Hi Oregyuy Thanks for your comments. There are two issues you...

Hi Oregyuy

Thanks for your comments.

There are two issues you raise which, given EWC’s official communications (such as eg. its Annual Reports) I do not understand. Firstly, you talk about a cost blowout at Sengkang lng. Given that EWC enterd a fixed, turn key price with Slipform in 2007 ($32million for engineering assistance, design servies, management etc p.119 AR) and 2009 ($352million for the engineering, procurement and construction of the Sengkang LNG project, p122 AR) I cannot see any cost blowout, as EWC does not have to pay Slipform any more than these 2007 and 2009 agreed costs. In fact, these fixed price agreements with Slipform have been extremely financially beneficial for EWC as these prices were negotiated some 7 and 5 years ago.

Secondly, the risk of a capital raising at the current share price (between 35 and 40 cents) is, in my opinion, non existent. According to its own 2014 AR, EWC has all the funds it needs for phase 1 (ie 0.5mtpa lng) of Sengkang lng and the revenue from its commercial operations will underpin further expansion. As the 2014 AR states: “Given the proven reserves in Wasambo, we do not depend on proving additional reserves or resources in order to have sufficient feed gas for the level of sales required to generate sufficient cashflows, based on our current LNG price estimations and assumptions on operating and financing costs, to fully recover our expected capital expenditure of US$352 million for the Sengkang LNG Project (excluding the investment for related gas supply infrastructure and financing costs and self costs)” (p. 32 AR). If further funds are needed to commercialise expanded lng production at a more rapid pace, it is envisaged to come from debt financing and not via a capital raising; see the following comments on p. 32 AR: “We have already invested a total of approximately US$292.7 million in the Sengkang LNG Project for major equipment purchases. We have received expressions of interest from a leading domestic bank in Indonesia to provide debt finance for the Sengkang LNG Project, but we have not yet entered into any binding commitments for finance”. I do not know the status of negotiations re: electricity supply to the lng plant, but I understand that lng deliveries may well commence in early 2015.