BCF recoverables, gas price would have to collapse completely or USD would have to really sink to justify the current price level. If the latter does eventuate (possible given the mess in the US economy and the way they are printing money and pumping them into the financials), gas price will no doubt rise to offset some of that as traders will be looking for a place to hedge against the depreciating greenback.

Typical of market commentators, all of a sudden, we have gone from a situation where nothing can go wrong (risk was being priced next to nothing) to a point where it's the end of the world (risk being priced like gold). Just like the boom and bust cycle of the 80s (was called collateralised mortgage obligations or mortgage bonds back then), many financials copped massive losses (biggest was Sol Brothers I think) and resulted in a credit crunch, though the current one is a lot more severe given the heightened level of leveraging in recent times. But it is not different to past cycles and it'll simply become a case of the strong (JP Morgan) eating up the vulnerables (Bear Stearns) - classic case of transfer of wealth.

Anyway, back to the point, Americans will (in the mean time) still be consuming gas, and a lot of it. So what we have in the ground, which we will eventually produce, is a commodity with sound fundamentals. The pricing of the shares will eventually catch up to the fundamental of the company. Forget the share price, I'm interested with the MIddle Wilcox appraisal result from HD1 :o)

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