The first of the key meetings will be held this week, the TMK distribution in specie.
Whilst the overall deal is poor value for TPD SH, the alternative of losing the asset for nothing is worse so this meeting will get my YES vote.
The following week, the SOA meeting will be held. The TPD register has undergone significant change since the SOA was announced. It isn't completely clear what the new insto presence on the register have planned so some doubt remains as to whether STX can pull off the 75% of the SOI and 50.01% of the SH base to complete the deal.
I hated the deal from day one, the ratio undervalued TPD. Since then the implied value has fallen due to the falling STX SP, it is currently below the 44c it was when the SOA was announced. Shorters are playing a role but that started well before the SOA announcement and I see no reason why they would stop after this transaction, time will tell.
I hoped that we would gain some insight into the South Erregulla appraisal wells before we vote. We know that STX hope to convert the 2C to 2P, but no shows in the Wagina will limit that, and flow testing of SE2 & SE3 apparently won't occur until 2024. So we are not much wiser today compared to when the SOA was announced.
I also hoped that TPD would provide some disclosure on first revenue from Walyering which will have now been received. I contacted the company to see if there if they intend to make an announcement, the answer was no, they don't consider it material. If the SOA wasn't in play, I am pretty confident it would have been announced.
To me, the only material change has been the announcement of the Walyering-7 well. I prefer to call it Macquarie -7 well because that is who is driving it. This well, the first STX drill in 2024 is to convert Walyering 2C to 2P, TPD would be entitled to 45% of this likely new 2P. It is important as it would push the Walyering project life out from 5 years to 8 years at full production. Crucially, Years 6-8 are completely uncontracted after the expiry of the STO GSA and the forecast gas shortfall in 2030 infers further rises in the WA gas price. By my calcs, the NPV for Walyering alone rises from $190M to $285M, both well short of the implied $130M under the SOA today. This also means STX get Condor, the TEG JV, and EP447 for free, rediculous IMO.
So, at the SOA meeting my vote will be NO, I prefer TPD to stand alone and use it's revenue from Walyering to fund it's own existing pipeline of projects.
JMO. GLTAH
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