For those criticizing the US oil play, will be happy to know that if plans continue to increase the oil production, they will have a return by years end of 50% cash flow on asset purchase price. Now that would confirm another cheap entry by PB. With input of our own EOR gas, profitability would also increase.
Also confirmation for those doubting the significance of its GTL plans can clearly see it remains the chief long term objection still, with diversification into oil producer deleveraging risk. Result is a PE ratio developing quicker than waiting purely on GTL.
Sales by other coalers has been also long and difficult, just as with Theresa, and previous Galille. As with the development of new technology. They were frustrated with developments firstly in Qland with UCG being the under runner to CSG, and put on the back burner by the Qland Govt. Dont forget, first plans for GTL were for Chinchilla before Nana Blyth stepped in. Then throw in the uncertainties that still exist on the mining tax and carbon tax, and LNC was then sidetracked to overseas development of GTL. All of these were set backs in the plans, and were not obvious till occurred. The development of the FT systems and understanding the different tenement requirements has taken time, but at no stage have they digressed from their GTL processes as some have queried. Trial plant on the progress for the US, and now a possible Chinese venture would definately give this a kick along with 2 active developments, again derisking on projects and locations.
It has secured funding, which caused concern late last year, and now is in a stronger position to deliver tenement sales and continue its plans of expansion. Assuming no tenement sale, but becoming cash flow positive and profitable by years end on the back of oil production would have the coy well placed.
It has become a play target for the shorters having decimated prices to which most here would consider undervalued. That surely should be a buy opportunity in that case.
Yes, PB has promised before on sales of tenements and not delivered. BUt consider the above problems for delays. I certainly do not agree with pre ejaculation of news and that PB had learnt from his previous tact, but unfortunately no, we are still hearing about Teresa, possibly because of previous comments he needs to respond to the queries of at what stage they are at. Personally, I would prefer none of this speculation...just tell us when the deal is actually done. So yes, he deserves criticism for this approach, and it leaves an avenue to then possibly doubt his current projections. Deals especially with Chinese and Indians are very difficult and tedious, the Indians worse than the Chinese. So only a signed deal is worthy of consideration, as MOUs are not worth the paper they are signed on.
A China GTL signed deal and Jet fuel trial would certainly attract some interest, and the big unknown, sale of tenements. It looks like PB has a number of arrows he could fire including JVs on tenements, outright sale with a twist as usual(royalties and UCG rights), or spin off of assets into a new coal listing. We are not devoid of possible outcomes for addittional cash generation besides from production. I feel this is what a lot of long tremers have seen as inbuilt value, allowing the coy to expand without dilution. Dilution is the enemy, so PB has gone through some tough global financial times (did not include that one above as a delay also), yet the coy has been able to progress its plans unhindered from cash funding difficulties, whilst very importantly not having any dilution, and for that, we must all give him some credit to not only having traversed that period unscathed, but taken advantage to expand during those tough times.
Chart has us sitting again on support, rather uncomfortably, and needs to hold, otherwise <1.24 is the next lower low.
LNC Price at posting:
$1.29 Sentiment: Buy Disclosure: Held
