Ann: South Erregulla Peaking Power Plant, page-208

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vulcarum

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28/06/24

12:37

Post #: 74520760
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Originally posted by invertedva: ↑

I love this announcement.
They've taken an asset that's been attributed zero value by the market and turned it into an asset that will produce $40-50 million in revenue per annum, with a payback between 3-4 years (see excepts from the announcement below).
I also like it because we are cutting out the middleman and not undercutting our own revenues on gas sales by adding to supply. If large domestic gas consumers want gas, they will have to pay a fair price for it. I think Gina and CE will send the same message regarding their gas supplies.
The downgrade in reserves for SE is disappointing but entirely expected. This is a large downgrade from the initial expectations regarding SE, but I am not writing off large reserve increases in the future. At this juncture, the company is clearly focused on monetising the assets it has (i.e. as a production firm) rather than expanding reserves at all costs (i.e. as they would've done during the exploration phase). Having said that, I think everyone knows once revenues are strong and cash is less scarce, they'll come back and re-drill SE. But that will have to wait until FID for WE and SE are behind us, and access to finance is less of an issue. At this juncture, we need to pump whatever cash we have into revenue generation. After all, we have enough reserves to progress a lucrative business plan in SE. Also, Waylering and Arrino-Kadathinni might be the lowest-hanging fruit in terms of exploration expenditure in the near term (i.e. cheaper to drill).
I am glad I've held during these difficult few months (after being blindsided by the SE results). It's a good reminder (at least to myself) that a good management team is worth backing.

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https://www.abc.net.au/news/rural/2024-06-28/strike-energy-shelves-urea-plant-to-sell-gas-peaking-power/104032234

STX Price at posting: 27.0¢ Sentiment: Hold Disclosure: Held
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Ann: South Erregulla Peaking Power Plant, page-208

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Ann: South Erregulla Peaking Power Plant, page-208

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