milestones - part 2, page-2

Great post.
I have some reasons for thinking the $8Gj cost in the CB is too high.
The report is based on peak flows of 8.5MMscfd and a well cost of $10.5m, so obviously horizontal wells, of which there have been precisely zero reporting in the Cooper.
They also assumed a 50% decline, which again we have no yardstick.
And they also include processing costs and a 10% return to get to $8.
So if we work out profitability without understanding those assumptions we risk double counting costs.
Their reference model cost of production at 0% return is $3.05Gj.
The $8Gj specifically includes new processing facilities and pipeline compression, and these are massive costs, $13m/Pj p.a.
I don't dispute that Moomba will need massive expansion to capitalise on unconventional volumes, but it looks like a huge flaw in their valuation to attribute all those costs to support an IRR of 10%.
I'm much more comfortable with using their costs of $3Gj for production and keeping the downstream costs separate.
Do that and you can see the awesome potential here.
Full report at: http://www.aemo.com.au/Gas/Planning/Gas-Statement-of-Opportunities/Production-Costs