agm slides

There is a PSA announcement from last Thursday showng the slides presented at the PSA AGM. Without being there, the slides are pictures. But add in the words, and the following becomes apparent:

Open up the AGM presentation on the ASX announcement. Key points are:

1. Page 4, EBITDAX for full year was US$26M. (Plain English translation of this is Net cashflow on everything except exploration and development). However, page 42, EBITDAX for Q1 2005 alone was US$13.8M. Now add to this the Main Pass discovery which will come on stream in Q4 2005, we are looking at at least a doubling of EBITDAX in 2005.

2. Page 29, proposed capex of US$25M (may increase he said if Main Pass was totally successful, which now looks very likely). If 2005 EBITDAX is going to be US$45-50M, and capex is US$25M, then that equals net cashflow of US$20-25M this year. Shares on issue are 120M, so equates to A$0.21-0.27 NET cashflow per share.

3. Page 30, super key page. All the blue areas in 2006 = cashflow. If 2005 is going to be as good as this, 2006 will be much better again, esp with Main Pass on stream. Now the economic life of these discoveries is only 3-4 years, so not permanent cashflow, but US gas market still seriously flawed and very vulnerable to shocks like really hot summer or super cold winter as all excess electricity generation capacity is gas fired.

4. At AGM the dividend question was asked. Response was 2005 not likely due to more exploration in Q1 2006, but 2006 will be a serious consideration. They still have 3 yrs of tax losses to run (inlcuding the current year) which is more than most commentators believed.


Also, Main Pass #2 was announced as successful a few days back, and development is proceeding. I have a sneaky suspicion that the 12-15bcf they were looking for is going to be exceeded. Bear in mind a find of (say) 20bcf is hugely more profitable than (say) 15bcf as development costs are fixed and only production costs are variable (and are US$0.35 per mmcf compared to price of US$6+, so minor component). Looks like we are cooking with gas.

Board was strongly challenged at meeting on Thursday to market the company better. Cannot help but feel that a dividend will light the blue touch paper on this one, but prob will not be forthcoming in 2005.