Share
79 Posts.
lightbulb Created with Sketch. 1
clock Created with Sketch.
23/08/14
23:54
Share
Originally posted by Bortgm
↑
It's Saturday again. Time for some reflection. And waffle. If you don't like a bit of detail best you grab the Saturday morning newspaper.
interestingly the US markets closed with both LNGLY and LNGLF at around $3.74. They clearly see this as a minor pullback.
The sizeable drop towards the end of the week was interesting. Seems some peeps jumped ship but the driver behind it may be a little more obvious than any of the excuses that I've read to date. I'm no technical dude as I've said before, but talk of the RSI (relative strength index) being at an over-bought level I found amusing. When a share price runs from 30 cents to $4 over a six month period I can guarantee it running an over-sold RSI most of.the way. A cursory glance at the Commsec chart confirmed that.
On the 20th our English friends Edison, published an LNG update report. They valued LNG at a current level of $1.90. It's fair to suggest that our Thursday/Friday action was influenced by this number. People that are sitting on good profits are suddenly being told that value is unjustified. A read through the report reveals that they may need to look at their research team a little closer. Whilst the report does say it is being over conservative and that the 2019 price target is still north of $13 it suggests that BH is only worth 10 cents to us with a chance of actually being built of 5%. 5%??!!! Really. The people of Richmond county and the Canadian government don't think so. They are falling over themselves to promote the project. Also these projects typically fall over, or are at least delayed on environmental grounds. Hard to see that being an issue when work has already started, the site has been cleared, all freckled frogs and marsh monkeys tagged and relocated, "tree huggers" running around looking for a tree. Expect an accelerated approval process here folks.
They also maintain that development cost for our Maggy are assumed at over $2billion. They say that Aussie LNG projects always go over budget. It is true that the likes of Pluto and Browse went way over budget. Will we be different? Absolutely. I have said previously that I am in the LNG space now. I have talked directly to the main players at most LNG projects. Pluto and Browse were started without detailed drawings. There was a concept and some conceptual plans. Contractors were told that they were to supply unit rates for each item such as concrete, piping, structural steel etc. a pricing schedule for such works would be hundreds of pages long. Ok so they started work. Design drawings from the owners team take forever to materialise and the contractor starts submitting claims saying that the prices provided don't cover all the delays being experienced. Lawyers get involved and an agreement is made that the job will now be remunerated on a time and materials basis. The contractor is now laughing. He can't lose. And productivity is now longer a driver. This is exactly what happened with the Woodside project. Were they stupid in doing that? No. time is critical to these projects, they are cash cows. They did what they did to expedite the project being completed as quickly as possible. Santos for one has just increased their dividend by 50%on the back of an LNG project coming on line.
LNG are different because ours is a Design and Construct contract. The contractor, SKEC, is responsible for their own design and they provide a fixed price and time in which to hand the plant over. If they screw the design or it's late, they write letters to themselves because we don't care. And we charge them liquidated damages if they are late with the delivery of the project.
I am currently working on an LNG, project in Oz. It's a Design and Construct format. We are rapidly approaching the commissioning phase and we are well within budget. There simply is no basis to Edisons assumptions.
there are other issues with the report that are very easy to question. But the bottom line is, this coming week we lock in Bear Head. We soon list on the ASX 200, FERC have commenced the review process for Maggy and BTAs are close, as is FID and the final locked in contract with SKEC for Maggy. If the price gets any lower, fill your boots.
i expect our management team will be proudly taking the stage in November at the AGM. I would be. They may also be expecting a bit of reward for their efforts. They deserve that too. I expect there will be extra focused between now and then to make sure each target is hit and no bad news escapes.
Bacon and eggs time. No waffles......there's enough of that here.
enjoy your weekend. We should be up and running again next week.
Expand
Brecknock,Calliance and Torsa fields known as the Browse Basin will be processed via FLNG plant. F meaning floating.
Super post but I think you meant Pluto and Barow.