LOL ....... " GLNG project risks • The GLNG project produced its...

LOL .......

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GLNG project risks
• The GLNG project produced its first LNG from Train 1 on 24 September 2015, with the first LNG cargo loaded on 16 October 2015. However,
Santos will invest a significant amount of capital in the GLNG project in relation to completion of Train 2 and associated facilities, the development
of the upstream gas supply over the life of the project and associated infrastructure. GLNG will also be seeking to acquire significant volumes of
gas supply from third party sources over the life of the project to supplement long term gas supplies from the GLNG joint venture gas fields.
• To find, appraise and develop further gas supplies from its gas fields, a significant number of new gas wells are required to be commissioned and,
along with newly constructed gas and water processing facilities, will be required to be connected to the gas transmission pipeline. There is a risk
that new gas supplies will not be able to be developed or new assets will not perform as expected or that defects in the construction or the quality
of materials used may be uncovered in the commissioning and/or operational phase. This may result in material liabilities due to a failure to meet
long term contractual LNG supply obligations and/or loss of sales and/or increased costs which may have a detrimental effect on Santos’ financial
position and performance.
• A failure to secure further gas supplies either from its own gas fields or third party supplies may have a detrimental impact on the GLNG project
and consequently Santos’ financial position and performance.
• GLNG has existing approvals for 2,650 exploration wells and production wells and supporting infrastructure. GLNG has submitted further EIS
approvals for 6,100 wells and supporting infrastructure, and for which approvals are pending. If GLNG experiences problems or delays in obtaining
relevant approvals or the conditions of these approvals are not met, or if additional conditions or regulatory requirements are imposed, or if
legislation changes (for example, in relation to land access), GLNG may incur higher than expected costs, be required to postpone or significantly​

change the scope of the project or, in extreme circumstances, terminate certain project development plans.
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discount rate versus mismatch in supply contracts .........just a "smidge different"...

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Australia Pacific LNG (APLNG) has recognised an impairment charge on its assets of which Origin expects to reflect its 37.5 per cent share ($1,031 million post tax) in the financial statements. In addition, Origin expects to impair its investments in the Browse Basin $578 million, NewCo conventional exploration assets $170 million and Energía Austral SpA $114 million.
In determining the carrying value of its assets, APLNG considers a range of project and macro assumptions – including oil price, AUD/USD exchange rates, discount rates and costs. The cumulative net effect of these has reduced the valuation over time but had not warranted a revision by APLNG of the carrying value of its assets until now. Since the last assessment at 30 June 2016, there has been a change in a number of relevant assumptions but principally an increase in US dollar interest rates which caused an increase in the discount rate from 9.0 per cent to 10.2 per cent (pre-tax)<sup>1. As a result, APLNG is now recognising an impairment.


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