Old Direction Fanciful Finance, page-26

Oldmarty


One year ago I asked RC “What is the takeover risk and mitigation”.

If the proposed 4 well drilling program is successful and CTP gets close to tripling its current reserves MAC would have a more attractive takeover target bearing in mind that our shareholder money and hard work has contributed to making their 50% of Mereenie more valuable.

I am concerned that additional shareholder capital may be required for the surface facilities needed to process the GAP gas for sale and I would like to see this identified at an early stage to ensure that shareholders have a clear understanding of the GAP implementation cost.

Presently the NGP has 60 TJ/d of capacity available (Until compression is installed) and if a profit margin of say $3.00/GJ is applied to the present remaining NGP capacity then this is approximately $65 Million profit per year for CTP, Macquarie and anyone else who takes up space on the pipe to share.

Even if additional NGP capacity was achieved through compression, the NGP feeds into the Carpentaria pipeline (CGP) with nameplate capacity of 119 TJ/d. and 30 TJ/day of this will be taken up with Phosphate Hill gas using the first say 300K of the CGP.

So, for CGP/MAC/??? to sell more than 60TY/d of gas to Southern markets the CGP would need to be upgraded in tandem with the NGP.

At first Glance this looks like CTP “NGP profit”, would be constrained to a bell curve in the $30M-$80M range by the path to the East Coast Market as long as the NGP is not filled up by Blacktip gas.

If the NT gas sales on their own “Pay the rent Etc.”, to avoid further share dilution, the “NGP profit” would need to fuel the growth of the business and shareholder value.

The combination of subsurface (Rate of gas production rather than total reserves) risk, pipeline capacity risk (If we are beaten to it by others), capital raising risk and selling price risk prevents a formidable combination on a bad day.

My guess is that given the combination of debt and share dilution it will be a long time before CTP sees “Boring annuities” and that a takeover is both our best hope and worst enemy.

At this point having put things to a proper vote I believe that we all need to get firmly behind the current BOD and business plan.

They have enough on their plate at the moment without having to deal with distractions.

I have picked up vibes that the CTP team are only human and are genuinely disappointed that they have not been given fair recognition for the work they have put into running the business over the last few months.

I would like to thank them for their efforts and resultant achievements.

The webinar is a good start at better shareholder communication and I urge the BOD to consider using say the consultant/s that prepared the Scheme Booklet to do a similar exercise on a suitable Shareholder Friendly booklet that clearly and transparently explains our current starting position and the way forward under the GAP strategy.

Ideally, shareholders would already be well oriented ahead of a capital raising.


The takeover risk has not gone away and strong shareholder support may once again be our final line of defence.

Best Regards

OGP