Gidday PSI,
Great information, thank you so much for your time on pulling this out.
Time to first production
My comments that 3 years from now to first gas feels a long time is in comparison to Senex's Project Atlas (which management have compared our Range against, also issued under the domestic gas tender). Senex was issued the block in Sep-2017 and gas deliveries to commence late-2019. I.e. Issue to first gas in 2 years.
CTP was issued ATP2031 (Project Range) on 1 Mar-2018. The IPL farm-in terms agreed in Jun-2018 which quoted "enabled fast tracking" - I presume that was development. In anycase, first gas in H2 of CY2022 implies > 4 years to first gas vs Senex's 2 years. I guess the gas ramp up is over a long time whereas CTP appear to have an accelerated time to plateau.
I'm probably missing something obvious...as the market doesn't seem to mind
Plant capacity
Yes, management stated 25 TJ/d for CTP's share, implying 50 TJ/d plant gross plant capacity.
Quality of blocks
You're the expert in this field and I won't dispute your knowledge, so I'm just quoting management and their implied optimism towards Range. They noted that Atlas would be most similar and also presented a map showing it's in the absolute "sweet spot" of the area. They're confident of converting all 2C to 2P. My own observation is that the PJ/km2 is comparable, but the real question is how will they flow? If we price in $1 GJ for 135 PJ, it's already substantially all of our market cap. $2 GJ is our c 1.3 our EV. It's excitingly crazy how highly leveraged we currently are to the upside....
Capex
Thanks for the source (attached the link below:
https://www.senexenergy.com.au/wp-content/uploads/2018/10/2018.10.29-Final-Investment-Decision-for-Project-Atlas-and-Roma-North.pdf
Scaling Atlas up for Range, we could look something like (Simplistically scaling up from 40TJ to 50TJ):
60 wells -> 75 wells = $105m
40 TJ plant -> 50 TJ plant = $100m
$20m Water treatment plant -> = $25m
Pipeline : I assume we won't put a cent towards this $0
Total ~$230m or ~$115m for our 50% share. No chump change and then we need to add on some inflation.
Financing options for $115m won't come cheap but hopefully we can do a combination of:
- Equity at higher Co valuation with retail support : I have no problem supporting on the same terms as insto's.
- Presale gas : We have experience in this and LD is a financial genius (I'm starting to sound like Justinmetals towards RC
- Debt
- Cash generated from Mereenie
- Sell down 10% of permit at FID at $2 GJ = $50m (dreaming?)
I think we will be fine...
P.s. I'm still excited on LD's financially savviness. Go the CTP.
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