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SP007

1,113 Posts.

150

18/05/15

11:57

Post #: 15299453
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Originally posted by Intel24 ↑

I would think that spending on an early works program relinquishes the need for a portion of the equity capital from Stonepeak.

In essence it means investors will be getting a 14% pre tax IRR on any capital spent on a Magnolia early works program as we take away equity commitment from Stonepeak. I am more than happy with that.

I would prefer that the Stonepeak arrangement disappeared and they asked investors for the equity capital personally as a 14% return on a de-risked project (at the time Stonepeak pulls the trigger) is exceptional and will be capitalised up at a WACC of around 6 - 7% on day one.

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Think of it this way...
Would you sell your LNG shareholding at 4.35 to buy a term deposit paying 14% pre tax.
I wouldn't...

LNG Price at posting: $4.65 Sentiment: Buy Disclosure: Held
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