I think it fair to say that shareholders wereprepared to be...

I think it fair to say that shareholders wereprepared to be highly critical of EWC management as a lack of achievements rerogress on EWC’s major projects (Philippines and Indonesia) warranted a solidexplanation. The ASX announcement re: EPCNS being posted some 90 minutes priorto the AGM acted as a major relief to those shareholders attending this year’sAGM. Furthermore, Graham Elliott’s announcement, during Stewart Wilson’s AGMpresentation re: 20 year extension of PSC having been granted, was greeted withspontaneous applause.  The major reasons underlying this u-turn of shareholder sentiment was, in my opinion, based on an understanding of the implications these significant milestones being achieved have in respect of achieving commercial operations of EWC’s major projects as well as relief that Stewart Elliott’s unwavering business approach, being based on the highest ethical standards as well as wanting EWC control over these new assets, has paid off.

 

The 20 years PSC extension was granted withoutEWC having to accept a partner prior to the extension being awarded. Now, EWChas 6 months time to find a partner, being free to select who will become apartner. This 20 year PSC extension has positive implications for the PPA extensionas well as funding concerning the completion of the lng plan: Bank Mandiri cannow consider this project on a 44 year basis rather than just a 4 year basis. Afundamentally different proposition.

 

The EPCNS certification does not only mean, forexample that the simplified approval process must be finalized within 30days(and that, if this is not happening within 30 days of a decision have beenmade, the approval process is deemed to have been finalized in the positive), butalso that the 600MW power plant is the anchor off-taker for the lng hub (ie.without the lng hub, no power generation and given that the 600MW power plantis an EPCNS there must be the EWC lng hub). Hence, EWC’s LNG hub will becomethe first operational lng hub in the Philippines). The 12km transmission line,being already being constructed is another indication of EWC’s confidence that200MW can be dispatched within the next 9 months, with a further 200MW comingonline a 6 months thereafter. By March 2020, the expected date of completion ofthe Pagbilao substation, a total of 600MW will be able to be dispatched. As faras funding is concerned, the DBP was on site last week and Landbank was on siteearlier this week.  Funding, sufficient for completion of 400MW power plant, 12km transmission line and LNG hub, is expected to be finalized within the next 3 months. This EPCNS is also assisting the NGCP to push forward with the construction of the Pagbilao substation and to meet its completion deadline of March 2020.

 

As far as EWC’s Australian assets are concernedit is worth while noting that combined revenue for Eromanga and Gilmore (oncerunning each at 4BCF) is estimated at between $60m to $100m per year, withminimal expenditure required. In addition PEL 96 (66% STX, 33% EWC), if gasreserves are being able to be booked (estimated at this time at around 2TCF forEWC), will provide a further massive increase to EWC’s revenue base.

Looking at all of this, it may come as nosurprise that SCBPE sees upside on its option to convert its 101millionwarrants at 50cents each within the next 5 years.