Valuation Estimate, page-36

Hi Psi81,

Thank you for your response. I gave you a thumbs up.

I appreciate your comment that:

"Typically a company making a TO won't pay money for wildcat plays like the ones Santos is discussing because they are high risk and that risk is difficult to quantify accurately."

The problem is that I am not a SH of the TO company I am a SH of the target company. Therefore, I do take into account the wildcat play of SANTOS. Especially considering the expertise contained in SANTOS and how high the Amadeous Basin is rated in SANTOS's new strategy. That said I did not include it in my very rough valuation.

You also stated in your post that:

"So we really need to know firstly whether CTP is going to be able to earn $40M p.a. NPAT from the gas and secondly how can it can be sustained."

With respect to your points of enquiry:
(1) can "... earn $40M p.a. NPAT ..." I would respond:
a) I believe CTP will have substantial tax losses from previous years and as such the tax costs should be minimal; and
b) as any GSA will not include transmission costs the $60+million revenue projected will be closer to the profit than if those costs will be included.
c) The above points would indicate a $40M p.a. is a reasonable guesstimate of NPAT.
(2) "... how long can it be sustained."
a) The CTP management has posted on its web page under "Exploration Strategy":
"The immediate focus is to prove up sufficient gas reserves to provide a foundation supply contract for the North East Gas Interconnector (NEGI) project. Such reserves will be supplied from the Mereenie, Dingo and Palm Valley fields and requires near term workover and stimulation of existing wells, optimisation of surface facilities, and in-field drilling to provide reserve upgrades. Considering the combined output of Mereenie and Palm Valley reached a peak capacity of 60-70 TJ/d (~25 PJ/a), the in-field acceleration activities and addition of Dingo Gas Field supports Central’s ambition to be a key supplier to NEGI with 550 PJ of 2P reserve potential."
b) Even at 20PJ p.a. supplied down the NGP wouldn't 550PJ supply that gas for a substantial period of time and thus easily support a PE ratio of 15?

If you would care to comment Psi81 on what I have said I would appreciate it.

Thanks once again for your response.

Cheers

Stoops