That ESG are proceeding with the purchase of the Kooragang Island land is an undeniable piece of evidence that the LNGN project is robust and in ESG's words:
"Forecast project costs are well and truly competitive with industry best practice."
Companies don't release sensitive financial data, like exactly what the IRR is on the project, or what the NPV is on the resource.
But again, FOLLOW THE MONEY. The Money holds the answers. This purchase is $25,000,000 pieces of evidence that LNGN is a goer. Hitachi/Toyo's involvement supports this. Marubeni's interest supports this. Alan Fanton joining the team supports this.
There are those that have wanted to sew the seeds of doubt about the project because they haven't been given the sensitive info. Their words are not important. The above commitments are the important pieces of evidence.
ESG is now in the LNG business.
Unlike Santos, ESG has the 2P reserves, right now, to support their initial 1mtpa project. Further reserves upgrades are all upside to the scale of the project.
This means that we have to start to consider reserves upgrade based on LNG cut-off assumptions. ESG's current 2P reserves are based on domestic $3.50/GJ cut-offs. There is not a single joule of gas reserves booked based on an LNG market. That will now change. And think $7.00/GJ LBG cut-offs.
According to ESG, a FEED is to begin within a few weeks. It is all systems go.
Yaq
ESG Price at posting:
85.5¢ Sentiment: Buy Disclosure: Held
