The share price is suffering in my opinionnot so much because of debt, as the level of debt is well known in the annualaccounts listed as A$78 million debt as at Sept 2018 with a plan is to reducethis by A$22 million from free cash flow this year 2019. So while debt ishigher than we would like it is now post NGP well supported by current post NGPcash-flow and not IMHO a major problem. Indeed one of the upsides listed by thecompany is to renegotiate the debt as the new post NGP connection cash-flow shouldlower risk and enable CTP to negotiate lower interest rates. Also note thatwhile debt was A$78 as of Sept 2017 cash on hand at the same date was A$27million, so “net” debt was circa A$51 million
I just bought in to CTP again recently –I had invested in CTP for many years ago having sold out about 3-4 years ago.To me the share price has not risen as hoped after the North Gas Pipeline NGPconnection as:-
- CTP hashistorically been seen as a “troubled” company – with good reason (sorry if Ioffend anyone) John Heugh was a good company founder and geologist that boughtgreat license areas but probably not a great CEO. Richard Cottee was a goodentrepreneurial CEO, who contributed much especially in getting access forCTP’s land locked gas and lowering tariffs etc however his and the BOD’sdecision to support the Macquarie bid was a mistake and we should thank theshareholders who fought this. R. Cottee and the Directors who supported this Macquarie bid are rightfully largely gone, however after this much turmoil the departure of Heugh, various litigations, numerous surprise equity raises Macquarie bid, shareholder revolt, board changes, it takes time to repair the tag of a non performing and troubled company. To achieve this transformation into a better investment requires that BOD /Management and Shareholders to now honestly engage and communicate well with each other.
Note: If the likes of Macquarie wanted to take over a company it is because they typically see a minimum 200-300% return with 3-4 years and more beyond. That’s why I bought back in I believe CTP with its new Chairman and experienced acting CEO plus finally higher reliable cash flow from NGP can now make this transformation.
- The CLAstory looking forward is now a very good story to tell however its not beingvery well told so far. IMHO Management should engage a professional Investor Relationsmanager. The recent ASX announcement confirming linkage to the NGP was to saythe least a very under whelming announcement for such a ‘transformational event’
A good story needs to be told loudly and often as possible especially as thereare so much noise out there competing for shareholder investment.
- BOD /Management needs to give a better forward guidance on what the NGP means from arevenue perspective and profitability perspective. While we have an idea of thesignificant impact of the NGP in tripling gas sales enabling pay back of A$20million of debt from free cash flow in 2019, we do not know what the roughprofitability of gas sold in the North Territories is versus in Queensland (i.eNGP tariff costs)
- CLA needs toactively work with share analysts to get better coverage. CLA is finally shapingup to be a good story, it’s significantly under reported. To be fair Managementin the Nov 2019 AGM presentation state that they will aim to improve analystcoverage.
After many years of changes I think CTP isfinally in a position to start delivering and be the company that I think manylong suffering shareholders hoped and still hope it will be and hopefully inthe not too distant future finally pay a dividend. The linkage to the North GasPipeline NGP is indeed transformational the market IMHO is simply not appreciating this at the moment.
The AGM presentation of Nov 2018 shows the projected CTP upsides well we have much to look forward to if Management can deliver. The helium opportunity at 8 times LNG gas prices could be significant, remember helium was previously found at Mt Kitty well by CTP circa 2011 but was not properly logged due to high pressure. So the helium should still be there.
So keep the faith and engage with the BOD and Management if you have questions, hopefully we will get answers from them and the future will be better than the past – I believe it will be, that’s why I bought in.
