It's Time to Buy
I donít normally take credit for telling people not to buy but in this case I will. In early December of 2008 I wrote a short piece about a Coal Bed Methane (CBM) company based in Indonesia appropriately called CBM Asia (TCF.V). As much as I liked the company and the story and the location, I titled the piece, ďDonít buy this just yet.Ē
It wasnít a bad call. Natural gas has dropped almost 50% and the shares of CBM Asia dropped more than 50%. But there is practically no exploration or drilling being done today for natural gas in any form. When people realize peak oil was in May of 2005 and all the depression has brought us is a temporary respite, energy, especially natural gas, is going to the moon.
So it was a bad time to buy either natural gas or CBM Asia in December but the time is right now. Reread my piece from then, it was accurate. Itís a great company, good management and at the right place at the right time. TCF has announced approval for their work program in the Kutai basin of East Kalimantan. They are putting out a request for bids for drilling. I expect them to be drilling by mid-June or so.
When you are drilling for coal bed methane, you are doing little more than drilling for coal seams. In some areas of East Kalimantan, the seams add up to hundreds of feet thick. There are other conditions you need, water to keep the gas in the coal, and some means of access to market.
TCF holds a 40% net working interest in two blocks in the Kutai Basin. According to research from the Society of Petroleum Engineers the entire basin contains over 80 tcf (trillion cubic feet). A company study estimates CBM Asia holds 970 bcf after deducting government and their partnerís interests.
TCF is well cashed up with over $5 million in cash with a market cap of under $9 million and is well positioned to benefit from good drill results. It will take months for the results from all of the tests to come in. You have to measure gas flow, water and thickness of the coal. But the first drill hole will give them 95% of the information they need.
While this is the first drill hole for CBM Asia, there has been lots of drilling for natural gas in the basin and other companies have provided results to the government that prove the concept. TCF is a very low cost, high potential return play on CBM in one of the best areas in the world.
CBM Asia is an advertiser. We participated in a private placement at $.60 almost a year ago. We have added to our position near the lows of the last month or so. We are biased and since we donít share in your rewards or losses, we encourage you to do your own due diligence.
CBM Asia Development
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March 1st, 2024
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