Good sleuthing in the reports O&G. Stairway does appear to be a shining star for upside.
Presentations show the Stairway is the uppermost horizon, and P4 the deepest. I think they would go for the shallower 120 PJ and 50% to Central.
Announced test of West Mereenie 15 / Stairway last year at 1.5 million per day or 1.6 TJ/d, then decline.
Last quarterly mentioned "flowing" but no rate. Is this a new standard for "continuous disclosure"?
At 1.6 TJ/d, in first year that is 0.58 PJ sales gas. Explains why Santos never developed Stairway. 1.6 TJ/d is much less than better rates 6 or 9 TJ/d from P3 wells. Stairway 0.58/annum compared to 3.2/annum from P3. Oh oh.
New wells or technology (#$%^ "frac") might bring it to a "generous" 2 PJ/annum then decline.
If new wells could produce 2 PJ/annum for 10 years, declining to low rate, that is about 10 PJ per well. (not 2 x 10. It is 2 x 10 x 0.5 decline)
This generous assumption (rate 4 times recent test) implies 12 wells are required and 10 years production. Add failed wells according to mother nature. 15 wells.
What does it cost to drill and frac a well out there, maybe 8 million? Add project costs for pipes, compressors, whatever, 20 mil. That's 140 mil, and Mac's 50% gets carried for 32 (the buyers deal to Santos).
If Central pays 102 mil (70+32) and sells their 60 PJ for $2 ex-plant after opex and tolls, that does not look attractive.
Be noice, assume wells 4 times more productive than test of best well, and that gas prices improve. If $4 gas price ex-plant, then return of $240 on $102 mil invested over 10 years... is unattractive.
If $102 was invested at 12% which most businesses expect as a return, over 10 years, that asks for $317 mil. No to $240.
This is an optimistic assessment of the supposed BEST opportunity in the portfolio.
Would such a lousy return double the share price, for the long suffering?
The same long suffering who would be asked to contribute 140 mil or double the current market cap. Would Mac increase the loan from 95 mil to 235 mil for Central worth $65 mil? ROFL.
Central announced "Macquarie is now finalising its due diligence and discussions with Macquarie continue". Woohoo.
Too much talk. Too much time. Uncharacteristic of a bank, the lender, to be so slow.
Buyer to seller?
Creditor to debtor?
CTP Price at posting:
15.0¢ Sentiment: None Disclosure: Not Held
