Fresh From The Cupboard, page-9

Well I guess its time for my first observation to come out of the cupboard. The truth is I’ve been trying to goad the company through the share holders on this site for quite a while now into either delivering on their promises or coming clean on why they haven’t delivered on them, particularly in regards to the BTA’s. To their credit, and to the credit of Timbo and co. they have held firm and not been bothered by my feeble attempts, which encourages me and makes me wonder if they really are that confident in our position regarding our three projects, the BTA’s, reaching FID and beginning construction so that we are at the forefront of the next wave of US and Australian supplied LNG and we will in fact all be rich. So here is the first of my observations from the cupboard regarding the Fisherman’s Landing project in Gladstone Queensland.

Lets start by acknowledging that the site agreement for lease at Gladstone expires in two weeks on 31 March 2017 and the extension of this site agreement for lease being subject to the provision of appropriate evidence demonstrating that the project remains a positive investment decision, which includes management’s assessment of the likelihood of a gas supply contract for the project (It seems to me that here, management should also be assessing the likelihood of off-take contracts). LNG has a non binding memorandum of intent (MOI) for a gas sales agreement (GSA) with Tri Star Petroleum. Tri Star is a coal seam gas company that supplies and has been in dispute with APLNG. LNG and Tri Star have said they will work together to find a buyer for up to 1.5mtpa of LNG and with two weeks until the lease expires there is no news of any buyers for this LNG. At the 30 June 2016 management said they were continuing to evaluate other gas supply opportunities but since that time there has been no news of any other supply.

With Queensland and other states being starved of gas supply the Federal Government is looking to introduce legislation that ensures that any new supply coming on line is reserved for domestic use, and not for sale overseas, so at this stage it looks like the Fisherman’s Landing project has no off-takers, no guarantee of supply and an impending lease to renew. If LNG’s total production was supposed to be 19.5mtpa to 23.5mtpa and Fisherman’s Landing was supposed to produce 3.5mtpa (or 1/6 of total production), then you could assume that without supply, off-takers and the lease being renewed, the company would lose at least 1/6^th of its value.