How can anyone take the forecasts seriously when there is a range of 350mmscf/d to 550mmscf/d and they still haven't got SJB plant to any more than half production yet and it's been installed for probably 3 years? So they want to go from production of 13mmscf/d the most recent quarter (average of around 17mmscf/day over the year) to potentially 550mmscf/day in 5 years?
As for the financing, all Macquarie have given them so far is $18mill extra at around 10% - I'm pretty sure if SEH can get the ODP's approved, and show some track record, there has got to be much better financing opportunities out there in 2-3 years. The $10mill that Macquarie have loaned SEH so far has cost an absolute fortune, considering that SEH had plenty of money in the bank and never had access to the other $40mill available.
Further optimisation predictions of the wells are very "pie in the sky" as well so I think we need to stick to the current well production dynamics and look at a plateau of around 350mmscf/d. Decline rates are not very well defined in the presentation either and same thing, SEH are very hopeful with well optimisation giving the wells a very big boost.
Overall, yes SEH has a huge future if they can optimise the wells, get to 350-550mmscf/day in 5 years, get an extension on the LXG PSC (will be interesting whether they have to give up some percentage ownership of the PSC or buy an extension by maybe not asking SOE to pay back already sunk costs) and find consistent buyers for the gas and actually have a decent percentage up-time.
At the moment SEH management are not delivering to the market's liking and hence the share price went down today. I'm pretty sure a lot of shareholders wont be happy with the most recent quarterly production volume and disclosure. Also, it is hard to believe the new pilot plant will be ready in 2 months when it appears to currently be a dirt pad atm.
In summary, SEH has a huge future but it has a long grind ahead of it and this will likely keep the share price suppressed.
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