Fantastic essay，now I have a clear view. The new holder should...

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caleco

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17/01/18

18:48

Post #: 30383168
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Originally posted by Bortgm ↑

Fair questions and we haven't broached them for some time so here's a high level take:-

BTA (this one you really should know tbh) Binding Tolling Agreement. Which basically means we need someone to commit for 20 years to taking a certain amount of frozen gas off us. Without it LNG can't build anything. They need it so satisfy their financiers. LNG is pretty much a binary outcome, we either build the plant and make some money or we don't. (notwithstanding the take-over option which is always in play now). When/if we get them, all 8mtpa, we go to the FID phase which is Financial Investment Decision. Once that's passes muster we turn some dirt on site. There is always the option that we raise the cash to build the plant but the dilution would see our "potential" share price dramatically slashed. So a big component of the Capex to build the plant would be debt financing and the kick-in from Stonepeak.

Valuation:-
Back of a drink coaster,
Maggy is 8mtpa capacity.
1 mtpa is about 50,000,000 btu.
Now we'll likely process a btu (British Thermal Unit) for around maybe $3 to $3.50. With a margin after covering site costs and off-site overheads of maybe around 40%, happy for you to guess your own number there. After that we need to take out Stonepeaks cut of the profit and we need to repay debt and pay tax.
A few years after we are built it wouldn't be hard to see a dividend equal to the current share price per annum. Once we are in that phase a multiplier of x 10 to x 15 earnings isn't unreasonable. So ten x from here for a target SP is more than realistic. And that doesn't factor in BH or anything else we get going. My guesstimate of an SP after Maggy is locked and loaded is maybe $5..... the previous high.

Like I said the numbers are rubbery and the SP growth pattern will likely follow that of Cheniere (US listed ticker LNG) during it's construction phase, lots of ups with a few downs along the way to keep you honest. Our trajectory would be similar is my guess. After that we are basically an infrastructure play with some added upside growth for other potential facilities and the sale of our tech (if it's worth anything)

Once we get a BTA or two signed, we'll fire Travis up and get some reality behind my rubbery numbers. Suffice to say, the upside is massive.

And the current SP hype appears to be (a) a response to the improving energy macro picture, (b) a P&D (c) or signs that some news is close. I have no idea which.

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Fantastic essay，now I have a clear view. The new holder should read this.

LNG Price at posting: 70.0¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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Fantastic essay，now I have a clear view. The new holder should...

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