agm, page-32

Overpaid and lame analysts can take my 2minute back of envelope effort and use it as the basis for some real analysis, not just lame background on Methanol.

Assumptions
- Gas resource (MEO equity share)
- Well field (upstream, $1,300 million)
- TSMP (downstream, $1,500 million)
- Methanol price US$482/MT
- Assume MEO can offset PRRT from capex and carried losses, at least for 5 years

Therefore total project cost, $2,800 million.

Gross revenue at 1.75 mtpa, $820 million pa.

On a basic Ebitda margin of 60%, equates to $492 million pa.


Scenario 1
MEO decides to capture value by:
- $100m development rights sale
- retaining 2% tolling fee (gross volume based), equating to $16.4 million pa, on a 6x multiple equals $100 m
TOTAL VALUE TO MEO
$200m


Scenario 2
MEO decides to capture value by:
- converting MEO’s TSMP project rights to MEO owning 10% equity in TSMP
- MEO feeding 25% equity share of Blackwood to TSMP to generate $100m EBITA
TOTAL VALUE TO MEO
$500m


Scenario 2
MEO decides to capture value by:
- converting MEO’s TSMP project rights to MEO owning 15% equity in TSMP and Blackwood (integrated development) so as to MEO feeding 15% equity share of Blackwood and TSMP to generate $123m EBITA
- capex funded 70% by debt (ECA, JICA), therefore MEO’s equity contribution would need to be $126 million. Given MEO would have sold down 10% further equity not to mention FiD kicker, MEO would not need to raise any cash. Assuming a utility EBITDA multiple of ~8, would indicate.
TOTAL VALUE TO MEO
$1,000m


Scenario 3
MEO decides to capture value by:
- combination of Scenario 2, 3 or 4
TOTAL VALUE TO MEO
$200 - $1,000m


A lot of value here, depending on the final format. And this is just TSMP1, doesn't include TSMP2, or TSLNG.