Ann: Two Wells Online as Vali-3 Commences Gas Production, page-37

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stumpytrunks

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13/04/23

20:08

Post #: 67264037
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Originally posted by OldGeo: ↑

Hi jophda,
I think you have hit the nail on the head with this comment - "The Market has been telling us for a while that the revenue from Valli and Odin may not be as lucrative as expected".

Back in December last year, Blue Ocean Equity estimated annual cash generation of $5-10m to MEL for the initial years of the project based on initial flow rates of 12 MMscf/d (the capacity of the new pipeline to Vali). They did not say whether this was raw gas (12MMscf/d) or hydrocarbon gas (9MMscf/d) but I assume raw gas since they talk about pipeline capacity (Hydrocarbon gas + CO₂). So, at a minimum ($5m pa) about $417,000 per month or $1,668,000 per quarter to MEL. MEL's last quarterly (End Dec. 2022 - see below) had outgoings of $2,268,000 which may rise to about $2,500,000 (End March 2023) to accommodate loan interest and principal payments if the loan is fully drawn down. Hopefully when Odin-1 comes online, MEL can turn cashflow positive. but they may struggle to be cashflow positive this year. Happy for any input.

I trust Glennon and Keybridge Capital did their own cashflow forecasts before providing the $5 million loan facility and must think the MEL SP will eventually rise to 2.5cents+ option exercise price.

Phew, MEL is a tough ride.

Kind regards OldGeo

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I'd imagine the 'oil and gas properties' represents one off expenditure relating to getting the Vali wells online. Take those amounts off on an ongoing basis and the cashflow is comfortably positive. My concern relates to the water production in Vali-2. The volume of this was vague in the last announcement, which I didn't love...noting of course that it was very early days.

MEL Price at posting: 1.8¢ Sentiment: Buy Disclosure: Held
7 Upvote

0 Great analysis

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