An article in the Weekend Australian abt the Queensland Gas...

An article in the Weekend Australian abt the Queensland Gas (QGC) takeover of Sydney Gas (SGL) states that the combined entity will have Gas in Place (GiP) esimates of about 360 Petajoules (PJ). From elsewhere, I note that each company has supply contracts for abt 10 to 15 PJ/yr and that QGC are concentrating on completing their first producing gas field this year, i.e. they dont already have one.

Based on last Fridays ASX announcement, KBO have 979.4 PJ GiP for just 15% of the area of their Lorraine permit in France, reducing to just 7% of their permit if they get the proposed adjoining southern permit extension. Previous ASX announcements state that the company expects to make significant increases to their Lorraine GiP estimates (within the next few months I understand). KBO also have other gas permits in France and Italy.

Based on issued shares as at 06/05 and Fridays closing prices, the market capitalisation of QGC and SGL is abt $250m and $67m respectively and the market capitalisation of KBO is abt $35m. I understand that gas prices in Europe are about 3 to 4x that in Australia. Gas supplies in Europe (France and Germany in particular)have just been severely disupted by the Soviets.

AS I read it, KBO currently has 3x the GiP estimate in just 15% of their French Lorraine permit as the current combined GiP estimates of QGC and SGL here in Australia .... and the Lorraine gas is smack bang in the middle of the tight european gas market.

So taking off my rose coloured glasses and assuming KBO's GiP estimate was only 2x that of QGC/SGL and that prices in Europe were only 2x that in Australia and assuming that every other KBO European gas asset was worthless, why shouldnt the market capitalisation of KBO be 4x that of QGC/SGL i.e. $1300m or abt $9.40 PER SHARE?

I doubt that I am out by a factor of 9 or 10, so a share price of just $1 should be a given sooner rather than later imo.

Food for thought. I for one wont be panicking tomorrow.

Cheers
Poyndexter

PS I only tell it as I see it here: you must act as you see fit based on your judgement and/or independant professional advice.