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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: Gib Bogle who wrote (88867)	8/18/2007 12:52:52 AM
From: koan	Read Replies (3) \| Respond to of 313051

Gib, ADB is a coalbed, shale bed, methane play. But I am gambling now and outside of my knowledge base here. Anyone who follows me or LC here needs to know we are gambling with little knowledge-lol. They sink holes into narrow coal seams and pull out the methane. I do not know much about it or the company. I know the flow increases as the wells are dewatered. Rocket Red may know about this. ADB does have something like 255 wells drilled and most hooked up to gas pipelines, so they have cash and have been drilling wells since 2004. Most of the NG comes from the gulf and it looks like hurricanes are about to go balistic. It takes two things for hurricanes: hot water and high pressure areas with little wind shear. For the last 18 months the gulf has been hot, but wind shear has kept knocking down the hurricanes. But now conditions are perfect. The atlantic is 80 deggrees which is what is necessary to get them started and the gulf is 86+ and no wind shear. 86 degrees is like jet fuel to a hurricane; and the storms are coming off of Africa one after another. NG prices could really sky rocket.

To: Gib Bogle who wrote (88867)	8/18/2007 2:44:04 PM
From: LoneClone	Read Replies (2) \| Respond to of 313051

Here's the ADB story as I remember it since I first bought some shares almost two years ago. The first problem was a management kerfuffle which brought all development to a halt for some months as the new guys took over and moved headquarters down to Colorado from Canada. The next problem was that just as they were getting things moving again, natural gas prices plummeted so they developed cash flow problems and again had to cease development for some months. IMO the financial crunch is behind them now, especially since they recently farmed out part of their Devon and Revloc Projects. They are also in the process of "evaluating strategic initiatives", which I take to mean selling all or part of the company, and as we all know, that can lead to price manipulation leading up to any transaction. And lying behind all this is the nature of coal bed methane itself. It is quite a different creature than conventional ng, or even unconventional ng like shale gas. Most CBM wells are from coal beds saturated with water, so once flow is established from the well, for the first 6 months to a year it has go through a dewatering process before the gas really gets flowing. (There are also issues with disposal of the water, which is often salty or otherwise non-potable.) As well, each CBM field and sometimes each well is different in term of completion, so the operator generally has to try a number of different completion techniques until they learn what works best on that field. Now to the bright side. Unlike conventional ng wells which have very rapid decline rates, sometimes 50% a year, once the flow in a CBM well is stabilized post-dewatering, that flow remains at commercial levels for many years, often several decades, due to very slow decline rates. Sometimes flow even increases over the years. And CBM wells are very cheap and easy to drill, often taking as little as a day per well and costing only $100-200K to drill and complete. Most fields require hundreds of well to develop, so it's a good thing they're cheap. When gas prices drop to $6 or lower, many CBM operations are financially marginal at best, but once the prices get above $8 they become cash cows. Natural gas is a very cyclical market, and it's been down long enough that fewer and fewer new wells are being drilled, which will lead to shortages within a year or so, particularly if the weather cooperates, via hurricane or due to a hot summer or cold winter. LNG looked to the big threat to North American gas prices, but with the developing world wide energy shortages, it looks like more and more of the LNG that was supposed to cause a glut in North America will never make it here. The ADB shares I picked up yesterday were for trading to bring my ACB down. Check out their presentation at admiralbay.com. I have been accumulating shares in the following besides ADB. (Be warned that I am somewhat to heavily underwater on all these right now.) -TREN.OB bringing into production a CBM field in Oregon and developing another in Washington -SME.TO/SCU with large producing acreage in the Powder River Basin and developing fields in BC and Alberta -SPI.V developing CBM and shale gas in NE BC -SLV.V producing shale gas in Saskatchewan and developing CBM in Nova Scotia. LC