The first point to make with a Qld Govt approval for UCG/GTL at Chinchilla is that it is a Company maker, ie they have plenty of coal, have the UCG in place, and some GTL.
I couldn't see PB doing a CR for anything less than $5.00 per share (he doesn't give anything away). And I think he would get plenty of takers (BP, who have an offtake agreement, for one).
I agree with the time frames given by Mr Mac, who also pointed out that OCG don't want any debt in a company using their technology. So a CR is a distinct possibility.
However, LNC could crank up their current setup. Because of the secrecy regarding the OCG FT reactor we don't know exactly what capacity it can produce. Is it 25, 30 or 35 BOPD ? This will give some immediate cashflow and prove we are on the right track and make it easier for a CR.
We know from OCG that the Capex is approx $100,000 per bopd, ie $500M for 5,000 bopd. Depending on the timing of these progressive payments, and how Umiat looks after this first winter drilling season, we may be able to borrow more on the US assets and remit some back to the parent company.
Alternatively, we may sell Teresa for $400- 500 M.
Finally, a note of caution. It is no certainty that the Qld Govt will give an early approval for UCG/GTL.
LNC Price at posting:
$2.31 Sentiment: LT Buy Disclosure: Held
