This quarterly result illustrates the substantial earnings...

This quarterly result illustrates the substantial earnings potential of CTP.

EBITDAX (Earnings before Interest, Tax, Depreciation, Amortisation and Exploration) is a good guide on cash flow before debt servicing and exploration activity. It largely represents sales revenue after operating costs.

The chart below plots EBITDAX over the past 7 quarters. The last quarter was the lowest production over this period, averaging 27 TJ/d. Its also an outlier from the trend after the cost reductions. The key point here is the profitability of the business, despite the lowest production and the lowest gas prices over the past 2 years.

The other point to note is the substantial leverage in the production profile. CTP can generate multiples of the current EBITDAX if production and domestic prices move back to previous levels, solely based on existing capacity. The forthcoming annual report should see EBITDAX of $27m based on an average of 32 TJ/d. Take this to 42 TJ/d and domestic gas prices at 2019 levels will result in a EBITDAX closer to $50m.

Here's the kicker - add in the expected shortage of gas in 2022, along with Range and the other farm out campaigns coming into production in 2021/22, illustrates 80 -100 TJ/d is within reach with a potential EBITDAX of $3 - 4/GJ. That's $90 - $150m per annum of EBITDAX and a substantial uplift for a company with a $61m market cap.