Viney402
Did you ever work out how much Tranche 11 gas price was? I normally don't post anything but just watch from the sidelines as to be truthful its easier and I don' want to get in any arguments with anyone, but I have tried to grapple with this issue and given Empire hasn't told us anything I thought I would try to work it out myself but didn't expect to get even more confused hence why I am writing this post and hoping someone can put me out of misery with where I am wrong.
I have just done some calculations, and maybe I have got it wrong, but it shows Empires average gas price per GJ decreased by more than 10% in the December quarter - how can that be if as they have told us that the gas price is not affected by the drop in the POO. I thought it was supposed to be fixed and increasing with CPI. Isn't that what they said?
Here are my calculations and please anybody if I have done it wrong, please let me know where as I just don't get it and it is driving me crazy.
Here is what I did, taking numbers from the Sept (Q1) and Dec 15 (Q2) quarterlies and the Half Year accounts of last week (and this is only for gas revenue, none of these numbers have any condensate revenue in them:
Q1 gas sold - 697,600 GJ (697.6 TJ) - of which 219,942 GJ was Tranche 1 and therefore T11 is approx. 477,658 GJ. Arrived at this as we know that Tranche 1 was for 5PJ of gas and Alcoa prepaid $25m so $5 per GJ. Empires accounts show that that the amount of the prepayment for T1 left in this financial year was $1,099,710, hence if you divide by $5 you get 219,942 GJ (secondly the Q1 said total gas sales to date was 5,478 TJ so less 5,000 TJ for T1 - you get T11 of 478 TJ (or 478,000 GJ) in that quarter.
Q1 gas revenue (per Empires Sept quarterly) was $4m, therefore if we deduct off the $1,099,710 from above we get $2,900,290 for gas revenue for T11 for the Sept quarter, which leads to approx $6.07 per GJ for Tranche 11 gas sales to Alcoa. So $1 more than T1 which sounds fair given T1 was a prepayment.
Now for the tricky part.
Q2 gas revenue (per Empires Dec quarterly) was $4.2m (which when added to Q1 = $8.2m which is what is in the half yearly commentary for revenue to date)
Q2 gas sales was 788.8 TJ or 788,800 GJ (Dec quarterly) - so therefore average gas sales price for December quarterly is $5.32!!!!! a decrease of 12.5% from the T11 sales average in the September quarter of $6.07..... HOW IS THAT?? They said that the price was fixed for sales to Alcoa so how come the average price dropped - shouldn't it be the same?.
If my calculations are correct, then shouldn't we be getting $6.07 per GJ for the December quarter and therefore we should have got $4.79m, or nearly $600,000 more in revenue and cashflow just for this quarter.
I noticed this because when I looked at that Argonaut research posted the other week that they had decreased the Empire target price because they had decreased the assumed gas price to less than $6. I couldn't work out why given I thought and Empire has told us it is fixed and not linked to the oil price.
Anyway I hope that I have somehow got the above calculations wrong, because if they are right, then how does that make sense given we keep getting told that our gas price to Alcoa is not affected by the oil price.
Are they giving away gas for nothing, or have they dropped the price to Alcoa - it just doesn't make sense to me.
Appreciate anybody's help to stop my brain from getting tied in knots with this one. Thanks
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