This is the thing to be paying attention to. HY has lots of mixed signals for number crunchers but this is the go forward basis - I've got a bit of work to do on my numbers too now.
The big thing is the sale of midstream assets. Now I said earlier I expected at least a 50% sell off but I was not expecting the sale 100%. That of course has +ve's and -ve's that go with it.
Biggest +ve is COE doesn't have to fund the Capex of $250M and maintain and staff the facility.
Biggest -ve's are COE LOE will go up by the long term tariff for processing. Trading Capex for Opex. As long as they are all matched up it should be a wash. We also are on;y selling Orbost for the capital we put into it.
And of course $250M (est Capex for Orbost) + $355M for offshore is ~ $605M which of course is considerably high that the $550 estimated ... but its 2 wells now which is the main difference.
With 80% of gas sold on long term contracts the cash flow stream is well defined - banks should love the project. Won't need to much of an equity raise and expect project funding of ~$250M. What is unknown to shareholders is the approx contract price (should be able to guess soon based off Casino-Henry what need long term contracts have in them). APA processing and selling in the Eastern Pipeline. Assuming COE price is sales price coming out from Orbost and customer negotiates transport to their location.
I like it. Remains very well position to profit off of east coast gas demand.
COE Price at posting:
38.0¢ Sentiment: Buy Disclosure: Held
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