advice to ctp board from shareholders

Hello CTP Share Holders

I am not a new comer; I just do not say much. I often visit this site to get the feel of how you are all thinking and I thank you for that help.

My user name appears below but I am also willing to give my actual name which is Geoff James. I am doing that as I hope that this post might stimulate shareholders to become more personally involved in the fate of our company.

I hold 1,070,000 CTP and have done since Feb 2009. One of the reasons that I have been a dedicated “Centralist” is that I have lived in the NT since 1950 and I know the place well. I went through the Surprise region in 1981, long before there were any roads there and I am confident of its future as a major oil province.

My journey took place when the working up of the Mereenie field (300,000,000 bbl) to the east of Surprise was at an early stage. We partly used Magellan’s seismic grid lines as FWD tracks to transit the country. It was an inspiring reconnaissance because we could virtually smell the oil wherever we went over that terrain. We sensed that our journey, though primitive, was significant as it was taking us through one Australia’s future foundations of wealth and security.

Magellan had found Mereenie 14 years earlier. For various reasons, mainly remoteness and the oil price, the discovery had been moribund all that time. By 1981 however Commonwealth control of the NT had loosened and local people were beginning to groom up the deal that became the JV between Magellan and SANTOS.

You know the rest. The Mereenie field started pumping in 1984 and it is still going. Although looking back in hindsight that breakthrough appears to be routine, take my word for it – it was not. The 17 year delay from discovery to production and sales, plus the likely minimum 2 years of prior research, seismic, and general mobilisation before spudding belies an incubation period of near enough 20 years.

I want to see our company go ahead but I know that the way we are going about it at present will take a long time. Things are done a little faster these days because of a better oil price - but not much faster. We are facing at least a decade before any true substantial progress can be made at our current speed.

The magnitude of our objectives, our chronic shortages of money, the fact that we do not own our own rig and the reality that the drilling season is very short, means we will not see any dividend earnings for our shares until 2024 at the earliest. Some will say that dividends are not the issue. Those who say so will be focusing on share price but we all know that in the end share price is driven more by the fundamental of dividend proximity than by asset accretion.

Until we approach the status of being a business rather than that of being an idea, CTP’s share price will always lag dramatically behind its asset fundamentals.

Imagine that we were in the coffee lounge business. We might have the franchise for the best beans in the world, our management and staff might include the nation’s best baristas and catering experts, we might have the option to lease a number of good outlet sites, but until we had served our first cup of coffee we would not feature much in a valuation exercise. Even at that point our enterprise would not be overly valuable. It would need to mature into a volume business.

For a number of reasons arising out of these factors, I have come to the conclusion that CTP’s mission is too big. At present we have the sizzle but no sausage. Our share price goes up marginally every 12 months on the excitement of the small amount of exploration that out funds, the terrain and the seasons permit us to achieve but to maintain and grow any value we need to get some sausages to go with that sizzling.

In the fullness of time, we will get there but I think it is time that all stakeholders began to think more aggressively about how to speed up process. We shareholders should be helping our board to focus its attention on this issue. We can do that by formulating good ideas and submitting them to each other and the board for consideration.

CTP’s share price would be a lot more buoyant, and the proximity of future dividend income for shareholders would be a lot closer, if the company could work on more than one project at a time, but CTP has too little money and too much to achieve. CTP’s shareholders and its board should think of some ways to get things moving.

We should all be making constructive recommendations to the members of our board, existing or incoming (however it may ultimately be constituted), for an effective and timely utilisation of our vast assets. I, for one, want to offer some help to think things through.

I offer the following suggestion as an example of how we might revitalise CTP. It is merely an outline of an idea. I acknowledge that it would need to be refined in a number of ways but, if the principle were to be adopted, the outcome would be practical and beneficial.

Our Pedirka Basin coal occupies at least 10 million acres. I have very roughly formulated that estimate assuming 200 km by 200 km land surface. I am using the unit of acres because it is reasonably common for that unit to be used internationally. A common minimum valuation for prospective exploration land is $10 per acre. It cannot be disputed that the land is prospective as we have already located the coal. Therefore an internal valuation of $100,000,000 can be justified.

Moreover expenditure on successful exploration and a premium for the existing success can equally justify doubling that figure to $20 per acre (remembering that it is to serve as an internal valuation). Assuming that the quantum of coal in our tenements is 300 billion tonnes (and we all know that to be a gross under estimate), if we project an internal valuation of $200,000,000 all we are doing is attributing to the “in-ground” coal a value of .07c per tonne.

A new corporate structure should then be established. For this discussion, I will call it Pedirka Coal Ltd (PCL). CTP should then rearrange the ownership of the coal by selling the tenements to PCL in exchange for the allotment of 1,500,000,000 fully paid shares of 13c par value in PCL. Assuming that there would be (by that time) 1,500,000,000 shares then issued in the existing CTP structure, each share holders in our original company could then be granted a proportional distribution in specie of one PCL share per share held in PCL.

PCL would then raise funds by loan from or placement to CTP, sufficient to fund the necessary listing expenses and preliminary working capital to list on the ASX and start work. After that, PCL would grow or fail as a participant in the thermal coal sector and provide CTP shareholders, in their new identity of being shareholders in PCL, with the opportunity to realise some value from this previously neglected asset.

All manner of possibilities then emerge. For example, PCL and WESICORP might amalgamate their coal discoveries under a new entity which might be floated off into to the market generally. There are many possibilities. Whatever might occur, CTP would be free to go its own way to pursue the petroleum, gas and helium projects with greater strength.

After dealing with that proposal CTP might reasonably consider an independent float for some of its other main elements. For example, Georgina Basin could be separately floated. That would give this element of the CTP assets the exploration funding needed to accelerate progress. Other candidates include the Wiso basin, the unconventional elements of the Amadeus basin, the Helium prospects and the Madigan reefs.

Each one of these elements could support a listed company. It is likely that with the minimum of inconvenience and expense the current CTP asset base could support a minimum of 7 new listed entities. The burning question would then be: what is the likely typical share price? My guess: not much less in each case than our current CTP price. Comparable entities trade at around 7c if their tenements are prospective. Even if they attracted a derisory 2c each, the net advancement of position for each shareholder would be 200%.

What is the common theme? CTP has got too much on its plate. It is no use having the biggest acreage in the world if you cannot make effective use of it. It is more practical to break up the empire and monetise its individual elements.

Remember, an entire block of flats never sells for as much as the sum of the individual unit titles that can be derived from the same building.

I will offer these suggestions to the board. I will do so by sending a considered and constructive e-mail to them. I will post it here when it has gone. My purpose in first posting these thoughts is to appeal to shareholders to do these things toward improving our future with CTP. These are:

1. Cooperate with and support each other by posting input that is truly analytical and addresses the issue of how we can enlarge share value.

2. Review my ideas and post criticisms of or contributions to them for consideration by all shareholders.

3. Write your own letters and e-mails to the board which adopt, support or expand my ideas (or copy them if it saves you effort) or which put your own considered suggestions.

4. Think about the possibility of launching a CTP shareholders association. We have a priceless asset; now all we have to do is fight for its recognition.

I will also post this material on the other forum. We two groups should work together on this.

Stay centred.