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SEH 23.5¢

MIE Update

  1. CH4

    119 Posts.

    * The Chinese Reserve Report (‘‘CRR’’) for Linxing West and Sanjiaobei have been​
    submitted to the relevant China partners in 2H2014, the internal preparation and compilation
    work for the Linxing East and Sanjiaobei Overall Development Plans (‘‘ODP’’) is also
    underway, as an urgent priority.
    * Av daily operated production (MCF) - 373
    * Av realised price (USD) - 9.50
    * 36 wells drilled for 2014 (4 less than forecast)

    From the above, I'm curious about the hurry for the ODP for Linxing East - surely this is not a priority for production in the near future. SJB I understand, however there is no mention of Linxing West, which is where most of the wells are and the best flow rates.
    I believe ODP approvals for SJB and Linxing West are probably 2 - 2.5 years away which is most likely when SEH will get the rerating it really deserves. At the moment there is no hurry or motivation for insto's/funds to accumulate huge amounts of stock or push the price up. They may also be hoping for another capital raising to bridge the funding gap between the end of this year and Chinese govt. approvals which will most likely be required for reserves based lending to be approved. I would also expect a slow down in drilling this year as funding may become an issue for SEH and MIE Holdings and they'll probably wish to know where their JV partners stand on funding and participation in the future.

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