The CBM Asia/Exxon Deal Signed
I know of no company I have covered in the last ten years that had such great potential yet was so little understood as CBM Asia. I have seen the potential for over four years and participated in half a dozen private placements and made not a cent.
I hate it when people tell me their latest drill program was a technical success. That usually means, "We drilled down and hit rock." In the case of CBM Asia, the announcement today that they have signed the deal with ExxonMobil is giant and people simply won't get it for another six months. It will appear to be a technical success but it's far more than that.
Doing deals with giants is like watching paint dry or trying to do the breaststroke through molasses. The deals are important to both sides but giants move slowly. Today, at last CBM Asia has the signed deal that will make their future in Coal Bed Methane in Indonesia.
Basically the deal calls for CBM Asia to fund a number of wells in the Barito Basin, South Kalimantan, to earn a 35 to 37.5% participating interest in four PSCs (Production Sharing Contracts) with ExxonMobil. In addition, CBM Asia gains the right to farm into 50% of certain PSCs ExxonMobil may acquire in the Kutai Basin, East Kalimantan.
Industry surveys indicate the potential for around 100 TCF of gas in the Barito Basin. ExxonMobil holds the heart of the basin. For CBM Asia to farm into between 35 and 37.5% means the potential for CBM Asia to add multiple TCF to their credit. It's also a giant vote of confidence by ExxonMobil in the management and technical expertise of CBM Asia.
If any other junior energy company announced a similar deal with ExxonMobil, their shares would have doubled the day of the announcement. Four years of lack of invisible progress on the part of management has turned investors into little more than sleepwalkers. They don't see a good deal when it falls on them.
It's time to drill and by the 2nd half of 2013 the present day "Technical Success" may well have turned into a giant home run.
At $.15, the company has a market cap of about $24 million. It will be a lot higher a year from now. I've been betting on that for four years. I've been wrong a lot but I won't be wrong forever. I'm betting on it.
CBM Asia is an advertiser; I have bought shares on the open market and participated in a number of private placements. I am biased. Take responsibility for your own finances and do your own due diligence.
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November 23rd, 2014
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