OilVoice - Exoma Well-placed to Leverage Success from Galilee Gas Project

Exoma Well-placed to Leverage Success from Galilee Gas Project

Wednesday, December 23, 2009

Highlights
• Exoma actively working to secure farm-in partner for Galilee Gas Project.
• Drilling expected to start in Q2 2010. Early success is likely to attract additional farm-in interest.
• According to analysis by Strahan Corporate ('Strachan')1, pure CSG gas activities tend to attract a market capitalisation of approximately A$0.40/Mcf of 3P gas reserves.
• At current <$50M market cap, Exoma has strong leverage to success and is likely to attract market re-rating if 3P gas reserves are established2.
• Strachan's analysis estimates that if Exoma attracted A$0.10/Mcf of contingent, 3C gas it would have a target value of A$200M2.

Exoma Energy Limited is among a growing group of companies working to monetize Coal Seam Gas assets in Central Queensland's Galilee Basin.

According to analysis by Strachan Corporate, as much as A$47 million is budgeted by other companies for drilling of some 50 wells and acquiring 600km of 2D seismic within the Basin over the next 12 months. Exoma plans to add to these totals with its initial drilling program, expected to commence in Q2 2010.

Exoma owns the largest contiguous tenement holding in Queensland's Galilee Basin. The Galilee Gas Project has an estimated potential to host combined gas in place of perhaps 55 to 70 Trillion Cubic Feet (TCF) of Coal Seam Gas (CSG) and Shale Gas (SG)3.

Exoma Managing Director, Mr David Rowbottam said 'Exoma owns 100% of five ATPs, covering 26,840km² of highly prospective CSG and SG permits, and has been working to identify and negotiate with suitable farm-in partners to partially fund the initial drilling program.'

According to the Strachan's report, the recent corporate activity in the CSG industry in Queensland and northern New South Wales has set a value mark of about A$0.40/Mcf of 3P gas reserves for pure CSG plays (i.e. where an LNG link is absent or only tangentially involved).

With a current market capitalisation of less than A$50M, Strachan considers Exoma has strong leverage to success and, if 3P reserves are established2, is likely to be begin being rerated by the market.

'If Exoma attracted just A$0.10/Mcf of contingent 3C gas, it would have a target value of $200M,' according to Strachan.

Exoma has been able to attract management with a track record in the CSG industry and, as noted in the report, this will provide a powerful incentive for funding.

Mr Rowbottam said since acquiring the Galilee Gas Project, the Company has been focused on defining a drilling program and securing a farm-in partner on commercial terms that will not erode shareholder value.

'In concert with this activity, Exoma has been assembling a team with the experience and skill to manage the exploration program. In a highly active industry, competition for top people has been strong and it has taken some time to put the right team in place,' he said.

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