Companies: CBM    COIL   

Cambrian Oil & Gas (COIL) has underwritten a £5 million funding by Methanol Australia and plans to float Elko Energy.

Kyrgystan-focused COIL, where fellow entrepreneurial AIM counter Cambrian Mining holds 27 per cent, expects to increase its holding in Methanol Australia to around 25 per cent through underwriting half that company's funding on the Australian Stock Exchange. That will give COIL, chaired by Cambrian Mining's Australian chief executive John Byrne, greater exposure to Methanol Australia's gas projects offshore Northern Australia, where director Jurgen Hendrich claims a potential six trillion cubic feet of gas in place and 800 million barrels of condsenate, with encouragingly low levels of CO2.

Hendrich argues an adjacent submerged island, Tassie Shoal, should 'transform the economics' of the project, by significantly facilitating the drilling and production processes, though an overall investment of £500 million or more could still be needed for 'two world-scale methanol and liquified natural gas plants'. London-based COIL, which raised £1.5 million at 3p in July, expects drilling to start in a year and suggests it could take up to five years to bring it to production.

According to Hendrich, Cambrian also plans to float its Canadian-based Elko Energy arm, with 80 per cent of a promising project in the Danish North Sea, and Dragon Energy, another unlisted Canadian concern, with potential oil reserves of 75 million barrels. At 3.25p, down from last year's 11.5p high and 2004's 5p float price, the shares offer speculative recovery potential.