Ann: Quarterly Activities Report & CashFlow Report, page-22

For those who want the facts here are some;

In CTP’s presentation on 10 Aug 2017 Slide 6 noted funds required raised ($25m) for drilling by the Rights Issue, being;

Mereenie – 2 appraisal wells - $10m (assumed total cost $20m, split with our 50% JV partner Macquarie)
Palm Valley – 1 apprasial well - $10m
Ooraminna – 1 appraisal well - $5m

The ACCC hasn’t yet approved Joint Marketing of Mereenie, however a decision is expected soon. Why does this matter and how come it impacts drilling?

CTP have signed a Joint marketing arrangement with Macquarie that allows gas from Mereenie to be sold by their JV, which means GSA’s will be signed with customers directly by the JV, being just one source of supply. The JV would have an understanding of the approximate value they can sell the gas at, which makes Macquarie’s decision to contribute capital to the drilling program easy to calculate. Once the ACCC ratifies the JV marketing, Macquarie can finalize their drilling capex and agree to fund the Mereenie drilling. As noted in the recent Quarterly since this ACCC decision hasn’t been finalized yet, CTP cannot commit to the four drill program with Ensign Drilling, so their only option is to commit to PV & Ooraminna (being 100% CTP) and lock in an Option to proceed with Mereenie later. This is obviously not ideal, or per their plan as ACCC originally indicated they would make an interim determination in December 2017.

So what if ACCC don’t agree to the JV marketing? In that case I imagine CTP & Macquarie would have to separately market their gas, and be potential competitors. If there was lots of supply this may be a problem, but I suspect with demand as is on the East Coast this won’t impact GSA pricing too much. It would mean that Macquarie would have to determine what they believe they could sign up a GSA for themselves, and determine if this is commercial enough to fund their half of the drilling program at Mereenie. While I imagine that is a no brainer, it is hoops that need to be jumped through before commitments can be made.

Happy to be corrected on any of the above…