now the answers are coming

I Refer to my post in late Jan as follows:

"Brief as it may be, the qrtly report format provides us with good info to make a 2005 forecast of EBITDAX.

In the December qtr they made EBITDAX of US$10.6M. The production for that qtr was 1972 MMCF, which is 22mmcf a day. We now know that they are producing at 27mmcf a day. Using similar ratios and assuming similar gas prices in the current qtr, well the EBITDAX for Q1 could be estimated around US$13M or so.

For quarters 2,3 & 4, the logic is similar, except the two main variables are the gas prices and the decline possibilities of current production, esp the 4.4mmcf a day from West Cameron. Assuming gas prices are lower in Q2 and Q3 (and also taking into account some favourable hedging they now have in place) but WC continues on, I think a minimum of US$10M is achievable for those quarters.

For Q4, things are getting a little further away. Let's just say WC runs out at that point, but gas prices firm, well US$10M is probably achievable again.

Some things I have not factored in and remain wildcards are:

- extra production from onshore wells x 3. Pure guesswork, but I reckon if they were all successful it would increase production by 4-5 mmcf a day.
- Main Pass results, which for now remain a question mark as it is new drilling and flow rates, well who knows. But I would expect success to be 3-4 mmcf per well etc. I have not factored this in at all.
- the other onshore stuff they are farming into, but reading what they said I would think significant production in 2005 looks unlikely.

So EBITDAX for 2005 could be 13+10+10+10 = US$43M, compared to the current year figure of US$25.7M.

Finally, the whole crux of the matter is what do they propose to spend on searching for the stuff this year. Last year they physically spent US$32M which is a stack of dosh. One hopes spending will be less than that this year.

One way to look at it is that US$43M is cash in, but what will cash out be? I suspect we will find out in the annual report at the end of Feb etc.

Also, if Main Pass proved successful, I think PSA could move on to the next level. And A$10M for a 10cps dividend would be a nice treat. We have been patient and we certainly deserve it.

Happy to kick this about with everyone."


Sorry to reproduce that, but the question of 'what will cash out be' has been answered.

The report tells us that capex will be US$25M. If they earn from the estimate above a Net Profit of US$43M and are planning capex of US$25M, well the cash difference is US$18M = A$22.5M = cash added to the coffers of 19cps. Furthermore, bear in mind that i reckon that the US$25M could be the high tide in terms of capex spending and that if it was lower in 2006 well then the cash generated would get even bigger.

Al last I am starting to see some meaningful shareholder wealth being created.