psi,Respond as follows ( sorry can't highlight or italicise as...

psi,

Respond as follows ( sorry can't highlight or italicise as on iPad):

Pluto is barely a break even proposition as I understand it.

* When Pluto made FID, it barely made the hurdle rate. Don Voelte said so and emphasised more gas was necessary. So, yes, I have overstated to the extent my reference point was hurdle rate.

Since then the cost has blown out and Pluto Reserves are thought to be a lot smaller.

* I understand Pluto reserves are less than thougt at FID. And reserves additions have not been large - hence no second train. Exploration has not been good for WPL - hence no second train. Majority of unsubscribed third party gas is held by XOM and BHP. Doubt they will be price takers with options to go to NWS, Pluto, Wheatstone, Gorgon, Standalone new build, FLNG perhaps.

Note XOM is already in Gorgon and Macedon Domgas plant is slap bang up against Wheatstone. Best WPL can hope for out of third party gas is a fee for toll treating.

IMO WPL needs to make discoveries or otherwise get its hands on feedstock through acquisition - both are going to be difficult and expensive which, as you note, will impact ROI.



Pluto was largely funded out of borrowings, some at a reasonably hefty interest rate.

* I was not saying this wasn't factored in. My comment was in the context of comments there would be large free cash flow. My point was it may be that the terms of the bonds, project finance docs would require borrowings to be paid down as a priority. In any event, understand borrowings are $2.5Bn which is considerably less than I thought - although have not independently verified.

Note WPL is, again, rebuilding an overseas presence.

* Not a bad thing IMO. Just overseas presence has been built, dismantled (maybe twice?) and now being rebuilt with the same Board largely in place. Board should be setting strategy and ensuring a steady hand on the tiller. This does not seem to be the case. Some good acreage was sacrificed that WPL should have persisted with. Also have lost the expensively acquired expertise. For example, the guys who went to Ophir. There was some crap flicked too - Gulf of Mexico and Libya spring to mind. IMO WPL should have persisted and Coleman and Board would seem to have a similar mindset.

Also, WPL has missed the shale train right in its own backyard.

* Last I looked BRU had the Canning locked up and BPT, DLS, SXY have the Cooper Basin locked up. Perth Basin is largely taken.

COP, HESS, STATOIL, BG, Mitsubishi have all taken positions. WPL is not in the same league as these companies who are getting set and, in its own backyard, WPL needs to be a first mover or at least staying on the pace.

Shale exploration is not expensive compared to offshore and WPL needs to grow through the drill bit IMO. I reckon Cooper shale is, technically, looking like a goer and BRU seem to be going well. STO has tied in a shale producer, albeit that it is a bit of a stunt.

Point is WPL needs to take exploration risk and generally be a bit more adventurous. For example, WPL bailed out of Great Australian Bight, Kenya, Liberia as others were getting in. WPL needs to get back to the mindset that got it into those countries ahead of the game in the first place.

Agree CSG was a good dodge for WPL. CSG being such a dud is what makes dry shale gas in the Cooper Basin a likely goer.

The focus on LNG only has cost and the rebuilding is going to take some time.

* My point was putting all eggs in the LNG basket was risky and it hasn't paid off with Pluto, Browse or Sunrise. Diversification through rebuilding overseas portfolio or other will take time. And less of an engineering mindset will be required. Liquids is what makes money for oil and gas companies. Stybarrow and NWS condensate have contributed large amounts to the WPL bottom line as did Laminaria. Perhaps more than LNG. Engineers might like big shiny LNG plants but the CFO and the Board should like liquids - and not ones made with a big fridge. Surely a company the size of WPL can focus on more than one thing at a time?

Anyway, my view. Is on the right track but has to play the cards in its hand. Or throw a few out and draw some new ones.