rewarding share

Just some information which, in addition to reading EWC ASX announcement, may assist Brunette-two to get ‘up to speed’ on EWC.

EWC has sufficient funds (debt finance and cash at hand) to finance its immediate projects, such as the expansion of up to 315MW of the Sengkang power plant and the 4x0.5mtpa LNG trains from the Sengkang gas field.

As at 26 August 2008 Sengkang gas field 2P gas reserves stand at 700 BCF. Sangkang gas reserves currently available are sufficient to supply 2mtpa LNG for up to 10 years. Drilling to confirm further gas reserves (estimated at up to 7 TCF) will be undertaken once the 4 x 0.5mtpa LNG trains are operating and LNG is delivered to customers.

Revenue from these LNG deliveries will also be used to finance further drilling in Sengkang gas field, to fund further LNG trains, LNG developments as well as allow for EWC share holders to be paid a dividend in two years time (according to Mr S. Elliott, as per 2008 AGM discussion). The fact that EWC will be in an extremely strong cash flow positive position in the near future is also underpinned by the following financial analysis data (current as of 2 January 2009), carried out by ABN AMRO and available on the Comsec website:

EWC earnings per share (EPS):
Fact:
2007/2008: 1.5 cents
Estimate:
2008/09: 0.4 cents
2009/10: 5.2 cents
2010/11: 23.5 cents

None of this takes into account the possibility, once additional gas reserves of up to 7TCF have been confirmed, of EWC being able to supply 5mtpa LNG for 20 years from its Sangkang gas field, let alone the enormous revenue potential concerning EWC’s Abbot Point 5mtpa LNG project.

While I am not able to forecast EWC share price on a daily basis, these data strongly indicate that the current share price severely undervalues EWC and that, once the above projects are nearer to commercial operations, EWC share price will be far in excess of $1.20. As I am a long term holder of EWC shares, I am extremely confident that EWC will reward its loyal shareholders very handsomely, indeed.