'Petro2458' pid='23619' datel Wrote:If the government takes 22.5% gas in-kind then it will take ~7 TCF for 1 train. 600 mmcfd for 25 years..5.5 TCF for LNG the other 1.5 TCF to govt't. This is why only 1 train is being discussed....Remeber that the best case estimate of resource is a 50% likelihood estimate..50% chance it's not as big. The good news is the after tax net present value of the 5.5 TCF at a higher equity is double current market cap...and is robust under the low case or p90 estimate.
Another point is that it will take a few years of production to understand if more that 7 TCF can be recognized (more wells may help...may not)..production is King when it comes to reserves estimation and narrowing uncertainty.
I believe we get the 1 train deal... Then we drill other prospects... Because we need them to underpin more LNG trains.
Worth noting that the volume need for 1 train is dependent on the decline after plateau ends...
petro, two things about the government's 22.5% that could change your analysis and calculations significantly:
First, I think it is highly likely that the government will sell part of the 22.5% to XOM, leaving more gas for an IOC LNG plant and subsequent sales to XOM. Also, there is the issue of how long before they will need any of the "in-kind" gas, and I think there was some indication last year that it might not be until after the first train's worth. On the other hand, maybe the EWC relationship will speed that up.