Blue Energy has done an early stage estimate of its gas reserves which it puts at 21 Trillion cubic feet of gas, If this resource can be converted into a reserve of even 10 TCF, this will be a very serious asset. Recent deals done by Santos and Petronas valued proven gas at just under $5 a GJ so if an independent geologist confirms Blue Energy's mid-case estimate of 21TCF shareholders are looking at values of $40 billion or more.  

That's a serious number for a company trading at 28c for a cap of $124 million. Stanwell Power must have accepted the story to some degree as it paid 40c in early August as part of a strategic partnership supply arrangement which guaranteed the power station 1% of this resource over 20 years. From a glass half empty perspective Blue Energy now needs to sign up contracts for the remaining 99% of its self-estimated resource, or from a half full perspective it may be able to sell gas to the world markets over the next decade at far higher prices than are prevailing in Queensland at the moment. The market price remains paralysed by the large volume of Blue Energy shares which fell into the hands of ANZ following the collapse of a margin lender associated with ANZ.  While this had nothing to do with Blue Energy. the shares were held by one of its founders who mortgaged his shares. The legailities of the issue are contentious. The fine print may not be, but when the surrounding circumastances are admitted, it seems that ANZ and its associates may have said one thing and meant another. The only relevance of this side issue is that it put BUL's shares under the cloud of a large possible sale by the receiver.  Once they are sold and locked away, there is every reason for Blue Energy shares to trade closer to the 40c that Stanwell thought it could easily justify..

Can Blue Energy reflect its inherent value? As we note above, these coal seams are far more predictable than oil gas structures.  In these reservoirs seimic can indicate hyrdocarbons, but it may have migrated or leaked in past eons. Coal seams are different.  The do vary in their capacity to hold and release gas, even over relatively short distances, but there is a far greater degree of predictability. The coal is there stretching for thousands of kilometres north south along the inland eastern coast. In a relatively short time we expect BUL to reveal is value.