Taken from Bob M reportIt’s not possible to consider resources without discussing energy. One of the top fund managers in the world recently called natural gas his number one pick as a contrarian. I’ve followed a Coal Bed Methane company in Indonesia for years and it’s selling at a yearly low today in spite of coming up with brilliant drill results.
The company is CBM Asia. (TCF-V) The company has a commanding position in CBM in Indonesia but as a result of a variety of events mostly beyond their control, the share price has been constrained for four years. Their goal is to control a land position with 10-15 TCF of CBM. Indonesia is a difficult country to deal in and CBM Asia has been at the mercy of their larger Indonesian partners for years. They are attempting to take control and be operator on their own projects this year.
For the last six months, the company has focused on raising money and has raised almost $16 million albeit at the expense of existing shareholders. The company has $16 million in cash and a market cap of only $18 million. Until they close all the financings, the stock isn’t going anywhere. When they start production or start doing some serious drilling on the projects they control, the stock will move.
The company gets little respect but Indonesia is the new frontier for CBM. With giant demand from Japan and China, the wellhead price in Canada is $3 but it’s $11 in Indonesia. If CBM Asia will focus on drilling wells and coming up with a timely 51-101, I see the share price being a lot higher in the future. Natural gas may get no respect today but that’s not going to last forever.