Trillion Energy International Inc. V.TCF

This is what the Casey folks thought before the dr

[Chainsaww]

TER: Any news on the LNG front in Europe?
MK: I would actually focus on LNG in Asia. LNG isn't going to hit North America because of the new unconventional discoveries. Two or three years ago, there was big talk about LNG in North America; it's a non-issue now. Because of the huge, huge capex and the fact that there's just so much supply of unconventional gas waiting to be tapped in the U.S., it ain't going to happen.
These liquefaction plants cost multi billions—not hundreds of millions, but billions of dollars—to build. The second largest liquefaction plant in the world is in Indonesia. If you find a world-class discovery, that's fantastic. But how are you going to tap into it and convert it into liquid natural gas? The costs are huge to build one of these plants that convert the gas into a liquid ready to be shipped. What you want to do from an LNG perspective is reduce your overhead. The way we've approached at it is, "Well, let's look at the largest liquefaction plants in the world and find the closest projects with the most upside potential that can tap into the existing infrastructure."
Marc and I agree that right now the best opportunity for that is in Indonesia with a company calledCBM Asia Development Corp. (TSX.V:TCF) (OTCBB:CBMDF). They're literally about 30 kilometers from the Bontang LNG plant, the second-largest LNG plant in the world. Just to tap into that costs a fraction of what it takes to build a plant. And this company, CBM Asia, has multi-TCF potential. With multi-TCF potential, this stock has literally 5- to 10-bag potential upon drilling.
MB: Another thing worthwhile to note here is that the gas price they're going to see will be much greater than anything we're going to see in North America in the next four or five years for sure.
MK: That's because they're right in an area of demand, which is Asia. This is my biggest thumbs up in the LNG sector, without a doubt. And I love CBM Asia's ticker symbol, TCF. The stars have aligned for this company. If anyone wonders what TCF stands for, it's trillion cubic feet and that's hitting the equivalent to a 10-million-ounce gold deposit.
TER: When will CBM Asia start drilling?
MB: The plans are certainly this summer to early fall. They're securing the permits and the rigs as we speak. They have a couple of major blocks they're exploring within the Kutai Basin in Kalimantan. They're also negotiating for some additional land in Sumatra. They're extremely well-positioned. There's much potential there; but the proximity to the under-capacity LNG facility makes it an excellent opportunity.
TER: Is this drilling for discovery or production?
MB: There are two things. It's been established that it's a coalbed methane prospect and it's been established that there are significant coal resources in the area. They're in an intermediate stage, if you will, a step between drilling for exploration and production to actually establish the gas content of the coals and the distribution of the gas within the coals. There's no doubt the coals are there. How much gas is there and how much can be produced needs to be established next.
MK: There is production adjacent to CBM Asia's block. There's no project as well-situated with such a tight market cap. They're cashed up, a good management team, excellent projects, great people. And in the junior market, it's also about share structure. Theirs is as clean as a whistle.
TER: What's the market cap and how many shares outstanding fully diluted?
MK: It's about $12 million market cap, so with $5 million cash you're looking at an EV of less than $7 million. I think it trades at roughly around 30 cents, with shares outstanding under 40 million. When these guys start drilling, this is a no-brainer for at least a double.
TER: That's exciting. Do we want to move around the world with other LNG opportunities? Or do we stop in Asia because the biggest opportunity for LNG is there?
MK: I think you want to end it there because of the costs. For example, there's a great project in Papua, New Guinea. Fantastic geology, great people, great project, but what's missing? A plant. In today's dollars in a depressed market, a plant there would cost in excess of $10 billion. Why do I want to go there when I've got CBM Asia, a junior, trading just above cash? I'd rather go with a plant that's 30 kilometers away. It's a no-brainer. I wouldn't even direct your readers anywhere else. They can just stop right there. That's all they need.