something is leaking nice 2c move, page-22

Tigmaster,

There are two parts tp your question:

Firstly:
"if i had half a billion why would i put into crux when i lose control of most of it in 9 years"

If you look at Slide 10 of NXS's 29/10/09 Presentation the economics of the Crux project is presentated as follows:
"Upstream capex: US$650 million
Average pre tax cash flow pa**assumes US$65/bbl& AUD 0.65
~US$460 million ~A$710 million"

From Slide 11 it looks like average production will be about 28,000 bbls per day or 10M bbls per year.

It is my understanding that liquids sell for approx the same price as oil. Oil is currently selling on the futures market for July 2012 for US$91.39 per barrell with price past that date at even higher prices:

http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

If you add an extra US$26.39 (US$91.39 - US$65.00) profit to the estimate annual production of 10M bbls you get a projected pre tax cash flow of US$724M ( i.e. US$460M + US$263.9M). This means that the project could approx repay its capital expenditure back in approx one year. After that date, I expect company tax and Resource Rent Tax will kick in reducing the annual return from the project. But hey, given that you have got your initial capital back in the first year, getting a share of the after tax profits after that until Dec 2020 is then "money for jam". Could be particular lucrative for a company that could finance its particpation in the project by just going guarantor for a bank financed project loan used to develope the project.


Secondly:
"i think echuca shoals is better and where management should be focusing more attention"

Yes I agree, I also would rather see a liquids project proposed for the ES which at present doesn't have a handover cutoff date. However, I don't know how much more work and time would be involved to achieve this. There is potentially much more liquids in the ES (258 MMbbl) than in the combined Crux/Auriga/Caelum (150 MMbbl) fields. In an ideal situation we will have both.

A lot of this has been said many times before. But hey, I have typed it so I might as well press the post button!

Regards

SP