The big take down in EWC's stock price yesterday would, I guess, be linked to overall malaise about energy companies the world over following the collapse in the oil price. EWC had held up pretty well in the current lousy climate. It's very frustrating that no one covers this stock and therefore has a direct line to management who could communicate on these kinds of things.
Questions:
1/ There is an LNG glut in Asia which has seen prices crashing. Demand has fallen off a cliff and there is too much supply espec with new Aussie projects coming on line.
Although much of the power feedstock is internally sourced, the net effect should prob be beneficial right? I suppose Indo and Aussie oil & gas will take a knock (they were only 29% of revenues in 2014), but that proportion that is set to fall dramatically as the new projects come on stream. Nevertheless, there could be some kind of write down on those assets as their economic value declines...any estimates on how much this could be?
I'd have thought for Phil, throughput would increase which would be good for the business - can anyone shed light on the pricing dynamics here? Therefore I guess the main impact would be on the value ascribed to EWC's reserves, which is not the main part of the story as they weren't going to generate cash anytime soon whereas the other assets truly are through 2015.
2/ As noted in the Reuters piece below the Phil president has received emergency powers to deal with the escalating energy crisis, which means, as far as I can make out that the govt will be able to make more use of the Interruptible Load Program whereby it will be able to enter short-term power supply deals with the private sector which has its own capacity based on diesel using this instead of drawing off the grid. This would seem to reinforce the really compelling story EWC represents as the Philippines is in serious trouble as far as energy consumption goes. Unless the market is assuming that there will be LNG substitution by oil as Brent crashes. What do people think?
In sum, any weakness should be seen as a buying opportunity as momentum builds for the new projects in early 2015, management hopefully talking to investors, and the ridiculous valuation compared to its peers.
MANILA, Dec 11 (Reuters) - The Philippines' House of Representatives approved late on Wednesday a resolution granting President Benigno Aquino emergency powers to avert a possible electricity shortage starting March next year.
But Aquino will still have to wait for a similar move by the Senate before he can use the extra powers to address the projected power deficiency that could result in rolling brownouts on the main Luzon island, home to more than half of the country's 100 million people and big businesses.
Aquino had sought a joint resolution from Congress as early as September to allow the government to enter into short-term power supply deals with the private sector. (Full Story)
"We are playing safe," House Speaker Feliciano Belmonte, an Aquino ally, told reporters after the lower chamber's move.
Some lawmakers and advocacy and business groups are worried that government involvement in power generation will push power prices higher.
Belmonte said the House wanted to ensure that the Aquino administration would not be blamed if the country plunges into a power crisis next year.
The government is also counting on businesses with diesel-fed power generators to avert brownouts. As of Dec. 5, a total of 141 companies have committed to take part in the government's Interruptible Load Program (ILP).
Under the ILP, participants with loads of at least 1 megawatt each agree to run their own generator sets, if needed, instead of drawing power from the Luzon grid.
Those who have already signed up have a combined capacity of 593 MW, according to the Department of Energy (DOE).
In October, Energy Secretary Carlos Jericho Petilla said Luzon needed as much as 600 MW of additional supply before March, and warned that the rolling outages could last until July. (Full Story)
The DOE has extended by one month the deadline to sign up for the ILP to Dec. 31.
Some 16,400 MW of new supply is planned in the country over the next five years to meet growing demand, but some projects have been held up by environmental opposition to coal-fired stations, while others are waiting for customers to commit to long-term supply deals. (Full Story)
Energy World Corp Ltd EWC.AX said in October the DOE had asked it to speed up the commissioning of its 650 MW LNG-fired power plant in Pagbilao province in Luzon. The Australia-listed company told Reuters it was looking to start generating 400 MW from the plant early next year. (Full Story)
(20min delay)
