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Do you ever look outside North America to invest in CBM?

Eric Nuttall:
There really aren’t many coalbed methane plays that I’m aware of outside of North America other than in China. A few companies have chased CBM in Australia, but they have not to my knowledge had a tremendous degree of success. I think anyone who has invested in an Australian coalbed methane story has not had a very pleasurable experience. We’re invested in a few Chinese CBM companies. We’re invested in Pacific Asia China Energy (TSX: PCE). We’re also in a private company called Terrawest, which will be going public later this year. We’ve found in general investments in Chinese CBM companies to have been somewhat challenging. It can take an extraordinarily long amount of time to sign a production sharing agreement with either CUCBM or with one of the state oil and gas companies. The wheels of bureaucracy move slightly slower in China than in North America. Thankfully, future investors in Terrawest won’t have to endure the wait that we had to go through. I expect over the next year that China will become a hotbed for natural gas exploration, and would encourage investors to seek companies that have already signed production sharing agreements. Both Pacific Asia China Energy and Terrawest have such agreements.


Eric Nuttall, Research Analyst
Eric Nuttall is a Research Analyst with Sprott Asset Management Inc. He joined the firm in February 2003 after beginning his career with CIBC World Markets. Eric supports the investment managers with the development and analysis of investment ideas for all Sprott Funds, with a primary focus on oil and gas stocks. Eric graduated with high honors from Carleton University with an Honors Bachelor of International Business.

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