EWC has grand plans evidence of which can be found in the last couple of years presentations and reports, which have held out the same promise but with little evidence of progress over this time, or more particularly the same evidence rehashed over the last couple of periods. If they pull their plans off it will be a minor revolution in supply of LNG from a source otherwise deemed uneconomic (stranded gas)and will make all shareholders a motza. The critical step is proving the concept by getting Small scale modular LNG up and running in indonesia. They've got the cash to realize their dreams so shareholders shouldn't expect to be tapped for funds.. aka its safe to buy now to partake in the mooted bonanza.
......aka "they've got the money"
They've got suppliers to manufacture LNG componentry that has been awaiting shipping for up to 18 months.
.......aka "they've got the expertise & materiel"
The agreement they thought they had with the indonesian authorities to access gas and licence to build (and land on which to build) an LNG facility (POD) is now under review.
Forgive me but am I right in thinking the Indo authorities are requiring a proving up of gas reserves that EWC thought was already a settled issue, as was the POD?.....
.......aka "they might not have the gas"
The implementation of the first 60mw of a 120mw powerplant expansion has been plagued by an extended failure of supplied equipment that is still not operational which is impacting negotiations over LNG POD and further expansion of the subsequent 60mw.
...... aka "they're losing the good faith of the counterparty in negotiations"
It seems to me as if EWC had great plans but simply failed to lock up agreements with the indo authorities to see them through, I'm familiar with the concept that as there was a change in Gov't this failure might come under the ambit of sovereign risk, and therefore beyond the responsibility of EWC or it's negotiators/directors.
We are nearing time for announcement of crucial approvals from the Indo authorities as to powerplant expansion and LNG POD at which time such sovereign risk can be priced out of the shares so it's a pretty straight forward bet with EWC. If they get the tick shareholders win.. More likely though surely must be further delay re LNG while gas of sufficient quantity is proven up to the Indo's satisfaction.
I'm trying to summarize this tale so I've left out all the bits that go with drawing lines in sand about lack of disclosure by EWC.
It does seem however that the Indo authorities are making noises about continuity of supply of power and linking these with potential insufficiency of gas for both LNG and electricity, I recall other posters pointing out how this is a straw man bargaining tool and that there is plenty of gas for both, providing however that the Indo's share other posters faith in the EWC model of funding further proving of supply from cashflows of first modules.(back to the POD approval)
I must say that as much as I like the EWC story I fear the Indo authorities do not share the faith in the further proving up of reserves from cashflows and will use this (amongst other means) to stymie development of EWC's LNG plant...... at least until "they" (whether individually or collectively receive incentives.....bribes..... payoffs.. their cut.. a better deal for Indo generally)
I'm greatful for others who have posted their views & analysis & seek not to question them so much as to confirm that I understand the essential issues with this company.
EWC Price at posting:
30.0¢ Sentiment: Hold Disclosure: Held
