Ann: Orbost Gas Processing Plant transaction completes, page-42

I have a mixed feeling with Maxwell and his management team.

If you went back about 3-4 years, management did a great job to get Sole going by sale of Orbost plant to APA. Market cap of COE increased from below $100m to more than $500m. Management did their job but not in favour of retail shareholders. All MC increase comes from two capital raising.

I bought in before the first CR and participated the CR with an average cost about 33 cents. Since then followed up every announcements from COE. Sole project was on schedule within the budget. But the their luck was ended by Orbost delays then not up to the name-plan processing rate. Even worse, they have to buy third party gas at higher spot price to fulfill the contact. I was so fortunate sold half of my holdings at 55 then the rest at 40 cents.

In my conclusion, management planned well to focus on development of two hubs. Unfortunately, Orbost didn’t pan out as planned. COE doesn’t have the cashflow to expand their Mantra and beyond. So that the value and future of COE is still under the cloud. Buyback Orbost further worsen the cashflow for future growth. But I think management has no other option. So I give them benefits of the doubt.

As all directors bought their share of capital raising, I think the worst period of COE may already past. I’d like to accumulate and average down the cost to see if COE can steer around the corner.