company valuation, page-7

Y'r point is valid Blackhat. I've just looked at their 2013AR & done the crunch.

June 2013 end: LT had 2P-121 PJ, 2C-102 PJ

New STO GSA rates kicked in frm 1st July'13.

- Gas 2b sold till 31/12/18: 83 PJ
- HY Dec'13 production: 6.1 PJ
- LT 2P balance: 121-6.1 : 114.9 PJ (this answers yr doubts)

- Contract gas remaining: 83 - 6.1 : 76.9 PJ

- Contract years left frm 1/1/14: 5 yrs or 1826 days

- Flowrate reqd: 76.9/5: 15.38 PJ/yr or 42.11 TJ/day

- At $4.50-$5.5/GJ it gives Cashflw of $69-$85mil/yr or $345-$422mil for 5 yrs worth of cumulative cashflow from LT to NXS.

The above can b used to retire the debt bit by bit. Hence the need for LT to flow efficiently.

The above is at (an unrealistic) 100% efficiency, which hasn't been the case unfortunately. So to answer yr question, yes there is gas at LT to meet STO's obligatory requirement for 5 years, without any show-stoppers. Will it operate smoothly, we don't know.

That's the Longtom bit.

In the Bass Strait, Santos also have a 35% equity at Kipper which comes online in 2016 via Longford. Currently Longford is flowing at 600+ TJ/day.

BHP & Esso r the other 2 parties. Kipper has 620 Bcf gas resource & had 200-250 ppb Hg detected during the testing in 2010. So once the Hg removal beds r installed, gas from Kipper will flow & meet STO's needs.

Links provided below.

http://www.gippslandtimes.com.au/story/1856636/kipper-tuna-turrum-oil-gas-production-begins/

http://www.exxonmobil.com.au/Australia-English/PA/Files/publications_mercury.pdf

http://www.exxonmobil.com.au/Australia-English/PA/Files/publication_ktt_fs.pdf

U also need to remember that STO r in JV's at Casino, Minerva in the Otway which r producing gas currently. So they already have a plan B & C in place.

So in a nutshell,

a) NXS needs to find cash frm somewhere to clear the debt

b) Open the sliding sleeve to flow the upper sands (ie 400 sands) from LT.

The point re: fire sale or partial divestment r absolutely valid.

If NXS owe's the bankers $148.4mil, as per the WSJ article & their only source of income goes down yet again, it just affects the overall cashflw scenario. No wonder the lenders r up in arms.

Not many lifeline's or Dark Knight's(?) left IMO. Given the issues we've had at NXS since 2009 when they flogged Libra to Shell & then dropped the Transocean Legend contract to drill Auriga, its just sad to see it all come down to this.