shareholders will be very happy

From Shaun Scotts presentation on Friday to the Sydney Miners conference, I have summised a few stand out points that I took from it. Good listen if you have the time:

-Shell already have supply agreements underpinned for their first train. 70% operator puts AOE in strong position. Arrow is looking to commit gas to the planned Shell 16mtpa facility. Shareholders will be very happy with this?

-Gas spec is good which lowers gas process cost. Lower heat value can be treated which inevitably adds cost to the product. I have only ever heard that the lower heat value specifically affects the Japanese market. Any others?

-Relative high cost of drilling (vertical wells in Surat - $200k or less - $500k with infrastructure). The thousands of wells will require significant capital, in addition to the capital required for the LNG facility.

-Drilling thousands of wells. A budding billion dollar drilling industry forming to support the LNG industry. Probably good opportunity for companys like Lucas-Mitchell?

-To drill the wells they are looking to maximize their process reliability and have hired Aera experience to help them achieve this. Aera have already been through this process having drilled thousands of wells in CA USA.

-Considerable planning needs to be undertaken to manage the production ramp up. He discussed gas fired plants as a ways to mitigate this. I can only assume that they drill the wells and restrict the flow to be burnt in gas turbines before opening them all up to the LNG facility???

-Managing water with an aim to have a modular reverse ozomosis pump to clean the water before it is considered safe for land usage. Modular unit is transportable and able to provide the necessary surge capacity that comes with the initial field development. High initial water production.

-International assets are not rated at present.



Personally, I think we are headed towards some good announcments between Shell/AOE on supply of gas to the LNG facility and also possible further farming in of Shell on the international assets portfolio.

Despite having $400m in the bank, imo Arrow will be hunting more cash to continue to develop their fields and possibly acquire reserves as a way of speeding reserve growth.

SF