I've taken the liberty of re-posting observations below about TSU and the impressive prospects at its Beaver River Play. It was originally posted late last year on the QEC discussion forum.

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Update on Transeuro Energy Corp (TSU-TSXV)

We’re updating Transeuro right now because they have started drilling a hole in North East British Columbia that has one of the largest targets we have ever seen in Canada – up to 8 TCF (trillion cubic feet) of natural gas.

In our introduction (June 30, 2006 – click here) we outlined how the company brought in management from High Arctic Energy Services (HWO.UN-TSX), and acquired plays in Canada, Ukraine and Papua New Guinea. We saw the potential for a lot of organic, low risk growth overseen by a technically competent management team.

And that growth curve could start very soon. On Monday Sept. 18 Transeuro announced they had began drilling into their Beaver River play in NE B.C. . The potential size of this play is significant: if management is right in their theory, this is a large shale sands play. An independent report suggests this scenario is plausible, and if correct could contain from 200 bcf (billion cubic feet) – 500 bcf per section. TSU is earning 50% into 17 sections. 17 x 200 bcf = 3.4 TCF. 500 bcf x 17 = 8.5 TCF.

That’s a lot of gas. For valuation purposes, 1 TCF is valued at roughly $1 billion in market cap. With Transeuro having 120 million shares out, 1.7 TCF (half of the estimated minimum 3.4 TCF target) is worth $1.7 billion or $14/share.

Of course, in this natural gas market that’s a ridiculous number. But even in a horrible market, the stock would be worth substantially more than the $1.25 it’s trading for now.

After all that arm-waving, please remember this play is still an IF. IF they hit what they think they will, that math is a possibility for the stock. IF IF IF = risk.

But they do have one producing well on this structure already, which has been steadily increasing production since it was brought onstream earlier this year. It was re-entering an old hole. Production has essentially doubled in the last few months – another technical sign that it’s a shale play. This new six hole program are the first new wells using modern technology ever for this formation.

The play is in Canada – for that size a target, you often have to invest in companies operating in far off countries with high political risk. This 8 TCF target is world class in anybody’s books. And it’s shallow, starting at only 1100 metres. A major pipeline runs across the property. IF these wells hit a productive shale formation, it should get developed quickly.

This formation – call it either the Besa River shale or the Mattson – has been drilled through many times on the way to a prolific deeper formation, the Nahanni, where wells produced tens of millions of cubic feet of gas per day. But the gas price wasn’t high enough and the technology wasn’t there to warrant developing shale gas (also called unconventional gas).

The company has now begun promoting their story to analysts, funds and retail brokers and investors. Time will tell if they have something very interesting to say in the coming weeks.

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I based it on 1 tcf, but hey IT IS A LOT MORE