Ann: Central signs 5.2 PJ pre-paid gas sale agreement-CTP.AX, page-24

This is a loan to CTP secured by gas in the ground, and throws a lifeline to complete Mereenie purchase to 50%. Good news to CTP, limited risk to MBL who hold security on anything of value.

Crafty manoeuvring, yes.
Crafty wording in this release, yes yes.

How much has been advanced? Not disclosing it is troubling. Lets guess -
$10 mil to pay Santos
$1.7 to buy 50% of Mereenie bonus?
$???? to "fund further field expansion". This implies additional funding requirements to the existing line of credit which can be drawn from $47 down to $90 mil? WOW.

Revised ACCC tariff to Ballera is not yet known, hence this deal structure. MBL has exit clause if tariffs snuff commerciality, can seek/demand financial settlement. If no cash, MBL hold title over the fields. Limited risk, have bought a cheap option on the upside. How cheap?

What is the implied gas price?
Assume $12 mil for 5,200,000 GJ ex-field, or $2.30 per GJ. That's a really crappy price even for an advance, but this small volume probably doesn't impact on OPEX so it's "free".
Implies east coast $6-7 minus $2.30 is a pragmatic view of total tariff around $4

How far does this defer increased revenue?
"When prices skyrocket", which is dependent on LNG markets from 2019, the first chunk of new gas sold will be MBL and Santos right to matching volume.
In 2019 assume 15 PJ production to satisfy existing contracts + MBL + Santos share. That is 41 TJ/d and the field capacity may be at limit. Central will be last in line to sell incremental gas, perhaps in 2020.

On the surface it seems CTP and MBL did well to keep the show alive. But why did they have to do this when supposedly they have enough cash to complete Mereenie, and revenue is increasing? This deal confirms that costs continue to outrun the piggybank.
Central continues to follow Bernanke theory, selling tomorrows revenue today, digging a deeper debt hole that will be difficult to escape.

Q. Bruham questioned why Central didnt man-up and sell gas themselves?
A. must be that there are no customers in NT now.
Q. What about IPL, why aren't they buying?
A. They are not under the pressure of MBL who have little choice but to back this horse or see it starve.

It's entertaining how different observers perceive this announcement.
More lipstick, more time to seek an exit.
Waiting until 2020 to increase sales and revenue isn't going to improve the share price now IMO.