fracturing, page-77

Hi Joel,

Great post!

Sorry to the long termers for reposting this info:

The recent article published in The Australian significantly impacts on the NPV of the Warro Gas Field to TSV. The article confirms that the recent contract gas price was negotiated in $US (opposed to $AU) and could increase to $US14/GJ in three years time!!!

The below (dated Nov 08) valuation of the Warro Gas project is based on conservative gas prices at $AU6.82/GJ

* The Project’s NPV on reasonable case assumptions of
$2 billion ($200 million TSV’s share ~ 20c per share)

http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00907428

"In only the second Australian contract linking domestic gas to international oil prices, Citic's $US4.2 billion ($5.8 billion) Sino Iron ore project in the Pilbara will pay about $US7.80 a gigajoule (GJ) for its gas when oil prices are at $US50 a barrel, according to Santos yesterday".

"The Citic contract is fixed for three years, but after that is understood to be directly linked to oil prices, and at $US90 a barrel would deliver prices of around $US14/GJ to Santos".

http://www.theaustralian.news.com.au/business/story/0,28124,24885298-12829,00.html

Recent contract price- $US7.80 a gigajoule (GJ)

conservative $AU exchange rate buys $US 0.7

$US7.80 / 0.7 = $AU11.14 a gigajoule (GJ)

which equals a 61% increase from $AU6.82/GJ

therefore the Project's NPV on reasonable case assumptions is now $3.22 billion ($322 million TSV's share ~ 32c per share)

DYOR!
JB