Ann: Reinstatement to Official Quotation, page-7

On the contrary, I'd say gas transport price is the most important consideration in the scheme of things. The other aspects of CTP's valuation equation are fairly well understood, but the question of whether 20c is fair or not fair is almost entirely dependent on that price.

But EY is assuming, essentially, that CTP has to pay to deliver gas to Wallumbilla. There is no doubt that the GMRG has sold out not only CTP but the entire Australian manufacturing industry, but this is not necessarily a valid assumption, and if you use a different assumption it can have a pretty major impact on the situation.

Here's just one example. The Carpentaria Gas Pipeline is currently flowing from Ballera to Mt Isa, supplying gas to Isa. The average flow rate at the moment according to the AEMO website is ~75 TJ/d. Tariff costs from Wallumbilla to Isa are $2.48/GJ.

But there is about to be another pipeline connected to Mt Isa from the Amadeus which can supply 90 TJ/d. That is more than enough to completely reverse the Carpentaria pipeline, and the cost from Alice Springs to Isa is only $2.72/GJ - very similar to the current cost of supply it from Wallumbilla.

So why would CTP try to sell gas to Wallumbilla and pay $5.20/GJ when they could sell gas to Isa and pay $2.72 plus a little bit more (as a discount to gas price received by CTP) to undercut the supply from Wallumbilla?

If that combined effect was $3/GJ instead of the $5.20 assumed by EY that makes a very significant difference to the valuation. Furthermore CTP doesn't actually have to sell the gas to a user in Mt Isa, if they negotiate a backhaul contract for delivery to a buyer at Wallumbilla. Then the Isa user gets CTP's gas and the gas that would have gone to Isa from Wallumbilla is now available for sale at Wallumbilla.

I'm not an expert on gas transportation so I am happy to be corrected but that's my understanding of the situation. There is a good chance that a significant portion of CTP's production will only have to pay tariffs as far as Mt Isa, through a combination of physical delivery to Isa users and backhaul. That's an extra $2 to 2.50/GJ onto CTP's bottom line and that will make a very significant difference when EY has assumed an ex-field price of around $4 - fully 50% higher.