RE: Anyone notice in NGP's last report that...NGP management has consistently been deceptive. I hate it when they talk about Blue Mountain producing 46 MW (gross) and 36 MW (net). Nobody cares about gross, no other company even mentions it.
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The point is they have a 49.9 MW power plant operating at 36 MW, only 70% of capacity. Admit to this to the market, stop obfuscating with "gross" production, and explain the economics.
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Last quarter Blue Mountain made 5.78 million in revenue, that's $23.12 million in yearly revenue. Does this make sense given their production capacity of 36 MW, their PPA rate of $76 per MWhr and 8500 hours of production? Yes.
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36 MW x $76 per MWhr x 8500 = a little over $23 million in annual revenue.
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How to improve the economics of the project? They can't change the PPA to the current market rate of $98. So they must increase the power the plant is producing. Get the plant to pump out 46 MW in power and the economics start looking a lot better:
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46 MW x $76 per MWhr x 8500 = 29.7 million in annual revenue. An extra 6.7 million in yearly cash flow will really help pay back those exorbitant TCW loans.
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Another issue, last quarter there was $5.78 million in revenue but direct cost of production and operating expenses totalled $4.5 million. Can management please let us know if those costs will decrease in future quarters? If those high operating costs are for drilling injection wells, then fine, those are one-time, necessary costs to improve the amount of production. But make this clear.
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The company will not survive with its high debts and low cash flow. What's the plan for increasing production and decreasing costs?