On 14/10/10 ESG announced "Processing Arrangements for Export of LNG", that it would retain a controlling interest in the Narrabri CSG Project
To do that they have to keep 36% as Santos has 35%
So they can only sell down 29% max of their 65% to help fund their Sole-Risk LNGN
36% of an approx $2.5Bn sole-risk project for 1mtpa is $0.9Bn which has to be raised - debt and equity.
How much would ESG get for that 29% stake ? STO sold 15% of a 7.8mtpa project for A$665M so 29% of a 1mtpa project could be A$165M
How much debt could ESG raise ?
How much Equity will it need to raise ?
Lets say "All Equity" as ESG has no significant Income Need to raise $900M - $165M = $735M
Santos as a shareholder in ESG should put up 20% of $735M - $147M - as it has shown it supports ESG's Commercialisation Focus and its desire to keep its Blocking Stake.
The rest of the Market Sophisticates Old and New and the Retail Un-Sophisticates will have to fund about $588M
How many more shares will have to be printed and will we as Un-Sophisticates get to have some or will we be diluted again
Last CR at 84cps -lets say that a Reserves Ann can give the sp a 10c uplift to $0.94 Another 626M shares needed and on the way to 2Bn shares on issue
No wonder the sp hasnt exactly jumped through the roof today, the market anticipated a "Feasibility YES!"
The Market is a Sober Place :-
1.The ESG Sole-Risk LNGN is now Very Serious and not a Feint to provoke Santos. Santos is Passive and Happy to support ESG as a 20% shareholder but not as a Narrabri CSG JV Partner. The Santos 35% is for Santos and not for Newcastle.
2.The STO Takeover theme is now Incredible in the Short Term . Put that Theme on your recall list for 2014-15
3. The LNGN Capex to be carried by ESG shareholders will be formidable. Share Printing Press Over-Heating is inevitable
Cheers
ESG Price at posting:
84.5¢ Sentiment: Hold Disclosure: Held
