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QGC posts strong results, predicts continued growth for CBM

 

 

 

 

Thursday, November 17, 2005

COALBED methane player Queensland Gas Company Ltd says increasing demand for clean energy will underpin the firm's continued growth.

 

Chairman Robert Bryan told shareholders at QGC's annual general meeting that growing concerns about global warming was encouraging the use of clean energy for both commercial uses and electricity generation more generally.

 

"This trend will underpin the continued growth of coalbed methane and impact very positively on QGC," he said.

 

"By market capitalisation QGC is now the largest CBM specialist company in the country and now has the largest proved (1P), as well as proved and probable (2P) gas reserves of any such company."

 

Bryan said the company's three gas sales contracts would generate $30 million a year in revenue a year once production, scheduled for 2006, had started.

 

"We are very comfortable about the profit levels that will be achieved from these contracts," he said.

 

QGC has unconditional sales of 15.4 petajoules a year forward sold, with the option to supply a further seven petajoules a year. It is also seeking more gas sales and is planning two new power stations at Chinchilla and at Gibson Island, within the Port of Brisbane.

 

"The former will attract cost advantages through being located on our Berwyndale South gas field, and the latter through being able to supply clean energy and very competitive electricity into Queensland's rapidly expanding Trade Coast," Bryan told the AGM.

 

QGC would be cost-competitive with the Papua New Guinea gas project, he said, based on low capital costs and individual well flow rates running at over 700,000 cubic feet a day.

 

The company's most advanced project, Berwyndale South, is due to start delivering gas in April, three months ahead of schedule.

 

The new Braemar gas contract will be using infrastructure at Berwyndale South that is being established to meet the CS Energy contract.

 

"In this way QGC is enjoying major cost advantages typically associated with 'bolt-on' projects," Bryan said.

 

 

 

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In reply to: trader10 on Friday 18/11/05 12:18am

*** Northern Winter gettign very cold now ***

 

QGC up 5.5% today

 

Excellent gasflows...lower production costs going forward and gas prices moving up again.

 

http://www.sharescene.com/html/emoticons/graduated.gif

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Main points from today's announcement...

 

* "way ahead of expectations on gas flow rates"

 

* expects to reduce development costs by 10-20% because fewer wells needed

 

* wells began producing gas immediately

 

* production rates are significantly higher than that required under base case financial model

 

* results augur well for reserve review

 

* QGX has the largest Proved Gas Reserves and Proved and Probably Gas Reserves of any coal seam gas sdpecialist company in Australia

 

* begin delivering gas in April 2006 to the first of three unconditional gas sales agreements

 

I suggest you have a look at their graph in the asx announcement of flow rates versus base case financial model

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In reply to: SCD on Tuesday 22/11/05 01:18pm

Hi SCD

This stock has great potential. Todays announcement was part of a process of QGC proving up an additional 30% in reserves from the Taroom seam, which I think they will achieve by mid 2006.

More proven reserves means ability to sign more gas sales contracts.

Unfortunately I'm not in atm but will be hoping to re enter on dips

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Hi Brierley,

 

I haven't been in QGC for some time but, when I saw today's announcements...together with recent media reports that the weather in the northern hemisphere was getting much colder...I had a good idea that this one was going to run.

 

Market has sold down many energy stocks and this is good value right now...can it get back to the 70s?

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In reply to: SCD on Tuesday 22/11/05 01:46pm

SCD

70c you ask ?

It's a favorite of daytraders and tends to get sold off a bit in between announcements.

However, they've had a string of good announcements lately which have successively established new higher trading ranges.

I would expect this trend to continue for the medium term.

Longterm, who knows, as they've only explored 5% of their tenements.

I won't ramp it anymore until I buy back in

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