SHG 6.25% 9.0¢ singular health group ltd

finished on it's high for the day.....

  1. 15,276 Posts.
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    Apart from the spike after the "Overston" discovery, there has been very little buying of SHG shares.

    Today was a little different!

    When SHG first made the "Overston" discovery, they were almost broke and had little future...they were also in dispute with the ATO regarding a "product ruling" on their main source of income for their future drilling budget. In fact, the company was so distressed that the directors appear to have organised a "get out" strategy with some clever share/option swaping with SGL.

    Well, fortunately they found gas at "Overston"...heaps and heaps of gas in fact!

    ...and since then, things have been quitely building.

    They immediately cancelled the share/option deal with SGL and suddenly became very popular with the banks. They also managed to sign up a ripper of a JV deal with a major player and can now raise capital in the blink of an eye...though now they don't need to!

    They have even been on the aquisition trail!

    So, why the sudden excitment, so long after the discovery? Well, they will finally be testing "Overston" in the next few days...with results due out next week.

    So...I suggest you do some reaserch. This is a very big find for a junior like SHG!

    There is however one problem; SHG drilled "Overston" with mud. This was in order to keep costs down as originally they were only concerned in finding out whether there actually was any gas, so I am not expecting too much from this test in terms of actual flow rates. However if they are relatively high, it would be exceptional news!

    The other well to be tested soon is "Tardrum"...which was also "mud" drilled. I have seen the initial flows, which tested the sandstone production zones only. It managed to flow at a healthy rate of 2mmcf/ one would expect higher flow rates on a full test.

    Anyone following MOS, who are in the same ground as SHG, will tell you how mud drilling can have a detrimental effect on hole condition and ultimately, on gas flows. It wasn't until MOS switched to "nito" drilling, that they discovered the 18mmcfd well, right next door to SHG ground. This was an exceptional result...and in the words of the MOS CEO, "was a company maker".

    SHG management have assured me that all future drilling will be done using "nitro" methods.

    The important thing to come from the flow test, among other things, will be confirmation of the qualitly and actual size of the reserves.

    I am quietly confident and have long held the view that SHG is a good long term investment!

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