EPG 0.00% 41.0¢ european gas limited

oilbarrel presentation

  1. 105 Posts.
    Tony started by explaining what on earth an Australian co proposing to list in France with French assets was doing in London. Apparently EPG is 80% owned from Europe, predominantly London. You HCers are a historical rump! You can see this play out in the price action – good presentation in London and whahey!

    A year ago (last presentation to Oilbarrel), the focus was on Lorraine. Now there are two other substantial projects. And taking pride of place in the presentation was Gazonor.

    Gazonor
    This is a CMM production operation, and the price paid can’t really be said to reflect more than the 1P reserves of 30Bcf with current production. Permits and applications stretch 90km upto the Belgian boarder. There are 600 shafts of which only 3 are being used for CMM. The key interest however is CBM potential. 2.5bn tonnes has been extracted from this basin, but that’s only 10% of the in-situ coal. This is a Lorraine sized asset [and the back of my envelope guesses 10Tcf gas in place though who’s to say what proportion’s potentially economically recoverable].
    The background is also that Charbonnages de France has been in wind-down-to-closure mode for donkeys years and optimising Gazonor’s economics hasn’t exactly been at the top of their agenda. Revenue has been 8m euros/yr and modest investment should double this in short order. Eg electricity generation which, with incentives, comes in at 80E/MWhr compared to the current 22E paid by the grid. (Even this is maybe 5x Aussie pricing though). Prefeasibility for converting 2 sites to electricity has been done, full feasibility study is in progress.
    The CMM gas is low quality, only 54% methane, the rest being carbon dioxide and nitrogen. Fortunately the current volumes are so piddly that the grid’s happy to get diluted by it and pays for the energy content. CBM production though will be pretty pure methane.

    CNP
    Talked for a while about how CNP is a big cheese with fingers in lots of energy pies and the relationship should go way beyond funding the purchase of Gazonor. For example following the merger of Suez with Gaz de France, they’ll hold 5.3% and be the largest shareholder after the state. I have to agree this is in seriously big cheese territory and I’m impressed.

    Lorraine
    Not a lot said. A bit of background, currently awaiting release of the rig from Total sometime in Q1. It can then drill & complete the single pilot production well and we’ll see if we get gas to surface. Folschvillier coal’s pretty tight, hence horizontal completions an absolute necessity, but over in the US they’re doing quite well in coals of similar properties to the extent where they’re exploiting seams down to 1m or so. Lorraine seams are a lot wider. In the Eastern areas permeability’s a lot better and some areas might even be amenable to vertical completions.
    Pilot production can be sold into the grid but if any development was to happen quickly then alternative sales methods would be needed. Like electricity generation or less plausibly short term LNG. I think we can be reasonably confident that it will not happen quickly!

    Lons le Saunier
    Nothing much said, currently studying historic results from the many wells drilled in the 50s & 60s. Probably have a lot more to say in a few months, but for now just to note that several conventional targets have flowed gas to surface.

    Gardanne
    This isn’t anything on the scale of Lorraine/Gazonor but the significance is that it should be easy to commercialise as historic mine degasification wells have produced easily.

    08 Work programme
    15m Euros.
    Integration of Gazonor assets and feasibility studies.
    Possibly another two CMM drainage wells
    Movement from Gazonor resources to reserves
    Production test at Lorraine
    Initial drilling at Gardanne
    Maybe initial drilling at LlS and St Etienne
    Euronext listing.

    Questions

    Was it our Buffin who referred to the "snail like" progress and asked if they had any in house expertise? Anyhow the answer was that they were pretty reliant on North American consultants, fortunately France isn’t an unattractive work environment [Editorial note: this is certainly the case for LlS, but Folschvillier isn’t known for its vineyards. Champagne’s not far West though nor Alsace to the South East]. Some delay was down to rig availability and some to doing ‘a lot of science’.

    Gas storage, carbon dioxide sequestration? Well they’ve got a pretty huge hole in Gazonor but that’s as far as it goes. Tony views sequestration as quite immature and has no plans to spend any shareholder funds messing around with it. If it gets proven elsewhere then maybe.
 
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