CTP

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5.3¢ central petroleum limited

From the AFR, page-16

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buddy134

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13/06/16

22:45

Post #: 18022501
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Originally posted by psi81 ↑

We don't know how much MBL paid for the gas because the value of the deal wasn't announced. All we know is that it is more than $10M for 5.2 PJ, which is where the $1.92/GJ figure comes from.

But the value is more than that because MBL also cancelled the production bonus rights owed by CTP which had a value to CTP of $2.5M to $8.75M.

ON TOP OF THAT there is an unspecified amount of money for "new reserve growth activities." We don't know how much that is but as I have said before, we may be able to glean it from upcoming quarterlies if it's listed as a separate item.

CTP has pointed out that basically any GSA above current production is going to vest at least the first stage of the production bonus rights, so the value is at least $12.5M.

Another thing you need to consider is the discount factor. The GSA is for a period of 3 years starting around the beginning of 2019, meaning the midpoint of the sales period is approx. 4 years from now (the date of cash receipt). On a 10% discount factor, that's 50% more value right there, so $10M today is worth ~$15M in 2020. For a company like CTP, 10% is probably the bare minimum DF you'd consider.

All in all, MBL probably paid somewhere around $15M, which discounted is around $4/GJ. If Mereenie production gets high enough to trigger the full production bonus payment, the value to CTP will be, on a discounted basis, over $5/GJ by my calculation.

In this way, both MBL and CTP win. On face value the loser is Magellan, but for a cash-strapped company getting that cash up-front is probably considered a win for them too.

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""( meaning the midpoint of the sales period is approx. 4 years from now (the date of cash receipt). ""

Okay then. If that is the case, what is the price of gas going to be in 4 years from now.??

Who is then going to be the winner out of this deal.??

For all we know, the gas in 4 years time could be at $5 or $6 per GJ, and it could be even up to $20 per GJ too.

Fair is fair IMHO.

CTP Price at posting: 9.7¢ Sentiment: None Disclosure: Held
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