While GeoMet, Inc. (Nasdaq:GMET) has seen impressive growth and is in the hot field of unconventional gas production, the Houston, Texas-based company currently feels like it’s undervalued.

“We’ve always considered ourselves to be a growth story and now we also consider ourselves to be a very good value story,” CFO William Rankin said during a presentation at an April Oil and Gas Investment Symposium of the International Petroleum Association of America.

For a stock that’s trading at around $7 but has analyst targets of $10 to $14, he might have a point.

GeoMet bills itself as the second-largest pure play in coalbed methane gas in the country. With all the hullaballoo over shale gas, it’s easy to overlook some of the advantages of CBM — notably that it occurs at shallower levels than most conventional or shale reservoirs and it tends to be more productive.

Methane gas has long been recognized as a hazard in coal mining but it is only in the last 20 years or so that it has been commercially produced and distributed as natural gas. Current production of coalbed methane is about 1.25 trillion cubic feet a year, or 9% of overall U.S. natural gas production. The country has an estimated 100 tcf in recoverable CBM.

Whereas conventional natural gas is stored in the pores of the reservoir rock, coalbed methane adheres to the surface of the coal (adsorption), allowing large quantities of gas to be stored at relatively low pressures. This means that, in contrast to conventional natural gas, production actually increases as pressure decreases — first by pumping out the water that fills the pores and then by production of the gas. While most wells will be less productive the longer gas is being produced, CBM . . .

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