Ann: Central Awarded Preferred Tenderer for Queensland Permit, page-26

Far from being a new initiative this appears to be the Third time CTP has undertaken an initiative with IPL starting way back to QGC days, (See below).


We must however remember that the 2014 deal fell through when PWC did a deal with IPL.

IPL Deal…

https://www.asx.com.au/asxpdf/20151117/pdf/4331qrwkm0n05v.pdf




PLR201718-1-1 Pros…

• There may be some justification in the (PLR201718-1-1) initiative if it is helps facilitate CTP signing a Mereenie GSA with IPL, at the right price, and I am pretty sure CTP shareholders would welcome a GSA-MOU hard on the heels of the ACCC Joint Marketing Approval announced today.
  
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• CTP are now on well and truly on record as stating that the Mereenie facilities can process enough gas to take up the remaining capacity of NGP1 (Round number 60TJ/day) so in simple terms shareholders can cross this one off the risk register.​

• We can also cross ACCC approval off the risk register.​

PLR201718-1-1 Cons…

• Involvement in a small satellite CSG operation in QLD that is restricted to selling gas to the local market with rising international gas prices should certainly be questioned by shareholders. ​

• I agree with psi81 that the operation is too small to stand alone and IMO will face an up-hill battle to cover overheads & generate significant profit.
  
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• I am concerned that it adds another layer of complexity to CTP’s operations and further complicates the exercise of valuing the business as a takeover target.
  
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• I have an overarching concern that the CTP is being overstretched by the capital requirements of existing CTP tenements without further share dilution.​

• My guess is that this initiative will inevitably require one or more capital raising exercises say (20M) to finance their 50% of the E&A (Exploration & appraisal).​

• I am uncomfortable that this deal may be a distraction and tie up an already stretched team at a time when profitable operations during the 2019 fiscal year are critical.​

Half yearly report… “Central’s ability to meet its debts as and when they are due for payment depends on future performance and cash flow from its operations. These cash flows may be affected by broader economic, financial, competitive, legislative and other factors, many of which are beyond the control of the Board of Directors.” ​

• This initiative, which appears to have had a long gestation period, was suddenly presented as a done deal without shareholders having any warning that CTP was heading in a strategic direction involving CSG.​

Notwithstanding the above I genuinely hope long suffering CTP shareholders see a better share price during the lead up to NGP1 first gas.


Best Regards


NGP



Reference Info….


Latest deal with IPL 01/03/18

https://hotcopper.com.au/threads/ann-central-awarded-preferred-tenderer-for-queensland-permit.4053088/?post_id=31438387

Today, The Honourable Dr Anthony Lynham MP announced that Central Petroleum
Limited (“Central” or “Company”) wholly owned subsidiary Central Petroleum Eastern
Pty Ltd was the preferred bidder for the Queensland Government’s tender for acreage
(PLR201718-1-1) dedicated to domestic market. Please see map at Attachment 1.
Central applied for the acreage by partnering with Incitec Pivot Limited (ASX:IPL) a
manufacturer of fertilisers and industrial chemicals, and significant consumer of natural
gas. It is contemplated that the acreage would be developed in support of the long
term viability of IPL’s Gibson Island fertiliser facility in Queensland. As part of the
arrangements being negotiated, Central and IPL are seeking to establish a 50:50 joint
venture for the acreage with IPL providing up to $20 million of funding for exploration
and appraisal of the acreage.

“This award of acreage is designed to provide a pathway to preserving the Queensland
manufacturing industry and to stimulate exploration in Queensland,” said Richard
Cottee, Managing Director of Central Petroleum Limited. “This year promises to be a
year of exponential growth for Central with its drilling program in the Amadeus, the
upgrade of the processing plant, and this exploration in Queensland.”


IPL announcement back in 11/11/2014

https://www.asx.com.au/asxpdf/20141111/pdf/42tmlfbwl49k7r.pdf

Central Petroleum Ltd (ASX:CTP) (“Central” or “Company”) announced today it has
entered into a non-binding heads of agreement (HOA) to supply up to 15PJ pa of gas (Around 40TJ/day) from its conventional reservoirs in the Northern Territory to Incitec Pivot Limited (IPL).

The announcement follows the Council of Australian Governments (COAG) communique which supported the concept of connecting the Northern Territory conventional gas reserves to the Eastern Australian market.

Central and IPL agreed a starting field price for gas which provides a commercial
underpinning for the development of the natural gas project, and which remains
confidential.

The HOA contemplates IPL providing assistance in sourcing capital for drilling
and reserve certification. The agreement sets out the key milestones that will need to be
met before a binding gas supply agreement (GSA) is executed.

“This agreement shows that it is economic to supply gas from the Northern Territory into
the domestic market in the Eastern states at a price capable of supporting industrial
customers”, said Richard Cottee, Managing Director of Central Petroleum.


“The agreement is akin to the first steps taken by QGC to contribute to the ongoing
operations of Gibson Island in 2004 - that agreement was also negotiated by IPL’s James Fazzino and I. The history of the development of the domestic gas market in Queensland always has seen IPL taking a lead role in shaping its future.

“The most difficult part of any negotiations is price and that is the importance of this HOA.
The precise form of financial support and the pipeline tariffs are still to be determined”, Mr
Cottee said.

Both Central and IPL support the development of an open and transparent domestic gas
market which will create opportunities for smaller scale and lower capital expenditure
projects while placing downward pressure on domestic gas prices. Both parties believe that
any interconnection will be part of a market based solution for industry. Natural Gas is an
important part of the Australian economy and cannot be totally substituted by electricity
(renewable or otherwise), and the gas is intended primarily to be used as feedstock in
manufacturing by IPL.

Central also welcomes the announcement on Friday of a MOU between NSW and the
Northern Territory governments signaling cooperation on both the development of the
pipeline and a national and competitive domestic market. Central wishes to play its role in
helping achieve those objectives.

This deal fell through and CTP shareholders were not informed but had to look at the PWC/IPL announcement to realise what had happened.