sp and potential gsa's

the SP seems to be gathering strength.
Very few sellers - earlier today was only 5 sellers ranging from 21c out to 49c. now still only 6 sellers in same price range.

this heading was in The Australian today- (I am too stingy to subscribe)- but it seems to indicate that Origin was prepared to pay a premium price to secure al large qty of gas.

"ORIGIN Energy's $3 billion deal to buy Bass Strait gas for domestic customers appears to have been priced at 50 per cent or more above usual prices. "

It seems to me that this is yet another confirmation that any GSA secured by WCL will attract a very, very significant increase in sale price per gj to WCL.

To put it into perspective, I calculated that WCL is currently receiving $3.10/gj for the approx. 10tj/d - 11tj/d sales it is currently producing.

The rates now discussed by various O&G coys is around $7-$9/gj for delivery starting 2015-2016.

So seems that the pricing WCL may attract will at least double - but could be 2 1/2 times to triple.

Even if only $7/gj, if WCL produce 60tj/d (which is capacity of current pipeline infrastructure)that's $420,000 per day, or $153m revenue p/a. WCL gets about half of that.
Conservatively, they would net at least half of their share, as EBITDA. So EBITDA of $38m with 355m shares represents about 11c per share - ie equivalent to half the current SP!?

Not pie-in-the-sky stuff imho.

Just look at the bullish (and uncharacteristically comprehensive) coverage of WCL investment in the New Hope Coal presentation.

It's NHC which states:
Quote
"-Significant opportunity to ramp up production to 60 TJ/day to match pipeline infrastructure

– Progressing GSA negotiations – potential doubling of gas prices toward $10/GJ within 18 months

– Potential for new GSAs to provide a source of development capital and underpin funding options"
Unquote.

so this from NHC, part of the very conservative Soul Patts Group!

Just maybe the stronger SP of WCL is pointing to a finalisation of the much touted GSA's which WCL has been talking about for years and years? And which was put on hold because of the Petro interest?

and about time too!

cheers