EPG 0.00% 41.0¢ european gas limited

general meeting of 15th feb

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    Well, the meeting was a pretty cosy affair ... I didnt count, but excluding company officers there might have been only 6 to 8 shareholders present, 4 of whom were hotcopper members or related to hotcopper members.

    So, the whole financial world can thank hotcopper for passing the two resolutions on a show of hands ... I think Tony McClure may have been holding a few more proxies though, just in case lol.

    There was no flash power point presentation, but Tony McClure was in a relaxed mood and answered questions from the floor for possibly 20 minutes or more. I remember the following points ...

    # The association with CMP/Transcor is not just about financing the Gazonor purchase and supplying modest associated working capital ... there are more far reaching opportunities with this group, including jurisdictions other than France.

    # CMP/Transcor is the largest shareholder of Total (4th largest oil company in the world I think he said) and Suez who are merging with Gaz de France.

    # EPG are in discussions with Suez to speed up access to existing pipelines for distribution of Lorraine gas.

    # A year or so ago, EPG had one serious project (Lorraine) and some other prospects. Currently there are three serious projects (Lorraine, Gazonor and Gardanne) and so the company's future is spread risked. Interestingly, management dont yet regard the prospective Lons le Saunier as a project, even though at a previous AGM they consider it to be a significantly bigger prospect than Lorraine.

    # Lorraine pilot production drilling is awaiting the April arrival of a large contracted drilling rig to extend the Folschviller 2 borehole below 270m or so and to drill multi seam laterals. This is expected to take less than 60 days, leaving a window of up to 30 days for drilling at Gardanne. I dont think Diebling 2 borehole is included in the current program (it is included in the drilling program for 2H 2008 I think).

    # Permitting for production at Lorraine wouldn't be available until 2009 at earlist, but gas produced from the pilot prodction boreholes may be sold commercially whilst the main production licence is being negotiated. Because of this, if the Folschviller 2 pilot production borehole is producing good gas, the proposed Gardanne drilling may be delayed to enable further laterals or extended laterals to be installed in Folschviller 2 during the upcoming drill rig contract.

    # Gazonor, being a going concern, already has production permits and so any production increase can be producing increased cashflow almost without delay. Studies are underway already to expand production and to extend reserves. Current P1/P2 reserves are about 33PJ, but significant upgrade is expected as desorbable gas is estimated at nearly 400PJ. I think some of that 400PJ can be extracted via existing CMM operations. New coal bed methane extraction operations are probably required to access the balance or more (from newly acquired adjoining permits).

    # When it was suggested the company might focus more on Gazonor because of the existing production permits, Tony was emphatic that significant simultaneous efforts would be made to advance Lorraine to production.

    # Sharemarket conditions will dictate when the Euronet (?) listing takes place in France ... as far as I am aware, it could still be mid year.

    # An increase in the pace and scope of announcements should be expected in the coming months.

    I didnt take notes as I was asking many of the questions and listening to his answers, so I will probably remember more over the next few days and may post anything else I feel is worthwhile.

    It would be good to hear from others present at the meeting.

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