Ann: Armour Energy to Receive $6m in Gap Grant Funding, page-23

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frmen1

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14/04/18

18:36

Post #: 32458459
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Originally posted by rmkpro ↑

Page 18 of the RISC report - Appendix G of BDO Report as part of the 'Target Statement'

7.4. Operating costs

Once the Kincora gas plant has been restarted there will be an ongoing operation cost required to run the plant and associated facilities. We estimate that this will range between $9-15 million per year for such items as:

 labour, including an operating, management and maintenance team for the plant;
 chemicals and consumable materials such as oils, paint, corrosion inhibitors, glycol, etc.;  spare parts and routine maintenance;
 logistics and accommodation costs;
 head office support such as engineering, HSE, etc.; and
 overheads such as insurance, IT, fees, etc.

Costs have been delineated as either fixed or variable with variable costs adjusted on the basis of production. Approximately 60% of costs are associated with the operation of the Kincora gas plant, the balance being incurred by the PLs, roughly in proportion with production.
We estimate the cost for periodic major maintenance shutdowns at approximately $3 million per 3 to 5 years.

They put CAPEX in that at $10.4mil to bring the plant back online and corporate costs at the time were $3.4mil. So hopefully they are talking the whole of AJQ that they 'EXPECT' to be cashflow positive, not just Kincora plant in a nutshell.

Again all good as most of the extra production will fall to the bottom line earnings anyhow which is when you would think the market may finally take notice.

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Thanks, apologies and regards mate.

AJQ Price at posting: 8.3¢ Sentiment: None Disclosure: Held
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0 Great analysis

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